P&E US 8 by GDS International

COVER NG P&E8 viz2_nov09 06/11/2009 09:52 Page 1

PRACTICAL MATTERS Michael Morris tackles the issue of renewable energy Page 40

SMART POLITICS Making funding decisions about the intelligent grid Page 44 www.nextgenpe.com • Q4 2009

RENEWED INTEREST The transatlantic future of alternative energy sources Page 80

Nuclear

Meltdown Will the pressure of public opinion dissolve the Obama Administration’s atomic plans? Page 32

BALANCING THE LOAD Page 50 A PERFECT FIT Page 98 ENERGIZING THE FUTURE Page 117

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FROM THE EDITOR 5

Climate crunch Why this is a pivotal time for the development of renewable energy policies.

ith December’s UN Climate Change Conference in Copenhagen looming, and as we grow ever more aware of our effect on the environment, the pressure to develop new sources of renewable energy increases. Thanks in part to this trend, nuclear power is currently undergoing a well-documented revival, both here in the US and abroad. Often billed as an environmentally friendly option because of its zero carbon emissions, nuclear has been hailed as the potential savior of countries keen to cut back on CO2 while keeping their power-hungry populations happy. Nuclear seems the obvious choice for a fledgling government seeking popular support – which explains the positive spin put on it by President Obama, who even mentioned it in his presidential acceptance speech. But nuclear comes with some not-so-hidden downsides. Those with long memories will still be haunted by visions of Three Mile Island

“Politicians always want to sell happy dust, the whole notion that we can do this without any pain. But you know it’s not true” Michael Morris, CEO American Electric Power (p38)

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and Chernobyl. And quite apart from the potential for a leak or ‘core damage incident’ – admittedly mitigated by improvements in technology and safety since the 1970s and ’80s – there is the problem of storing the radioactive waste produced by the nuclear fission process. These issues are serious enough to make the reintroduction of nuclear power controversial in some quarters, resulting in a dilemma for Obama and his team: how to appease both sides? The apparent answer is to talk up the positive aspects of new nuclear while holding back on handing out any actual cash for its development. As Associate Editor Natalie Brandweiner discovers in her in-depth look at the new administration’s nuclear policies, such a delicate juggling act can be a hard one to keep up. Elsewhere in this issue, American Electric Power CEO Michael Morris outlines his stance on renewable energy sources. In his view, our current generation and transmission system must be restructured if we are to

reach our ultimate goal of becoming greener and less dependent on fossil fuels. He warns, however, that those who believe we can do this without spending any extra money are fooling themselves. We also take a look at the latest news on the smart grid, often touted as an essential element in our drive toward increased energy efficiency. Will governmental wrangling thwart its development? Unless we can work things out at a political level, all the effort we put into reducing our environmental impact will go to waste. That’s why events like Copenhagen are so important – without them, the future of our planet may hang in the balance.

“Solar energy presents a little more complex picture than traditional renewable sources”

“There is great promise in technologies around traditional pulverized coal”

Mike Taylor, Director of Research and Education, Solar Electric Power Association (p90)

Chris Hobson, SVP and Chief Environmental Ofﬁcer, Southern Company (p94)

Marie Shields, Editor

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CONTENTS_nov09 05/11/2009 15:01 Page 9

CONTENTS 9

44 Power play Politics and the smart grid

Sleight of hand Is the Obama Administrationâ&#x20AC;&#x2122;s support for nuclear power merely an illusion?

80 Sustainable energy showdown How renewables are shaping up in the US and Europe

Keeping it real Michael Morris takes a pragmatic approach to renewable energy

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CONTENTS 11

Pushing the boundaries

Balancing the load

Smart grid

50 SMART GRID

50 Balancing the load

94 The case for carbon

Mark Case outlines BGE’s smart grid program

Why Chris Hobson supports clean coal

56 Rise of the machines

98 A perfect ﬁt

How Southern California Edison is deploying cutting-edge technologies

Rhone Resch looks at solar’s place in the energy puzzle

76 Risk assessment Annabelle Lee on security within the smart grid infrastructure

GOLD SPONSORS

ASK THE EXPERT 48 Alex Brisbourne, Kore Telematics

INDUSTRY INSIGHT 60 David Wilkinson, RAM Mounting Systems 78 Jeff Newman, Enfora

RENEWABLES

84 Pushing the boundaries

102 Tapping the source

AEP uses technological innovation to diversify its fuel mix

How to get in on the flow of money for new projects in renewable energy

90 Saving up the sun

104 Adding value to the grid

How do issues of storage affect solar energy’s viability?

Brad Roberts on the latest energy storage technologies

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CONTENTS 13

EXECUTIVE INTERVIEW 88 Nancy Hartsoch, SolFocus 97 Gregg Patterson, PV Powered, Inc. 121 Alan Saunders, Autodesk

108 Renewable recovery

ROUNDTABLE

IN THE BACK

66 Smart grid With AT&T’s Kevin Jones, Malcolm Unsworth of Itron, Jim Hanson of Motorola Inc., Andrew A. Bochman of IBM’s Ounce Labs, Allan Breitmayer of Sierra Wireless and TELUS Business Solutions’ Roland Labuhn

The future is bright for green energy, says Mike Eckhart CONSTRUCTION

110 Gridlock?

117 Energizing the future

What the Golden State is doing to overcome its transmission infrastructure challenges

A round-up of current power plant construction projects

114 Looking for a new breed of CEO

CUSTOMER OPERATIONS

Anita Hoffmann examines the CEO talent in the cleantech sector

122 Saving money through energy efﬁciency

Green leader: Denmark

124 Comment: Climate change 126 Regional focus: Denmark 128 Photo ﬁnish

Joseph Forline explains how PSE&G is giving back to its customers

A perfect ﬁt

Saving up the sun

114

Looking for a new breed of CEO

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UPFRONT

THE BRIEF

United Nations climate chief Yvo de Boer

BANGKOK CLIMATE CHANGE TALKS

ddressing the media on the fi nal day of the two-week long Bangkok talks on climate change, Executive Secretary of the United Nations Framework Convention on Climate Change Yvo de Boer called the talks “constructive” and said he believed all the ingredients were there for a successful outcome for the Climate Change Conference in Copenhagen in December. “Whatever the atmosphere at the moment, I think significant advances have been made here to get us close to something which can serve as the basis for agreement in Copenhagen,” de Boer said at the conclusion of the talks. However, he also pointed out that while countries’ negotiators have shown rapid progress on concrete ways to implement the

UPFRONT.indd 16

mandate, he believes they are still clinging to long-held differences. De Boer stressed the urgency of raising ambitions and bridging this divide. “Th is session has been characterized by real advances and real work to put together important parts of the architecture of the Copenhagen agreement but you can only take good faith so far. . . . The stark reality out there is that unless we see an advance on those key political issues, it is very difficult for negotiators in this process to continue their work in good faith,” he said. During the sessions in Bangkok, negotiators resolved about half of the 2500 points of contention in the 200-page negotiating text, including determining ways to help poor countries to adapt to the effects of climate change,

transfer cleaner technology and work of which was decided by the collect and distribute funds to Kyoto Protocol in 1997. assist the poorest nations. Targets for emissions cuts by However, rich and poor nadeveloped countries still fall short tions ended the week further of their required levels, although apart on at least one issue. The they are creeping upwards, mostly European Union and the as the result of the introducUnited States made tion of more ambitious Cuts of it clear that they goals by Japan’s new wanted to put government. The a new treaty World Resources are needed in place of the Institute calculates to have a real effect on global Kyoto Protocol, that the targets warming causing delegates amount to cuts of from developing about 10 to 24 percent nations to walk out. below 1990 levels by 2020. They accused the economically By contrast, scientists have said powerful countries of wanting to that cuts of 25 to 40 percent are “kill off ” Kyoto, despite the emneeded to have a real effect on phasis it places on encouraging global warming. development in poorer areas. Oil-rich Norway provided China, along with the majorthe one bright spot in Bangkok ity of developing nations, insists by promising a 40 percent cut if that industrialized countries cut agreement is reached in Copenhaemissions by at least 40 percent gen. Observers saw this as a moral of 1990 levels by 2020, the framegesture more than a practical one,

25% to 40%

5/11/09 16:37:46

UPFRONT

THE BRIEF

because it would have little impact on total emissions from the industrialized world, given Norway’s small size. There was also no breakthrough on how much money to give to the world’s poorest countries in order to help them prevent global warming, despite a proposal by British Prime Minister Gordon Brown this summer for an amount rising to $100 billion a year. The Philippines’ Bernarditas Muller commented: “We are extremely concerned by the lack of numbers and clear funding commitments by the developed world.” Su Wei, China’s chief negotiator, said, “We came here with hope and confidence, but have to leave with disappointment and deep concern.” Su, who is Director of the Climate Change Policy Department of the Chinese National Development and Reform Commission, said some developed countries adopted a “passive attitude” in combating climate change during the talks. “They neither offered satisfactory plans on their own emissions cuts, capital and technological transfer to developing countries, nor responded positively to developing nations’ suggestions on these aspects,” he added. “The talks involved a confl ict of interests, so they could not run smoothly,” Qi Jianguo, an economic and environmental policy researcher at the Chinese Academy of Social Sciences, told the Chinese news agency Xinhua. Many eyes are now on President Obama, in the hope that he will travel to Copenhagen in December after receiving his Nobel Peace Prize in Oslo. His attendance would ensure a level of attention that could make all the difference to the talks’ success.

UPFRONT.indd 17

NEWS IN PICTURES

A full moon next to a wind energy turbine near Filsum, Germany. The country is a leader in installed wind capacity, with 25 GW.

A student cleans solar panels to maximize energy efﬁciency during the Department of Energy Solar Decathlon in Washington, DC.

A maze of electrial wires above a street in Shanghai China. China recently overtook the US as the world’s biggest emitter of CO2.

Solar panels on a yurt in Tajikistan. A small panel can save a family up to one dollar per day on the cost of kerosene.

5/11/09 16:37:53

UPFRONT

PROFILE

LISA JACKSON, ADMINISTRATOR, ENVIRONMENTAL PROTECTION AGENCY Currently serving as the Administrator of the Environmental Protection Agency (EPA), Jackson is regarded as one of the most powerful women in US environmental politics. Officially nominated by President Obama in December 2008, she was confi rmed through unanimous consent of the US Senate in January 2009. Beginning her career with the EPA in 1986, Jackson has always been at the forefront of environmental strategies. During her tenure at the EPA, she worked on the federal Superfund program, developing hazardous waste clean-up regulations and overseeing projects throughout New Jersey, later becoming Deputy Director and Acting Director of the region’s enforcement division. Delving further into politics, Jackson joined the New Jersey Department of Environmental Protection (DEP) in 2002 as Assistant Com-

UPFRONT.indd 18

missioner of Compliance and Enforcement and headed numerous programs such as land use regulation, water supply and geological surveys. Most notable was the department’s creation of standards for the Highlands Water Protection and Planning Act. Becoming Commissioner of Environmental Protection was the logical next step for Jackson, and she led a team of 2990 professionals responsible for protecting New Jersey’s natural and historic resources. She actively aimed to aid those communities that had long been neglected, and led numerous compliance sweeps on areas heavily affected by pollution, such as Camden and Patterson. Opinion regarding strong enforcement was divided at that time, and she received much criticism from those working on toxic clean-ups at the local level. She became Chief of Staff to the Governor of New Jersey, handling all state operations

and political liaisons for the governor, before being appointed to her federal position by the President. In her role at the EPA, she is currently attempting to push through the Clean Air Act. The act declares CO2 to be a public health threat and paves the way for the government to impose taxes on US businesses producing large amounts of CO2 . It is expected to provide the basis for cap and trade. The suppression of a report in June brought Jackson under question. It was alleged she was involved in withholding data written by Alan Carlin that was unsupportive of climate change. Senator John Barrosso of Wyomng has also accused her of taking decisions based “more on political calculations than scientific ones”. Combine that with damning reports from DEP employees, and her time in federal government is likely to be a colorful one.

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UPFRONT 19

GOAL WITHIN REACH

The Obama Administration has not given up trying to get approval of its climate policy in the Senate before the UN Climate conference in Copenhagen in December. Carol Browner, White House Adviser on Energy and Environment, says that it is still possible to get a political mandate from the Senate in time. “Th is administration from day one has been about taking action and we are still working very, very hard to get a bill out of the Senate,” she says. She believes it is still possible for the Senate to pass energy and climate legislation this year, even as a debate over the US healthcare system dominates the Congressional calendar. “We haven’t given up trying. There are still windows where time could come available…We feel very, very confident that we can work with the rest of the world to take significant steps forward in Copenhagen,” Browner said in an interview with Bloomberg News.

HITTING THE OCEAN FLOOR Maldives government officials literally took “What we are trying to make people rea dive in October to raise awareness about alize is that the Maldives is a frontline state. climate change. Members of the cabinet Th is is not merely an issue for the Maldives staged a meeting six meters under a lagoon to but for the world,” Nasheed said. highlight the threat of global warming to the Against a backdrop of coral, the Presilowest-lying country in the world. dent, Vice President, Cabinet SecPresident Mohammed retary and 11 ministers signed Nasheed and 13 others pulled a document calling on all on scuba gear and communations to cut their carbon The islands are only an average of nicated via hand signals dioxide emissions. while seated around a table Nasheed had already in the lagoon on the island announced plans for a above sea level of Girifushi. The meeting fund to buy a new homeaimed to draw attention to land for his people if the 1192 fears that rising sea levels caused low-lying coral islands are subby polar ice cap melt could swamp this merged. He has promised to make the Indian Ocean archipelago within the next Maldives, with a population of 350,000, the 100 years. The islands are currently only an world’s fi rst carbon-neutral nation within a average of 2.1 meters above sea level. decade.

2.1 meters

FAST FACT

The proportion of renewable energy in Denmark is to be increased to

20% in 2011 rising to

30% in 2020

UPFRONT.indd 19

NO US-CHINA PACT President Obama’s visit to China in midNovember will not lead to an agreement on countering global warming, according to Todd Stern, the US special envoy for climate change. However, he says Obama will work with Chinese President Hu Jintao toward facilitating an agreement at the international meeting. “It’s never been an effort on our side to work toward a separate deal, but we’re going

to be trying to make as much progress as possible,” Stern says. “We’re pushing them and they’re pushing us.” “All of us have to take responsibility for our own countries and for the sake of all mankind. Th is is not a matter of saying, only if other countries take certain measures will we take certain measures. It is not that kind of future,” Xie Zhenhua, China’s top climate envoy, told reporters. Source:

5/11/09 16:38:04

UPFRONT

INTERNATIONAL NEWS

SAHARA SOLAR The Desertec Industrial Initiative, a $400 billion plan to provide Europe with solar power from the Sahara, has reached further development following the formation of 12 companies to carry out the work. The German-led, project brings together major players in the industry such as Siemens, E.ON and Deutsche Bank. The initiative has set a target to provide 15 percent of Europe’s electricity by 2015, with solar power being generated as soon as 2015. The technology being used is not innovative, it is already being used in the deserts of California and Nevada, but it is receiving huge media attention for the scale of the project, which also has plans to connect North Africa to this European grid.

UPFRONT.indd 20

NUCLEAR TAKEOVER The French government is becoming doubtful as to the purchase of half of US nuclear energy company Constellation. State-controlled French operator EDF announced its bid for Constellation last December, but it has since emerged that the government is keen to continue its presence in Europe following its buyout of British Energy in late 2008. The Financial Times reported the government’s change in enthusiasm for the American takeover, stating that regulatory difficulties in the US have delayed the $4.5 billion deal and quotes a senior official questioning EDF’s progression with Constellation. However, a French government official who stated that a deal between the two has been authorized denied the report.

RUBBISH RE-USE London’s mayor, Boris Johnson, is considering a new project to save at least $147 million in refuse collection. Following a report by the London assembly, it emerged that the waste generated by Londoners could be used to generate enough electricity to power up to two million homes and provide heat for 625,000 houses. The amount of money being spent on sending waste to landfi ll is increasing following rising taxes. Currently, more than half of the capital’s waste ends up in landfi ll, with only 22 percent of it being recycled; non-recyclable rubbish, such as food, could be converted into energy. Creating gas from the rubbish could be used for heating or for generating electricity and could cut London’s CO2 emissions by 1.2 million tones.

5/11/09 16:40:19

UPFRONT

INTERNATIONAL NEWS

COAL GASIFICATION In a bid to develop its clean coal technologies, India is undertaking a collaborative effort with Coal India Ltd (CIL) and receiving support from its peers. CIL and GAIL (India) Ltd are working together to develop a surface coal gasification project at Talcher coalfield in Orissa for the production of ammonium nitrate and urea. GAIL had organized a study by Udhe India to examine the potential of the project. It was estimated that the project would consume 5000 tons of coal a day to produce 7.76 mscmd of synthesis gas (equivalent to 3000 tons a day of ammonia) to produce 3500 tons of urea a day. CIL is also working with ONGC for underground coal gasification projects. The two are working on the development, operation and R&D activities. The pilot site at Vastan, Gujarat, has been obtained and its design has been firmed up, and the project is expected to commence production next year.

UPFRONT.indd 21

TOKYO MOTOR SHOW The 41st showcasing of innovative concepts and new production cars from the world’s major auto manufacturers took place in Tokyo between October 21-November 4. The effects of the recession were present, with only Lotus, Caterham and Alpina making the journey from Europe. Most notable was the innovative yet cautious approach to plug-in hybrid vehicles. Toyota displayed its Plug-In Prius Hybrid, run on lithium-ion battery technology and emitting just 42g/km of CO2 or less. However, remaining cautious of public opinion, the vehicle is due to go on a limited trial next year. Renault, also exhibiting at the show, has stated that 20 percent of its entire production will be battery electric vehicles by 2012.

SOLAR FOCUS The Japanese government has launched a new program to encourage the purchase of surplus solar electricity. Power companies will now be purchasing the surplus electricity produced by solar power generations in homes, schools and hospitals at a much higher rate. Starting in April, the utility companies will collect a monthly sub-charge from every household and organization to cover the rise in costs. However, critics are doubtful about this move and believe it will only weaken customer sentiment. Th is is the latest of Japan’s attempts to make photovoltaic generation, which produces less carbon emissions than fossil fuels, is popular and demonstrates the country’s commitment to fighting global warming.

5/11/09 16:40:35

UPFRONT 22

KEVIN MCCULLOUGH, CHIEF OPERATING OFFICER, RWE ENERGY

Being a very carbon-heavy industry and a very carbon-heavy player within the energy sector, arguably we needed to do something more fundamental around weaning ourselves away from the carbon-based technologies. The winners going forward in any business sector are always those that can be innovative and move quickly, and because we were a little later than most of our competitors in getting into large volume renewables, we had to make some fairly bold moves fairly quickly. We live in a world at the moment where we take poverty for granted and we have to do something about that. The vast majority only minimally change their lifestyles towards energy, and there is no real solution going forward that involves low carbon and low price, and that’s the reality. Onshore wind is now beginning to find parity with gas turbine plants. Offshore wind

UPFRONT.indd 22

is in a different league. It’s at least 50 percent more expensive than onshore wind in pure capital of cost because of the amount of infrastructure that sits beneath the waves.

applied in a smaller environment, ultimately to a very small scale. Nuclear was born out of the Cold War. It was built effectively for weapons grade plu-

“Our consumers are our absolute lifeblood, and you ignore your consumer at your peril” We see real strength as a portfolio as opposed to a single party player. I don’t believe that with the technology available today we will be 100 percent renewable. There is certainly the potential, but probably only on a project by project basis. You’re already seeing, on a larger scale, utilities using their carbon footprint or their sustainability impact very cleverly to competitive advantage. There’s no reason that I can foresee why that wouldn’t be just as practically

tonium with heat as a huge byproduct that some clever people thought we can build energy from, and of course more clever uses of that nuclear technology became civil nuclear reactors. Consumers need to be continually educated, but so do the utilities that serve them because our consumers are our absolute lifeblood, and you ignore your consumer at your peril. We’re living in an age now where consumers has never been as informed as they are today.

5/11/09 16:40:41

UPFRONT

BIOFUEL COULD HARM WATER A new study by researchers at Rice University in Houston, Texas has found that expanded production of crops to produce biofuels could damage water resources. The research suggests that policy makers should take into account what they call the “water footprint” when encouraging biofuel development. The study, called ‘The Water Footprint of Biofuels: A Drink or Drive Issue?’, suggests that by using too much water to produce fuel, we might end up with not enough water to drink or to grow food. According to the lead author of the study, Pedro Alvarez, Rice University Professor of Civil and Environmental Engineering, the water footprint consists of two elements. “Water shortages caused by a significant increase in fuel crop irrigation, and increased water pollution from related agro-chemical drainage and increased erosion and so on. The two impacts we refer to as the ‘water footprint,’” he says. Alvarez says there are good reasons to continue programs to produce biofuels, such as reducing the need for imported oil and diversifying our sources of energy. But he says policymakers should provide incentives to producers to use crops that use less water and have less impact on the environment in the form of runoff of pesticides, fertilizers and other chemicals.

FROM THE VAULT In the Q1 2009 issue of Power & Energy, Ralph Izzo, CEO of Public Service Enterprise Group, examines the difficult state of the US utility industry in relation to the heightened federal focus on reducing greenhouse gas emissions and the recent global financial crisis.

Source: voanews.com

NEW SOLAR RESOURCES To help utilities rise to the challenge of adopting solar power at a large scale, the Solar Electric Power Association (SEPA) unveiled a new web portal and database last week at Solar Power International. SEPA says that its new site lets utilities explore options, fi nd resources and think strategically about how their utility peers across the country are moving forward. The site aims to help utilities make business decisions about

solar power by providing “intelligent navigation” of industry reports, events, online tools and market data that can be fi ltered by technology, application and employee type, SEPA said. Highlights include the Solar Toolkit, a one-stop window into the site’s technical content. The site also offers data and maps on the largest solar projects, as well as streaming online webinars from past SEPA events.

Go to www.nextgenpe.com, click on ‘Previous issues’ in the left column, choose ‘Issue 6, February 2009’ and scroll down to ‘Cover stories’ to read about PSEG Global’s strategic efforts to face the enormous challenges created by climate change.

CLEAN VEHICLES Energy Secretary Steven Chu announced in early November that the Department of Energy is providing up to $5.5 million in funding from the American Recovery and Reinvestment Act to support the X PRIZE Foundation’s work to inspire a new generation of energy efficient vehicles. As part of the Automotive X PRIZE competition, teams design innovative, commercially viable, high-efficiency vehicles that will help break the dependence on oil and stem the effects of climate change. The funding will provide technical assistance and expand national education and outreach efforts for the competition. The award also supports President Obama’s Strategy for American Innovation, which calls on federal agencies to increase their use of prizes as a tool for promoting technological advances.

Source: renewableenergyworld.com

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5/11/09 16:40:47

UPFRONT 24

BACK TO THE LAB

The US Department of Energy researches and develops its national science interests through a system of facilities and laboratories, which it oversees. The National Laboratories and Technology Centers are federally funded but administered and staffed by private corporations and universities. In the second of an ongoing series, Power & Energy examines the 17 national laboratories and the varying ways in which they impact the country’s energy usage.

PROJECT FOCUS

BROOKHAVEN NATIONAL LAB LOCATED IN LONG ISLAND, New York, Brookhaven was established in 1947 and originally owned by the Atomic Energy Commission. First operated as a nuclear research facility, Brookhaven’s activities have vastly expanded to include environmental and energy research, neurosciences and medical imaging, and structural biology. The lab’s motto is ‘passion for discovery’, and it has six Nobel Prizes to back up its promise. Co-located within the laboratory is the uptown New York forecast ofﬁce of the National Weather Service.

NATIONAL ENERGY TECHNOLOGY LAB A SCIENCE, TECHNOLOGY AND ENERGY laboratory, the main focus of the National Energy Technology Lab is to advance the national, economic and energy security of the US, which it does through onsite and contracted research. The laboratory develops technologies to resolve the constraints imposed on decreasing fossil fuels, and ensures responsible supplies of energy for the nation’s growing economy. It is the only lab devoted to research into fossil energy technology and incorporates a number of national goals, such as carbon sequestration and producing hydrogen fuel from coal. It currently employs more than 1200 people at each of the ﬁve laboratory sites.

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5/11/09 16:43:03

PROJECT FOCUS

UPFRONT

PRINCETON PLASMA PHYSICS LAB

SAVANNAH RIVER NATIONAL LAB

SPECIFIED FOR RESEARCH regarding plasma physics and nuclear fusion science, the lab is located in New Jersey. It originated out of the Cold War project Matterhorn, a project to control thermonuclear reactions, and was renamed the Princeton Plasma Physics Lab following the project’s declassiﬁcation in 1961. Its primary goal is to develop fusion as an energy source and its current major research projects and experiments include a Tokamak Fusion Test Reactor and the National Spherical Torus Experiment.

SITUATED AT THE SAVANNAH River site near Aiken, South Carolina, the laboratory carries out research and development incorporating environmental remediation, technologies for the hydrogen economy, handling of hazardous materials, and technologies for the prevention of nuclear proliferation. The labs focuses on, and has vast amount of experience in, the domain of nuclear waste and hydrogen storage, following its initial creation to support the production of tritium and plutonium during the Cold War.

JEFFERSON NATIONAL ACCELERATOR LAB OFFICIALLY KNOWN as the Thomas Jefferson National Accelerator Facility, it was founded in 1984 and is operated by Jefferson Science Associates, LLC. The lab’s main research facility is the Continuous Electron Beam Accelerator Facility (CEBAF) accelerator, and the nuclear physics program is carried out at three end stations, with plans to introduce a fourth. There are plans to double the electron beam to 12 GeV. The Jefferson Lab also boasts the world’s most powerful free electron laser, at more than 14 kW.

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5/11/09 16:43:04

UPFRONT

SMART GRID PROGRAM OG&E has entered into agreements with General Electric Energy (GE) and Silver Spring Networks to handle key aspects of its Positive Energy Smart Grid Program to begin in Norman, Oklahoma next year. As part of the Norman deployment, 2000 to 3000 customers will be recruited to receive information in almost real time regarding the price of electricity by time of day and the amount being used. The smart grid program will provide customers with more information to help manage their energy use and save money, without compromising their lifestyles. It also will help OG&E maintain reasonable electricity rates and continue reliable delivery of electricity to its customers, the utility said. GE will provide Norman with 42,000 smart meters that will measure electricity use in the home or business and transmit the information to OG&E for billing and service monitoring. The information will be communicated via Silver Spring Networks’ Smart Energy Network, a secure, IP-based network.

UTILITY BALANCE SHEETS STRAINED Share values among America’s utility, gas this year included DPL, Energen and PPL. and power companies have outperformed Ranked among the top 40 for the first time the broader market since the fi nancial crisis was NRG (32), and returning to the rankbegan last year. Maintaining this perforing after a year’s absence were Mirant (21) mance, however, might become more difand AES (37) – three companies with heavy ficult in the months ahead, according to a exposure in wholesale power markets. Conreport published in the September issue of versely, Alliant and Northwest Natural Gas Public Utilities Fortnightly magazine. slipped to the bottom of the F40 The fi ft h-annual Fortnightly after ranking in the high 20s last 40 study, sponsored by Accenyear. Cap-ex spending ture, ranked the four-year The F40 metrics – comgrew by nearly shareholder value perforbined with supplementary mance of US investor-owned 2009 data – showed the inutilities (IOUs) and other dustry remains fi nancially in 2008 companies active in electric robust despite a substantial power and gas industries. The decline in stock prices. Cap-ex C Th ree Group of Atlanta, which spending among the Fortnightly along with Public Utilities Fortnightly devel40 companies grew by nearly 30 percent in oped the F40 fi nancial model, analyzed the 2008, topping $49 billion, and the entire annual reports of 85 companies to compare industry’s cap-ex increased 17 percent to a series of shareholder-value metrics – such nearly $94 billion. At the same time, equity as profit margin, dividend yield, return on returns among the top 40 companies deequity (ROE), return on assets (ROA) and clined only slightly, from 15.4 percent in sustainable growth. FY2007 to 14.6 percent in 2008. Companies leading the F40 ranking

30%

Source: www.fortnightly.com

US ENERGY CONSUMPTION (QUADRILLION BTU)

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BIOFUELS - 1.413

BIOMASS - 3.884

RENEWABLE ENERGY - 7.301

NUCLEAR ELECTRIC POWER - 8.455

NATURAL GAS - 23.838

ELECTRICITY NET IMPORTS - 0.113

smart meters are installed over the next 10 years, they could produce a quadrillion bytes of information

COAL COKE NET IMPORTS - 0.040

140 million

COAL - 22.421

FOSSIL FUELS - 83.436

FAST FACT

PETROLEUM - 37.137

Source: renewableenergyworld.com

ENERGY SOURCE 2008

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HYDROPOWER RECEIVES $531 MILLION Hydroelectric projects received about 24 percent of the $2.2 billion in Clean Renewable Energy Bonds allocated recently to renewable energy developers, according to the National Hydropower Association. “By providing more than $531 million in funding for hydropower projects, the federal government is supporting efforts that will create jobs and add to the country’s domestic, affordable electricity generation re-sources,” said Jeff rey Leahey, NHA’s Senior Manager of GovErnment and Legal affairs. The US Treasury Department allocated the bonds to more than 800 companies and

GLOBAL RENEWABLE ENERGY OUTLOOK

cooperatives nationwide. The funding was authorized by the Energy Improvement and Extension Act of 2008 and the American Recovery and Reinvestment Act of 2009. In the past, the federal bonds program often overlooked promising hydroelectric projects, Leahey said. The lat latest allocation was based on a pro rata basis, a change the NHA had been pushing for. “NHA salutes the leg legislators and policymakers who have improved the CREBs program, so that it recognizes the extraordinary energy, environmental and economic benefits that can come from hydropower,” said Leahey. Source: renewableenergyworld.com

EIGHT GW OF WIND BY YEAR-END According to a recent brief from Emerging Energy Research, the US wind energy market could reach 8 GW installed in 2009, (including project spill-over from 2008 and new wind build), despite initial fears of a major drop in megawatts resulting from the fi nancial crisis. The firm said that 6.3 GW of wind have already been added in 2009, while more than 2 GW are under construction and scheduled for activation by year’s end. “At face value it appears that the US market could witness its second-best growth year to date; however, if you remove spill-over build originally meant for completion in 2008, 2009 market activations will probably be closer to half of 2008 levels,” said Senior Wind Analyst at EER Matthew Kaplan. Still, 2009 build-out has surpassed industry expectations. In the first quarter of this year, most market participants expected a significant drop in 2009 activations to well less than 6 GW based on frozen fi nancial markets. However, a combination of projects planned for 2008 spilling over into 2009 and construction activity by developers eager to qualify for American Recovery and Reinvestment Act 2009 (ARRA) provisions, led to US market growth nearing approximately 8 GW in 2009, according to Kaplan. Source: renewableenergyworld.com

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UPFRONT

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DOE AWARDS FUNDING FOR GEOTHERMAL ENERGY Energy Secretary Steven Chu has announced up to US $338 million in Recovery Act funding for the exploration and development of new geothermal fields and research into advanced geothermal technologies. These grants will support 123 projects in 39 states, with recipients including private industry, academic institutions, tribal entities, local governments, and the DOE’s national laboratories. The grants will be matched more than one-for-one with an additional $353 million in private and non-federal cost-share funds. The grants are for identifying and developing new geothermal fields and reducing the upfront risk associated with geothermal development through innovative exploration and drilling projects and data development

and collection. In addition, the grants will support the deployment and creative fi nancing approaches for ground source heat pump demonstration projects across the country. “The United States is blessed with vast geothermal energy resources, which hold enormous potential to heat our homes and power our economy,” said Secretary Chu. “These investments in America’s technological innovation will allow us to capture more of this clean, carbon free energy at a lower cost than ever before. We will create thousands of jobs, boost our economy and help to jumpstart the geothermal industry across the United States.” Source: renewableenergyworld.com

COMPANY INDEX Q4 2009 Companies in this issue are indexed to the ﬁrst page of the article in which each is mentioned. Alstom 38

Heidrick & Struggles 114

Solar Electric Power Association 90

American Council on

Idaho National Laboratory 32

Solar Energy Industries

Renewable Energy 108

Itron 2, 66

Association 98, 110

American Electric Power 32, 38, 84

Kore Telematics 48, 49

SolFocus 88, 89, IBC

American Wind Energy Association 80, 110

Land Agent Services LLC 101

Southern California Edison 56

AT&T 6, 66

meettheboss.com 125

Southern Company 94

Autodesk 121

Motorola 66, 72

SunGard 15

Baltimore Gas and Electric 50

MSE Power Systems 4, 116

Teamquest 27

BP Solar 8

National Energy Technology Laboratory 24

TELUS Business Solutions 12, 66, 75

Brookhaven National Laboratory 24

National Institute of Standards and

Thomas Jefferson National

California Energy Commission 110

Technology 76

Accelerator Facility 24

CH2M HILL 37, 119

Nuclear Energy Institute 32

University of Massachusetts 80

Cinterion 64

Oak Ridge National Laboratory 44

Conergy 93

Oliver Wyman 44

Current 31

Ounce Labs, an IBM company 66, 68, OBC

Duff & Phelps 102

PowerMand 53

Electricity Storage Association 104

Princeton Plasma Physics Laboratory 24

Energy Storage and Power LLC 107

PSE&G 122

Enfora 78, 79

PV Powered, Inc IFC, 97

European Photovoltaic Industry

RAM Mounting Systems 10, 60, 61

Association 80

S&C Electric Company 104

European Renewable Energy Council 80

Savannah River National Laboratory 24

Exelon 32

Sensus 54

Get Wireless 59

Sierra Wireless 66, 70

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CLIMATE SUPPORT More than a dozen leading US corporations, including Public Service Enterprise Group (PSEG), DB Climate Change Advisors (Deutsche Bank Group), Gap Inc. and National Grid, have announced the launch of a new initiative to support Congressional action on clean energy and climate change legislation. The goal of the new group, called American Businesses for Clean Energy (ABCE), is to offer a platform for leading US businesses to express their support for meaningful and effective legislation that will drive clean technology innovation, create jobs and address the threat of global climate change. ABCE’s official message is: “We are businesses from a broad cross-section of American industry that support Congressional action to enact clean energy and climate legislation that will significantly reduce greenhouse gas emissions. Now is the time to act.” Some of the fi rst signatories to the ABCE pledge of support include Aspen Skiing Company, Avista, Calpine Corporation, Conservation Services Group, DB Climate Change Advisors (Deutsche Bank Group), FPL Group, Gap Inc., National Grid, New York Power Authority, PNM Resources, and Public Service Enterprise Group.

5/11/09 16:46:39

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COVER STORY

u o y w No see it...

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n recent years, nuclear has been dressed up and re-branded as the savior of the global energy crisis. Governments are finally taking notice of diminishing energy resources and beginning to feel the power of lobbying efforts calling for a reduction in carbon emissions. Public opinion is no longer as drowsy as it previously has been – the average energy consumer is now waking up to the effects of individual usage on global warming. Being ‘green’ is the new scene. The previous stigmas of safety and reliability have been washed over and nuclear has re-emerged as America’s answer to the fuel crisis. President Obama is carrying the torch for its revival and canvassing in its support, with Energy Secretary Steven Chu in tow, but the accumulation of this into policy never seems to appear. There is still so much to see of Obama’s tenure, but so far his legislation for nuclear’s dominance is nowhere to be seen. In fact, nuclear features as a side note in many of his energy speeches. Promises of funding and plant construction continue to be made, but it seems that the US government is shying away from actual legislation.

Public opinion

now

Global opinion has changed. The UN Climate Change Conference scheduled for Copenhagen in December 2009 is set to reorganize the framework for climate change mitigation and millions across the globe will be watching the outcome. The Nuclear Energy Institute (NEI) is regarded as the biggest nuclear lobbying group in the US: according to its website it “develops policy on key legislative and regulatory issues affecting the industry.” The NEI board represents 27 nuclear utilities, plant designers and engineering firms in efforts to expand the nuclear industry, and for the entirety of 2007 spent $1.3 million lobbying the US federal government. It has targeted this towards building public support, running ads to highlight the nuclear benefits.

you don’t He hails nuclear as the answer to America’s carbon-emitting problem and the future of energy selfsufﬁciency, but without the legislation to back up his rhetoric, are President Obama’s nuclear policies nothing more than an act of illusion? By Natalie Brandweiner www.nextgenpe.com 33

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of rgest provider la e th is y g r e n “Nuclear e , almost eight y it ic tr c le e n o b clean, low-car ewable power n e r ll a n a th r times large bined” BILL KERRY-BOXER production com Public opinion has not always leaned toward favouring climate change and nuclear energy. The development of nuclear fission in the 1930s saw the first attempt to pave the way for nuclear to emerge as a primary energy source – Eisenhower’s ‘Atoms for Peace’ speech, which he delivered in 1953, kickstarted the first waves of support for nuclear power, and the US Navy became one of the first organizations to develop nuclear power for its propelling submarines and aircraft carriers. The US launched its nuclear power program in 1954 and the SM-1 Nuclear Power Plant, at Fort Belvoir, Virginia, became the first reactor to deliver energy to the grid. However, the work of the Manhattan Project resulted in the building of large reactors at the Hanford Site and the first nuclear weapons were created using plutonium that had been produced there. Rising costs during the 1970s and 80s and falling fossil fuel prices made nuclear power less attractive and 63 nuclear units were cancelled in the US between 1975 and 1980. But it was less economics than general opinion that slowed nuclear’s progress as a primary energy source. Fears began to grown about the safety of nuclear – how likely were accidents, what were the chances of a radiation leak, and where exactly was the nuclear waste being disposed of? The 1979 accident at Three Mile Island and the 1986 Chernobyl disaster answered all these questions and set public opinion firmly against the atomic option. Nuclear power has had a very different history in Europe, however. Following the 1973 oil crisis, France had to move away from its dependence on fossil fuels and invest in nuclear power. Today, nuclear is its main source of electricity and supplies approximately 80 percent of the country’s power. Elsewhere, developing countries such as China and India are showing a heavy interest in nuclear. To cope with its rising population and developing economy, China plans to build more than 100 plants. In March 2009 China Guangdong Nuclear Power Group, a major nuclear power corporation, set up the China Guangdong Nuclear Uranium Co. to be responsible for its uranium supply, ensuring that the country is self sufficient not only in power plant capacity, but also in the production of fuel. The Obama Administration has recognized the softening of public opinion on nuclear and talked up its return, yet after months of promises they still lack the commitment to introduce any such legislation. Rather than the government, it is the utility companies that are acting on their faith and carrying the baton for nuclear implementation. Nuclear power is emerging as an economy-based supplyand-demand principle – utility companies across the US are reacting to the need for viable sources of renewable energy and investing in its future.

Federal policy Since the Energy Policy Act of 2005, nuclear has become accepted as a viable form of renewable energy for the US. Despite being passed by George W.

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Bush and facing criticisms for favoring Texan companies and amounting to nothing more than a broad collection of subsidies for US energy companies, the legislation highlights nuclear as an “innovative technology” and authorizes cost-overrun support of up to $2 billion for six new power plants. Obama voted ‘yes’ on the bill and carried through his support into his own presidency, including nuclear as part of his energy policy. During his acceptance speech he announced, “As President, I will tap our natural gas reserves, invest in clean coal technology and find ways to safely harness nuclear power.” However, implementing his promises into policy is quite a different story. The Obama Administration has ramped up the move towards renewables, but this alone cannot produce the energy that the country needs. A recent study by the Nature Conservancy, a conservation organization of more than one million members, shows that new energy production, specifically biofuels and wind power, is likely to consume a landmass larger than Nebraska. Nuclear sets itself apart as being a producer of low-carbon electricity without excessivie intringement upon the country’s landscape, but the federal policy to support engagement with nuclear never materializes. The Office of Nuclear Energy offers two program goals for nuclear advancement: the development of new nuclear generation technologies and the

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Kerry-Boxer Bill Claimed by John Kerry to be a “pollution reduction bill”, the issue of cap and trade is avoided; instead the bill looks at nuclear worker training, federal procurement of water-efficient products, green jobs, climate change adaptation programs and flood control. The bill emphasizes the need for the Secretary of Health and Human Services to create a strategic plan for health issues caused by climate change – waterborne diseases, tropical diseases, pulmonary effects, cardiovascular effects, air pollution health effects, hazardous algal blooms, mental and behavioral health impacts of climate change, the health of refugees, the implications for communities vulnerable to climate change, and local and community-based health interventions.

maintenance, enhancement and safeguarding of America’s nuclear infrastructure. Its first goal, as stated on the Department of Energy’s website, is to develop technologies that “foster the diversity of the domestic energy supply through public-private partnerships that are aimed in the near-term at the deployment of advanced, proliferation-resistant light water reactor and fuel cycle technologies and in the longer-term at the development and deployment of next-generation advanced reactors and fuel cycles.” On June 16 this year, Steven Chu followed up on the DOE’s emphasis of development, announcing funding of $9 million for nuclear energy university program awards. The Nuclear Energy Universities Program will provide scholarships and fellowships to 86 US nuclear science and engineering students. The funding is being made available to support the country’s energy research infrastructure, but what about the powering of the infrastructure itself? On September 18, Chu flew the flag for nuclear once again and announced that $40 million in funding would be made available to support design and planning for the Next Generation Nuclear Plant (NGNP): plants which will use high temperature, gas-cooled reactor technologies to integrate multiple industrial applications in one plant or facility, such as generating electricity while refining petroleum.

“Support for new developments in nuclear technologies will be critical to meeting our energy, climate and security goals for years to come,” says Chu. “Next Generation Nuclear Plants hold the promise of safe, cost-effective, zeroemissions energy for major US industries that are some of the largest energy consumers in the country.” The NGNP project is expected to be comprised of two phases, with the construction of a demonstration plant expected in 2012. Applications are to be made to the DOE, with two awards being announced in February 2010 and both supporting a unique reactor concept. This follows an already long-standing agreement for the involvement of Idaho National Laboratory to build a full-scale, 300MW prototype. However, before anticipation runs too high, is worth noting that the construction of the plant is not planned to begin until 2016. The Nuclear Regulatory Commission (NRC) published an NGNP licensing strategy in 2009 laying out a process, but includes no actual details regarding design for the reactors, and it is expected that it will be at least 2014 before the NGNP is ready with a reactor design for the NRC review. The Obama Administration hails itself as bringing the next generation of nuclear power, promising research funds and new developments, but when stripped back to the finer details, the likelihood of any progress being made during the current president’s tenure seems exceptionally small. It is not only the construction of nuclear power plants that the government is failing in its support. The catastrophic case of the Yucca Mountain Repository was also a stop-start, before being completely rejected by the Obama Administration. Proposed as a storage facility for nuclear fuel and other radioactive waste, it was approved in 2002 under the Bush Administration but all funding was stopped earlier this year. Chu stated that it is “no longer an option for storing nuclear waste,” prompting concerns over plans for nuclear waste disposal. Obama’s team do not want to lose face by ignoring public interest in nuclear, but are reluctant to implement a potentially damaging policy. His nuclear policy is proving to be nothing more than a brilliantly streamlined PR spin: extolling the benefits of nuclear but without feeling the effects should anything go wrong. Nuclear has certainly moved away from its previous stigmas, but not completely. For many it still remains a controversial policy. John Keeley at the NEI confirms this viewpoint. He believes that although there may be a lot happening behind the scenes, it is unlikely we will see nuclear policy made into legislation any time soon. He notes the current federal focus on healthcare reform and the need for the Obama Administration to heavily hone in on the criticisms they are currently facing. “Healthcare is the driver now,” says Keeley. He also notes the Senate elections that are due next year – in times of electoral campaigns it is rare to see controversial legislation introduced for fear of political fallout.

Lack of support Keeley also points to the shortfalls of support for nuclear energy in the Kerry-Boxer bill. The only promise Barbara Boxer seems to have kept in announcing new legislation on nuclear power is the announcement having ‘nuclear’ in the title. The bill actually does very little to address nuclear policy, opting to include it as a side note on the end of stipulations for natural gas, coal and renewable energy. The report cites nuclear’s pivotal role, yet fails to make any serious commitments for the future: “Nuclear energy is the largest provider of clean, lowcarbon electricity, almost eight times larger than all renewable power

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g tion of thinkin lu o v e n a g in e “We’re se a e of nuclear as lu a v e th g in d regar the solution” to r HELEN HOWES to u ib tr n o c

production combined, excluding hydroelectric power.” The bill includes a generic goal to expand the nuclear energy workforce and concentrate more research into nuclear safety and disposal, but none of this is partnered with a firm set of allocated funds. Chu has sided with this argument and stated that in response he will push for billions of dollars to secure funds to cut greenhouse gas emissions. The response to the bill has been overwhelmingly critical. The bill came about as a result of the lobbying done by conservationist Lamar Alexander, who spoke on the importance of nuclear, not just for a greener future but also to secure more votes for the energy and climate bill. Fellow Republican John McCain also staunchly spoke out against the bill, saying, “I’m not going to be part of any agreement that I know is not going to succeed in reducing greenhouse gas emissions, and that means it has to be nuclear power. We need to build 100 nuclear power plants in the next 20 years. We have to, otherwise we’re not going to reduce greenhouse gas emissions.” The principle of outside looking in springs to mind, however. Would Republicans introduce such a controversial policy if they were in power? Obama’s Administration is quick to note the environmental benefits of nuclear but slow to implement it because of the fear of failure. The politics of introducing nuclear as a primary energy source continue to get in the way – the controversy surrounding the safety of it, the problems with storage and a possible electoral defeat should anything go wrong. Facing increasing criticism for his lack of commitment, Obama may now have given up on glossing over the shortcomings of his nuclear legislation. During the UN climate summit on September 22 he failed to mention nuclear energy even once, an omission that was made more apparent by the Chinese president’s discussion of nuclear as a primary energy source. Hu Jintao cited statistics and targets for his energy plan, committing to building 132 GW of new nuclear plants.

Utility policy

“Support for new develo pments in nuclear technologies will be criti cal to meeting our energy, climate and secu rity goals for years to come” STEV

Instead of instigating nuclear legislation, the current administration seems to be warming the waters for the utilities to dive in and make the first move, be it successful or not. Its vague pledges for government funding for nuclear programs have got the utilities fired up and competing for the prize, each attempting to be at the cutting edge of nuclear technology. One utility that has long established its support for nuclear technology is Exelon. It has the largest nuclear fleet in the US with 17 generating units, which produced a record 132.3 million net megawatt-hours of electricity in 2007. The company has done away with safety fears and gained public confidence in its operations with its unbeatable statistics – during the same year, as production increased, the fleet recorded its lowest industry safety accident rate. In a previous interview with Power & Energy, Helen Howes, Exelon’s VP of Environment, Health and Safety, said she believed the growing public de-

36 www.nextgenpe.com

mand to increase the supply of nuclear energy is proof enough that consumers no longer have the critical attitude towards nuclear that they once did. “What we’re seeing now is an evolution of thinking regarding the value of nuclear as a contributor to the solution,” she said. There are still a number of those who are anti-nuclear, that’s inevitable, but the value of nuclear as a climate change strategy is being more and more acknowledged. It’s certainly not done so as the only option, but it’s raised its status to be one of a number of options on the table.” American Electric Power (AEP) is another utility that is pushing nuclear. With a majority of its fleet being traditional coal-fired generation, the company understands the need to expand its resource mix and create a balanced portfolio to suit both the climate and changing consumer needs. Nick Akins, EVP of Generation, explains that nuclear is a huge focus for AEP, who are exploring other forms of base load technology. “It’s a priority for us to be able to uprate our nuclear station: we have plans on uprating nuclear by 400- to 500-megawatts and that is a relatively small cost, at least a lesser cost than a new coal-fired station,” he says. However, Exelon and AEP are two of America’s largest utility companies, with reported revenues in 2008 of $18.9 million and $13.3 million respectively. The average cost of building a new nuclear power plant is approximately $7 billion, which is virtually unachievable without the help of government funding; maintaining the plant also brings high costs. The only recent nuclear funding other than Chu’s long-term applications for $40 million has been for the Idaho National Laboratory. Republican Mike Simpson, whose district stretches across Idaho and includes the lab, recently announced an increase of $33 million in funding for research, equipment purchases and the advanced test reactor’s operation as a national scientific user facility. President Obama’s energy policies contain promising nods to an American future where nuclear plays an important role in a dramatically reduced carbon emissions rate, but none of this is backed up by legislation. As the NEI’s John Keeley suggests, while there may be much going on behind the scenes, nuclear’s future, right now, does not seem concrete or certain.

EN CHU

This lack of federal commitment raises questions of government uncertainty and doubt. Perhaps they are concentrating on changing attitudes of anti-campaigners to avoid a bombardment of attacks and criticisms should anything go wrong, or perhaps they are sitting back, waiting for a Republican government to storm full steam ahead and make their mistakes for them. Only time will tell – but for now, it appears that the shining future of nuclear generation outlined in Obama’s speeches will be funded not by the government but by the utility companies themselves.

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THE BIG INTERVIEW

Keeping it real Michael Morris, CEO of Americaâ&#x20AC;&#x2122;s largest electricity generator, tells Natalie Brandweiner about his pragmatic approach to building our renewable energy future.

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ccording to recent forecasts, the US energy grid will be adding 20 percent more users in the next 10 years. With its 39,000 miles of territory, American Electric Power will have a major role to play, and AEP CEO Michael Morris believes the grid to currently be in a state to handle these demands. He notes the mistakes made by previous energy growth forecasts, and the likelihood that those being made now have just as much potential for inaccuracy. “Whether they’re wrong on the high side or wrong on the low side is important, but if they miss it by a small amount, the grid will be fi ne,” he says. “There are some very important subsets, though, to what we need to do. When we had the 2003 outage, a lot of people said we had a Third World grid. That just isn’t accurate. What we have is a very bifurcated grid. It was not built regionally, it was built very locally as each utility served their own needs, and ultimately over time we have knitted that together. “The American Electric Power 765 backbone grid serves 10 percent of all the energy that flows through the Eastern Interconnect, which is everything east of the Rocky Mountain region. American Electric Power’s transmission grid also handles about 10 percent of all the electricity that flows across Texas, so we will be a major player, no matter how this unfolds. Therefore, it’s very important to our customers, very important to the states we serve and very important to our shareholders because we see it as a real potential growth opportunity in an earning sense,” Morris explains. However, the question as to whether the grid should be regulated at federal or state level is no longer the primary issue. During the 1930s the interstate gas companies were forced to abide by federal regulation while the electric companies, under the Federal Power Act, chose to be continually regulated by the states. Th is was then hard to change because of the footprint already established within the utility industry, says Morris. “The benefit of an interstate electric transmission grid will be to the benefit of everyone who lives in the country, so why shouldn’t you spread it across the entirety of the gigawatt hours that the system is able to handle? If you do that and you have federal control over it, you’ll see a tremendous amount of transmission capacity added to the system, which will bring renewables into play and also change the way that we build power production facilities. “You take a region of the country where you think you may need four or five stations to be built. If the grid were truly interconnected, you might only need to build two or three of those stations. Today a new clean coal plant or a new nuclear station may cost as much as $7 billion. Build three of them instead of five and you’ve saved the US economy a tremendous amount of money. So, yes, it should be federally regulated.”

New infrastructure Morris fully endorses the restructuring of the current generation and transmission system and advocates the benefits it can provide. Surely such an overhaul and those jobs created would also provide federal benefits, helping President Obama reach his self-set target of creating five million new green collar jobs. “If we’re ultimately going to make the country greener and less dependent on fossil-based fuels, it’s essential. Federal legislative control and cost allocation authority will take down the barriers that are holding back the capital investment needed,” he adds.

He notes the current activities of Senator Jeff Bingaman and the work he is currently undertaking with one of the principal committees in the Senate as a move towards this, describing it as, “A pushback from the Republicans, oddly enough. “It’s a states’ rights issue versus federal government intervention. It’s the cost allocation. Why would somebody in New Jersey want to pay for a transmission line built in North Dakota to bring wind to the Twin Cities? That’s no different from asking why would someone in Columbus want to pay for a bridge spanning Tampa Bay in Florida? But that’s the way the federal policy has always worked. “Governor Pataki has been helping us on this issue, and he’s got two great analogies that are absolutely irrefutable. At the turn of the 20th century, De Witt Clinton, the mayor of New York City, suggested that they fund the Erie Canal. He had no idea it would make New York the fi nancial capital of the world for decades, and it has. “Dwight Eisenhower, when he was President, for different reasons believed very strongly in putting together an interstate highway system. He had no idea it would make California the eighth largest economy in the world, but it did. So the point here is if we built the electric grid in the same way we built the interstate highway system, we would build out a technology-enhanced greener footprint that is a less carbon intensive, less costly undertaking for the country, which would allow us to continue to have technological advantages over all the countries that we compete against.”

“Almost everywhere where I bump into politicians, they always want to sell happy dust, the whole notion that we can do this without any pain. Wouldn’t you love to believe that? But you know it’s not true” Shareholder growth Addressing AEP growth at a recent shareholder meeting, Michael Morris said that actions taken in late 2008 and early 2009 were aimed at assuring the company’s stability in these weak economic conditions and have it positioned to resume growth when the economy recovers. BP CEO Tony Hayward recently faced the task of publicly denying that the company had turned its back on renewables, as it reported a loss of 53 percent in second quarter profits. Renewable energy is not a fast ensurer of ROI, and so how can Morris be so sure that his investments are sturdy? “Well, there’s a lot of credit here to the finance committee of the board of directors as well as our Chief Financial Officer and those inside of the finance group that we were early to move to take down lines of credit that we had negotiated back in the 2005/2006 timeline,” he replies. “We were fearful. We are an A2P2 credit rated utility as it pertains to commercial paper. Companies like ours and other utilities around the United States depend substantially on commercial paper to fund the day-to-day operations of a business for paycheck, to pay for coal as it’s delivered, to pay the transporters, their bills as they send them to us, the entire business.

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“Worried that that might not sustain through an extended credit crunch if it came, we took down those lines of credit. And what was predicted to happen did. A2P2 commercial paper was unavailable toward the latter part of the fourth quarter of 2008 and totally unavailable in the fi rst half of Q1 2009. That’s beginning to ease some now, but that gave us some fi nancial flexibility. “We then moved quickly into the equity markets in Q1 2009 to take advantage of what we saw as an opportunity to put additional equity into the system, help to balance out the debt-equity ratio in our balance sheet and support more strongly the notion that our ratings from the three principal rating agencies are not only right but sustainable now and into the near-term future. “As many people know from our earnings call and updates, we’ve cut our capital budget to $1.8 billion for 2010. If times were different, we would have that capital investment up The John E. Amos Plant, a coal-ﬁred plant in West Virginia, has a generating capacity of 2900 in the $2.5 billion to $3 billion range because that’s the kind megawatts. Amos is AEP’s largest generating plant. of money that needs to be spent on the system to make sure that we continue to provide reliable, cost-effective power to our customers,” he asserts. to that same conclusion. I received enough emails back from the folks in Morris admits there was an internal focus on cost savings, but not at this company that led me to believe they understood that. Was anybody the expense of compromising technological innovation. He gives as an happy, me included? No, of course not. Everyone thinks every year you example the Turk coal-fired plant that the company is currently building ought to make more money, but the truth is that saved us a tremendous in Arkansas, describing it as, “ultra super-critical, higher temperatures, amount of revenue going forward. The 2008 plan did pay off, and we higher pressures, less carbon footprint than any coal-fi red power plant in were honest about it, and we calculated the incentive compensation that the United States, and in the entire Western Hemisphere – a technological everyone earned and everyone got it. breakthrough that no other utility here in the United States has done.” “There are 21,640 men and women who have dedicated their lives He compares managing his Fortune-ranked 196 company and the to keeping the lights on in the 11 states that we do business. They're organization of his staff through the current economic downturn to the bright people. They want to be told the truth, and that’s what we do,” running of a general household. “You all have an economy that you run. he explains. It’s called your household. Ours is no different than your household. It’s just a few more zeros,” says Morris. In the mix Morris was recently quoted as saying of the energy mix, “There is an issue here that is larger than many of us think. There are answers, but the cost of energy is going to go up. I hate it when I hear Democrats and Republicans saying we need wind, we need solar, we need nuclear, and costs will come down. The politicians think it is going to be free. It isn’t.” It’s not a comfortable message for these times of increased focus on the benefits of renewables. “The American people are bright, and all you need to do is tell them “I’m sure that every one of our employees has throttled back some the truth. Politicians on both sides of the aisle – at the local level, at the vacation planning or new car purchases or some of those things, probstate level, at the federal level – almost everywhere I bump into politiably saving more than they did historically. All of those things, paying cians, they always want to sell happy dust, the whole notion that we can down credit cards more rapidly than they did before, making sure their do this without any pain. It’s like the commercials on TV: ‘You can lose mortgage is in good shape, renegotiating it to lower the cost if they can. 30 pounds and eat all the chocolate cake you like.’ Wouldn’t you love to That honest conversation is essential. The trust and confidence that I believe that? But you know it’s not true.” hope the men and women of this company have in me and the leadership He notes the Energy Information Administration and the data they team – and I get plenty of indication that it’s there – has a lot to do with release as being “typically wrong.” Statistics such as ‘Wind is 15 cents us being honest and frank. a kilowatt hour; biomass is 12 cents a kilowatt hour; a well-run fossil “In the latter part of the third quarter last year, early end of fourth plant with all of the paraphernalia, even with carbon capture, is approxiquarter, we told everybody no salary increases in 2009, the first utility to mately six or seven cents a kilowatt hour.’ As the expenses of functioning make that statement, and around 70 percent of corporate America came the way we have been continue to increase, Morris emphasizes that the

“Honesty rings well in the ear of Americans, no different than it does in the employees of American Electric Power”

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American people need to become more aware of this, need to be given a more honest message.

Carbon capture Ever the technologist, Morris’ solution has been to embrace renewables, but to do so with realistic and viable methods. Coal, one of AEP’s major energy sources, accounts for over 50 percent of this nation’s electricity and over 32 percent of its carbon emissions. To combat the problem of the utility’s emissions, AEP’s Mountaineer Carbon Capture and Storage Project, is built to remove between 100,000 and 300,000 tons of CO2, a significant amount but still less than four percent of the plant’s total annual emissions. Morris will need all of his expertise to manage the transition period when the technology is almost there, but not quite. “That’s the other side of the honest equation of, again, I want to lose weight, but I still want to eat my chocolate cake. The fact of the matter is we’re improving the technology. Th is is so different from the Clean Air Act. In the 1980s and 1990s we all knew how to capture sulphur, we all knew how to capture nitrous oxides. We knew the technology was out there, but it hadn’t been tested. “We all want to do this. I don’t think there’s a utility in the United States that doesn’t. The technology is just beginning to get laid out and beginning to be scaled up. Again, we think at AEP it’s essential for our customers and for our shareholders, because we’re the largest coal burner in the United States, that we push that technology, and we are.

“However, you wouldn’t want, nor would you expect, us to spend $1 billion, maybe even $1.2 billion, to retrofit the entirety of the station to find out after that we never did enough advancement of the technology. This is too big; it doesn’t work. So our plan is to do the small step this September and be in operation. Everything’s being built: the wells have been drilled, the pipes have been laid, and the capture technology is being constructed even as I sit here. We hope by 2011, 2012 we’ll upscale that to commercial size, 1300 megawatts, at Mountaineer. That means I need four of the commercially available technologies deployed at that station. “We believe it’ll be shovel-ready, in today’s phraseology, in 2015 or so and deployable, not only for our system but other systems. And again, equally important, employable around the world. If we as a people don’t retrofit the current stations that supply – China’s 70 percent coal, India’s 64 percent coal, Russia’s 60 percent coal – we need to retrofit that existing fleet or the lights are going to go out and the economy goes down all over the world. Believe me, today’s economic recession/depression is nothing compared to where we’d be if we didn’t have energy to fuel the massive productivity of the world,” he states. Some environmental think tanks say that there is in fact no investment to back up the carbon emission promises. Morris says that while that may be true of some companies, is is not true of AEP. The Mountaineer Project has a price tag of approximately $100 million, which the company is deeply invested in, with its ultimate expansion being in the order of $400 million. “We’re working with our checkbook rather than with our mouth,” says Morris.

The Pickens Plan

n alternative energy plan put forward by T. Boone Pickens, Founder and Chairman of BP Capital Management, which calls for building new wind generation facilities that will produce 20 percent of our electricity while using our domestic natural gas supply as a transportation fuel as well as for power generation. It aims to: • Create millions of new jobs by building out the capacity to generate up to 22 percent of our electricity from wind, with additional solar generation capacity. • Build a 21st century backbone electrical transmission grid. • Provide incentives for homeowners and the owners of commercial buildings to upgrade their insulation and other energy saving options. • Use America’s natural gas to replace imported oil as a transportation fuel in addition to its other uses in power generation, chemicals, etc.

Source: www.pickensplan.com

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Realistic goals

Coal Natural gas Oil Nuclear Hydro Wind Solar Geothermal

The greater good A secure energy future is going to require some compromise. Understanding the grid and how to make it a more efﬁcient tool for both the utilities and their customers seems to be the missing link in terms of transmission and distribution. Morris notes that despite an abundance of wind in certain areas of the US, because very few people live in those areas, this resource is not used as effectively as it could be. The most logical conclusion in light of the current recession, and one reiterated across the industry, would be to rebuild the infrastructure – creating jobs and simultaneously reorganizing power transmission and distribution. Morris says that this issue receives no federal oversight control or cost allocation decisions, and as a result is being swept under the administrative carpet. “We always use it as a poster child – and it’s a bit out of date only because it was in a different era, a different timeline – but the last line that our company built, which was about 100 miles long from West Virginia into Virginia, took 18 years from the time we originally developed the need and the time that we actually energized the line. It was 16 and a half years to get the permits and 18 months to build the line,” he says. The NIMBY attitude adopted by so many Americans is an added challenge to those already mounting against renewable growth. “There is an attitude in the country of ‘nothing in my backyard’,” says Morris. “We all want energy. We want all of it that we can get. We want it cheap and we want it clean, and we want no opportunity to see where it came from. We hear, ‘I don’t want to see the plant, the transformers, the transmission or the substations. I just want it to appear magically.’ “That’s not the way it works. The wall socket is really an intriguing piece of equipment – behind it are trillions of dollars of equipment across the world that make it work, but people don’t want to see it. That’s part of the problem,” he says.

Despite these technological advancements, utilities may be unable to keep up with the demands imposed upon them by the federal carbon emissions targets. As public awareness of climate change continues to grow, it is expected that people and politicians will want instant change on carbon reduction; but do these perceptions need to be reset in terms of realistic timelines and procedures? “The current plan is that we’ll begin to make some serious reductions by 2020,” Morris says. “Right now the plan calls for reductions that technologically won’t be achievable. The latest work out of the house has us reducing by 17 percent by 2020 rather than the 20 percent, which was the original plan, so we’re making progress.” Morris explains a more realistic number to be somewhere in the region of between 10 and 15 percent. “I’m a big believer in the men and women of AEP. When we said that we would begin the build-out of a lot of clean air things and have them done in three or four years, everyone said, ‘I don’t know how we’ll do that, Mike,’ but we did it, so I love visionary goals, but I like them to be realistic rather than just political phrases that get you a big buzz and then nothing happens. “If you look at Kyoto, it’s a perfect example. The entire world supposedly signed on to Kyoto. As you know, we and Australia and a couple of other countries, for obvious reasons, said, ‘Wait a second. There are only two or three nations out of the entire world that will hit their 2012 requirement.’ So great political phrases are always tainted by political reality. “California is a great example. In 2010 California was supposed to be free of internal combustion engines on laws that were passed back in the 1980s and 1990s. Last time I was there, there were a lot of internal combustion engines on those freeways. Far too many, as a matter of fact.” AEP is also exploring the avenue of cleaner and more independent energy as a partner in The Pickens Plan – the alternative energy plan put forward by well-known businessman T. Boone Pickens, which includes the establishment of an extra high voltage transmission superhighway. “There’s nobody better to win the hearts and minds of the people of this country than Boone Pickens,” laughs Morris. “I’ve known him for a long, long time, and he truly is an iconic American. He’s a fi rm believer in the creativity of the men and women of this country, and he’s lived that life. “He started out as a geologist and created Mesa Petroleum and turned it into a real juggernaut and then moved on to help restructure corporate America where he thought it was headed in the wrong direction, particularly in the energy development business, He says it simply, ‘Either you’re with me or against me.’ If you're against him, that means you're for foreign oil, and if you’re with him, that means you're for domestic production of natural gas and oil. “His theory is quite simply this: if we don’t do something about transportation fuel in a competitive sense, then we, as a nation, will continue to be an importer from countries that don’t think much of us; in fact, countries that would just as soon see many of us not around anymore if they had a chance to do that. His statement is very simply that. We’re out joining him everywhere that we can: we had a public forum recently where we had hundreds of people at a town hall meeting here, and we played off of each other and did well, and we continue to do that.

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Morris points out that Pickens has put a lot of his personal money into an advertising campaign promoting the use of natural gas in big vehicles and putting plug-in electric hybrids in day-to-day travel business. “Next year Nissan will have a viable SUV in this country that you’ll be able to plug in. Colleagues of mine at Northeast Utilities are already working on building plug-in stations at different locations throughout part of their service territory. We’ll start doing those kinds of things at American Electric Power as well. “Since the fi rst embargo of 1973, this country has said we need to be energy-independent. If we don’t do something about transportation fuels, we’ll never be energy-independent other than going back to foot pedal and bicycle pedal and horse transportation, which clearly isn’t going to happen. So we’re big believers in it. The other piece of it that works for us is if you’re going to have plug-in electrics and you’re going to have an electric grid that’s able to handle that on a national basis, again, you go back to federal regulation and federal cost allocation.”

Legacy Michael Morris has been involved in the utilities industry since the 1970s and has held the position of CEO not only at AEP but also at Northeast Utilities System and Consumers Energy, and has witnessed some of the industry’s most innovative moments, with the latest round of innovation emerging with Obama’s Plan for America. However, his involvement in the industry is coming to an end, and for many he will be known for his

work behind the scenes, leading up the future structural reform. “My timeline will be up in 2011, and that’s pretty sad because, quite honestly, there’s no better time to be in this business. I’ve seen lots of ups and downs, lots of challenges, but we’re there. I had a chance to do what we call the University Listening Tour throughout much of 2008, and I went to campuses from MIT in the East, Stanford in the West and many in between. The young men and women who are being educated on campus today see this as a challenge. They are technologically advanced compared to where my generation is, and they are up to the challenge. So I’m a firm believer in the creativity of the American way of doing business.

“Today’s economic recession/ depression is nothing compared to where we’d be if we didn’t have energy to fuel the massive productivity of the world” “Silicon Valley is working on solar power, which is great news. It’s currently working on retrofitting existing transportation vehicles to make them plug-in viable or multi-fuel viable. You're seeing a tremendous amount of capital being invested in renewables and a lot of capital being invested in what to do with carbon when you capture it. The whole capture storage idea is logical, but it’s silly when you think of it. You ought to capture it; you ought to take the CO2. O2 is very viable and valuable; C is very viable and valuable. Let’s figure out the energy equation because today it’s more energy to split them than it is to capture them and store them, but that doesn’t mean it’ll be that way tomorrow. As I call them out of due respect, ‘the kids’ on campus will help solve these problems as we go forward, so it’s a great time to be in the business. “I’ve had the enjoyment of four very unique, different career stops along the way,” he says. “I had 12 years in the gas business. To this day, people will bump into colleagues and say, ‘Oh, I knew Mike back at American Natural Resources, and he was always a fair dealer and honest guy,’ and those kinds of things. And then three utilities: the biggest utility in Michigan, Consumers Energy; the biggest utility in New England, Northeast Utilities; and now the biggest utility in the United States. If along those ways I’ve touched some lives and made some difference, that’s plenty of legacy for me.” Michael G. Morris is Chairman, President and CEO of American Electric Power Co., Inc.

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FUNDING

POWER POLICY Will the American public embrace smart grid technologies or will they be a waste of millions of taxpayer dollars?

ow exactly the federal government will execute its overhaul of America’s energy infrastructure is a wellworn debate, and nothing less than controversial. The ambiguous ‘smart grid’ has become a symbol of America’s cleaner, greener future and the Obama Administration has made great strides with an early announcement of funding for installation of both grid upgrades and advanced customer meter systems. Yet, despite the incessant buzz, there is much uncertainty as to how this shiny new technology will fit into the current infrastructure’s allegedly aging and broken system. More importantly, there is great speculation as to whether

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it will be understood by the American public; will they care enough about its benefits to want to use it? Despite public opinion so far measuring low in terms of interest, the federal government is plowing on, certain of public enthusiasm once they see the benefits for themselves.

Federal funding The American Recovery and Reinvestment Act (ARRA), passed in early 2009, paved the way for the development of a smart electricity grid, promising an $11 billion fund. Following the historic blackout of August 2003, the government was keen to revitalize its reliability and empower consumers, reiterating its commitment during the GridWeek 2009 Conference.

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Treasury Secretary Tim Geithner (2-L), with Energy Secretary Steven Chu (3-L) and executives from renewable energy companies, delivers remarks after granting awards under the American Recovery and Reinvestment Act program in Washington, DC, 22 September 2009.

In a keynote speech at the conference on September 21, Energy Secretary Steven Chu provided some long-awaited details for the smart grid program. He announced a portion of the ARRA funding to be allocated to utilities for smart grid: more than $144 million would be provided for the electric power sector, $44 million of which was to be awarded to state public utility commissions and $100 million for smart grid workforce training programs. “America cannot build a 21st century energy economy with a mid 20th century electricity system. This is why the Obama Administration is investing in projects that will lay the foundation for a modernized, resilient electrical grid,” said Chu. “By working with industry leaders and the private sector we can drive the evolution to a clean, smart, national electricity system that will create jobs, reduce energy use, expand renewable energy production and cut carbon pollution.” Yet, how exactly this money was to be portioned, to whom and how much became a much talked about question. With almost every utility wanting a slice of the pie and submitting proposals, the Department of Energy (DOE) became inundated with requests. Utilities across the US are excited about the future of smart grid, and rightly so, but this is a com-

petitive playground; the entrants are multiple and, more importantly, involve a lot of big players. And it’s not just utilities competing for the prize; large solution providers, such as IBM, Accenture and General Electric have also bid for funding, making the smart grid program three times oversubscribed. So how will the funding be apportioned? The Obama Administration announced 100 smart grid grants on October 28, with an expected investment of more than $3.4 billion into development of the grid. The Department of Energy followed by stating that grants between $400,000 to $200 million will see the installation of more than 18 million advanced digital meters, bringing the nation’s total to approximately 40 million. Prior to the announcement, Steve Mitnick, a partner with Oliver Wyman’s energy and utility consulting practice, predicted that the allocation of funding would be based on a combination of the innovation of the utilities’ projects and politics. “You can’t leave the politics out of this, no matter how hard the DOE is endeavoring to,” he explained. “Naturally, the funding will be spread among states, among different types of utilities, of different geographies and different sizes.”

“We’re looking for operational readiness and innovation” Matt Rogers

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He was right. Out of the 400 projects that applied for funding, 100 received awards, spread across 42 states – in a clear attempt to diplomatically distribute the funding. Electric systems distribution funding is generally scattered across the northern states and integrated and/or cross-cutting systems funding generally along the south; and those central and southern parts of the country not awarded funding for electric transmission systems are provided with advanced metering infrastructure investment grants. However, the development stage of the projects was also a major influence in determining who required what. Matt Rogers, a colleague of Mitnick’s during their years at McKinsey & Co. and senior advisor to Steven Chu, describes these innovative projects as being “shovel-ready”: projects that are up and ready to go, needing only funding to move forward. However, Rogers explains that in return for funding, it is also the company’s responsibility to raise a certain proportion of capital, depending upon that company’s net profit and size. “We’re looking for technological readiness. A number of folks have great ideas but don't have technologies that are ready to scale. We’re looking for market acceptance,” says Rogers. “We’re looking for operational readiness and innovation.” Returning to Mitnick’s discussion of political influence, it is not necessarily those companies that are shovel-ready that have been awarded the government funding. In an attempt to keep the peace, the project awards appear to have been distributed on a geographic basis; but spreading the money too thinly may have a diluted effect on those breakthrough projects in need of greater funding and lessen technological progress.

BIG NUMBERS

“If all you cared about was shovel readiness and ‘moving the needle’ then you would come up with one set of winners. If you throw politics into that mix you come up with a different set; realistically it will be a little of both. For example, it’s not politically doable for the list of awards to come out and there to be very few winners in Republican-leaning states,” says Mitnick. The question arises as to where this leaves the smaller utilities. The precedent seems to have been set that the more capital raised, the more money will be awarded. The DOE’s funding to Solyndra of $535 million was only given

“You can’t leave the politics out of this, no matter how hard the DOE is endeavoring to” Steve Mitnick after the company raised $198 million, with a similar request to A123Systems. Analyst Eileen O’Grady reports that a dozen large utilities, including American Electric Power, CenterPoint Energy and Consolidated Edison, are asking for more than $2.6 billion, which exceed the $2 billion set for ‘big’ grants of $20- $200 million. Mitnick also notes that most large awards went to large utilities, but several large utilities did come up empty. Smaller utilities did receive funding too, but many lost to larger neighbors within their states. The rolling out of funding has been a relatively short process, surprising many who believed it would be long and arduous for the DOE. Despite the DOE’s commitment to announce the funding in fall 2009, many believed it would take longer because there was no precedent for a program of this scale. The DOE has never handled so many proposals or had so much money to be awarded at this pace in such a short timeframe.

Criticism

$3.4 billion

Expected federal investment into development of the smart grid

100 million

Number of smart grid grants announced by Obama Administration on October 28

18 million

Number of advanced digital meters that will be installed under the scheme

40 million

Total projected number of smart meters in the US as a result of the funding

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It is less than a year since Obama’s inauguration and the number of those waiting for him to trip up remains high, which he noted in his awareness of the presence of opposition to the scheme: “The closer we get to this new energy future, the harder the opposition’s going to fight, the more we’re going to hear from special interests and lobbyists in Washington whose interests are contrary to the interests of the American people,” he said. The opponents of the stimulus package are watching to see what blunders will be made in handling such a huge task. Among them are Republicans but also the general public. The Republicans in Congress and the states have criticized the administration for various reasons – as Mitnick puts it, “they’re looking for red meat, for serious missteps.” The DOE is certainly well aware of this. Moving fast whilst remaining cautious is a very hard balance to strike. Criticism of the program does not remain only within the walls of Congress, however. The polls have shown that the public is becoming increasingly skeptical of the stimulus programs, not just within the energy sector but also in healthcare. A poll by Real Clear Politics taken in October 2009 showed that the number of average Americans who believe Obama is leading

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the country in the right direction has dramatically fallen to 38.6 percent. So is the administration doing the right thing pushing this smart grid program through? The end result of providing the funds for the smart grid initiatives is, after all, the increasing of green consciousness in America’s homes and businesses, educating the country’s public in a bid to change how they consume power at different points of the day. “We can go through with all this great technology at the distribution level with advanced meters and smart appliances, but if at the end of the day the end-users in households and businesses remain relatively indifferent, then all that great information is not going to have much of an impact on consumption and peak demand,” explains Mitnick. “That’s the mega question. The question is out and there’s reason for some cynicism and skepticism, although there is going to be a lot of money spent trying to make this work.”

Green collar Having the public visibly see the benefits of the stimulus program is Obama’s golden ticket for approval. Tagged onto the end of the billion-dollar utility fund is the federal commitment to expand employment opportunities, adding greater weight to the President’s plans for a greener America, whilst simultaneously fighting the unemployment rates caused by the recession. During his unveiling of the ‘New Energy for America Plan’ in December 2008, Obama pledged to ‘strategically invest’ $150 billion into creating five million new green collar jobs. Mitnick notes that the money for these projects will be available within different sectors of the energy industry and for a number of years to come. The complete stimulus package funding will not be spent solely on smart grid. “Undoubtedly there are going to be a lot of people working in different parts of the value chain, and you are certainly creating jobs through the energy efficiency monies. There are over $5 billion from ARRA funds for energy efficiency, as well as some of the other project areas, which amounts to a number of jobs,” he explains. Tom King, Director of the Energy Efficiency, Renewables and Electricity program at the Oak Ridge National Laboratory, explains that a number of individuals can be trained to install PV panels on commercial buildings or residential homes. King advises that Obama’s $150 budget for green collar jobs would best be spent on smart grid implementation: “If there were the initial funding to look at smart grid operations and deploy these technologies, then consequently staff would have to be trained to install those. This would work hand in hand with an increase in manufacturing demand, so there would also be such companies having to produce the smart meters.” But whether the creation of green jobs will ease the American public into consuming energy more efficiently remains to be seen. We will not know for quite a number of years if Obama’s Administration is revolutionizing the country’s energy infrastructure and changing the philosophy of how energy is perceived and used, or, to borrow a phrase used by Mitnick, whether they are simply building bridges to nowhere. When the speeches have died out and the policies have lost their novelty, only then will the value of all the money that has been spent be properly evaluated. What was the value of adding so much intelligence and information at the distribution level available to customers about their energy consumption? Did customers make use of that information and significantly change their energy usage habits? “Those are the big questions,” explains Mitnick. “The price of natural gas has moderated in the US. Natural gas prices dictate the price of electricity to

a large extent, especially how the price of electricity varies from the peak of the day to the middle of the night. If you have moderate natural gas prices, then the price of electricity won’t really vary as much between the peak of the day and the middle of the night. Consumers will see this information, but will that make them even more reticent to change their habits and moderate their energy use during the peak of the day?” Obama’s smart grid policy is no longer the issue; it has been approved and will be implemented soon enough. However, not everyone is convinced. The jury is still out and only the American public themselves will decide whether or not the program has been a waste of millions of their tax dollars. How well the program is implemented is also very much the responsibility of the state regulators who will deem whether or not the utilities can charge different prices for electricity in the peak of the day versus at other times. So far, regulators have generally been reluctant to allow variation in electricity prices, and as Mitnick notes, “You can have all the advanced meters you want, but if the price of electricity doesn’t vary, the customer can do little with that meter information.” How the smart grid stimulus program will fare is not an analysis or judgment that can successfully be made right now. Unfortunately the Administration must implement in full its program before we can see if it is understood and accepted by the public. And during this time, it is not only the Republicans in Congress that will be watching to see if the Obama Administration is successful, but also the entirety of America and the rest of the world. n

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ASK THE EXPERT

Going green Alex Brisbourne explains how M2M applications can help companies to become greener and more environmentally conscious while still boosting revenues.

oing green is not just for tree-huggers anymore. The machine-to-machine (M2M) communications market, which uses wireless networks to communicate in real-time with sensors embedded just about everywhere, is enabling organizations worldwide to save energy, water and natural resources, create efficiencies and boost revenues. Exploring real world deployments of green M2M networking requires developing a better understanding of how wireless technology and sensor networks are making the world greener with innovative M2M applications that conserve energy, save water, preserve resources and drive additional revenues. Solution providers in a variety of industries, such as resource management, utilities, the public sector and agriculture, are developing and implementing profitable M2M green applications today. Wireless technology is a core component of green initiatives around the world. Real-world examples of companies becoming more energy and water-use efficient and/or environmentally conscious with M2M applications include using M2M communications for trash management. Instead of hauling trash, companies can better manage it by determining the best way to handle the waste and scrap coming out of their businesses. With devices installed on or near a trash compactor control panel, companies can record and analyze compactor activity, energy use, safety door switches and pickup and return. From there, the collected data can be wirelessly relayed from any location, helping to reduce costs and the environmental impact of trash. For example, American Trash Management implemented a wireless M2M solution that

relies on remote sensors to monitor containers, premises. In practice, the AMI simultaneously send notifications and receive and process usage provides a higher level of service and reduces information. This data is uploaded to a centralmany hard and soft operational costs required ized business management system for highly for service. Consumers can monitor electrical effective and scalable waste management. With usage in real-time, while the utility can identify increased scheduling efficiencies and optimized and correct service interruptions more quickly, truck rolls for fuel and maintenance savings, and improve efficiencies in the meter reading this has yielded both cost savings and increased process, billing and customer-service operacustomer satisfaction. tions as a whole. The meter data is backhauled Another example of companies becomacross the M2M wireless network within a ing more energy and water-use efficient and/ secure IP VPN. As a result, the utility elimior environmentally conscious is using M2M nates approximately 7200 truck rolls per month communications for water management. Adfor every 100,000 meters deployed, yielding a vanced wireless water management devices substantial direct savings, customer satisfaction can monitor irrigation improvement and carbon schedules and water usage footprint reduction. like never before to proHowever, this barely vide just the right amount scratches the surface of of water to keep landscapes the potential for innovahealthy. Such a system can tive networked applicacalculate and control irtions. Within a few years, rigation on a ‘just-in-time’ hundreds of millions of basis, using real-time data wireless devices will be from weather forecasts and attached to digital cellular just-passed weather events, networks, quietly performwater evaporation, plant ing the things we want transpiration and sub-soil them to do in our quest leakage. Many organizato be more cost efficient, Alex Brisbourne is President and COO of Kore Telematics. He has over 20 years’ tions, including the State safer and more responsive experience in the telecommunications of California, better reguto our customers. And it industry and was personally involved in launching the ﬁrst 2.5G GPRS network late their water usage levels doesn’t stop there – reguin North America. He sits on the Advisory Board of several technology and irrigation schedules latory initiatives will drive companies in the USA and Canada. using M2M. adoption of wireless-based Using M2M for smart data gathering and remote grid monitoring is another example. A large control applications in the environmental, electric utility in Arizona is at the forefront of a energy and safety arenas. For all of these reagrowing national trend toward smart metering. sons, the M2M market grew significantly over Their automated metering infrastructure (AMI) the course of the past two years, and is ideally deployment consists of M2M data communicapositioned to continue this growth over the tions to and from electric meters at customer next five years.

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TECHNOLOGY

Balancing the load Mark Case of Baltimore Gas and Electric tells Power & Energy why the company plans to use its smart grid program to cope with rising energy demand. 50 www.nextgenpe.com

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n 2008, Constellation Energy’s subsidiary, Baltimore Gas and Electric (BGE), conducted two related pilots, the first being a deployment of 5000 smart gas and electric meters to test performance functionality – analyzing their communications and ability to interface with the company’s outage management systems. The fi rst was hugely successful; the technologies used produced the outcome that was intended, allowing BGE to hit their performance targets of a minimum of 99.5 percent hourly reads for the advanced meters, and set them in good standing to begin the process of implementation of their smart grid system. Mark Case, the company’s SVP for Strategy and Regulatory Affair, outlines a related piece of the pilot that tested dynamic pricing for 1300 BGE residential customers. “We were measuring customers’ willingness to reduce usage during peak periods in exchange for the opportunity to earn rebates on their bill,” he explains. “We tried out three different pricing structures: one that was called critical peak pricing, which provided a very high price for power during the peak hours and then a discounted price for power during the non-peak hours. Typically, we were looking at the window of 2:00 p.m. to 7:00 p.m. on the 12 hottest, highest demand days last summer. “The other two pricing structures we tried were both rebate-based. The low rebate level was $1.16 per kilowatt-hour, and the high rebate level was $1.75 per kilowatt-hour. We used smart meters to measure how much would customers reduce their usage during those 12 hottest, peak-demand days, between 2:00 p.m. to 7:00 p.m. How much would they reduce their usage below their otherwise baseline level? How much would they reduce in exchange for the opportunity to earn those rebates? “We found that customers were very enthused about the program. We had an average saving per customer of better than $100. More than 95 percent of the customers did take action to reduce their usage on at least a few of those peak days, and the overall

satisfaction rating at the end of the program was 93 percent. A strong majority of customers wanted to be able to continue that sort of program going forward, so that gave us a lot of confidence and data with which to build our business case for the full deployment of AMI, knowing that customers had demonstrated in a very strong, compelling fashion their interest in these opportunities to lower their bills and help reduce the need to build new power plants,” he explains.

Education Case explains how BGE enrolled its residential customers through a random selection process in order to produce statistically valid results of the pilot; this is important because if customers were able to self-select their interest in the programs, then bias could occur within the data. All demographics were taken into account – income, age, location and so on – and once the customers were enrolled, BGE produced an informative package explaining how the pricing structure worked, how customers could take advantage of the real-time pricing options and how they could earn rebates during these peak periods. “It could be things like making sure lights or electronics that are not in use during those hours are shut off,” says Case. He notes that many of the company’s customers tended to reduce their air conditioning load. By notifying customers the evening before a peak event, via a phone call, text or email, customers would receive the price signal and reduce their load manually. He adds that come customers only got the price signal, whereas others also had a switch on their air conditioning unit that allowed BGE to cycle the air conditioning pressure on and off during the peak periods in order to reduce the load. “We found that for customers that had the price signal and no additional technology, their typical reductions range from 22 to 27 percent. Customers that had the price signal and the incentive along with a switch on their air conditioning unit, would save up to 37 percent, so much higher numbers.

“A 25 percent reduction in overall peak demand equals a lot of new power plants we don’t need to build”

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“We also had a third group of customers who had an in-home display device, a product called the ambient orb. It is a little frosted glass ball around the size of a soft ball that was plugged in and sat on the kitchen counter. We then sent a radio signal to that to indicate when a peak period was occurring. Normally the orb would be glowing green, and then as we approached a peak event it would begin to pulse in color, and then as we got to the peak event, we would light it up red to provide an additional indication that we were in a peak period. We found that the combination of pricing information and incentives, and in some cases the additional technology, was very effective in reinforcing behavior,” Case explains. He cites the challenges that residential customers have faced in light of the economic recession that have contributed to the success of the pilot program. Customer participation was high and interest was robust. The rise in energy prices in Maryland over the last few years has also had an effect on the behavior of BGE customers. The focus of the state on better managing and controlling energy costs has reflected on to the customers, and more than 95 percent of the customers took action, not necessary on all 12 days of the pilot, but on enough for them to earn a rebate. “After each event we would send them a report letting them know how much they saved or in a few cases didn’t save. Then as the next event would come along a week or two later, that tended to reinforce that positive behavior. Maybe on the first event the average savings was about $7 on that day per customer, but by the time we got to the second and third, that number had gone north of $10 to $12 per event. There was really a lot of interest in it. Tougher economic times and higher energy prices encourage this sort of program even more.”

Project actualization Following the success of the pilot, BGE fi led with the Maryland Public Service Commission in mid-July to begin rolling out its smart grid and meters across its service territory, a total of two million. The fi ling was due to be heard in November, with a decision being issued by the end of 2009; if the approval is reached, BGE hopes to begin the project in 2010, with the aim of completion within four years. Phase I will launch the soft ware applica-

tions: the meter data management system that will capture the hourly data for two million of the company’s customers and feed it back into the billing system. Case adds that this phase will also involve integration with outage management systems. “One of the benefits of smart metering and smart grid is that the meters will send a signal back to BGE letting us know if a customer loses power, so we’ll be working on those integrations,” he says. “We’ll start a pre-deployment mode of the meters in the second half of 2010. We will probably have somewhere close to 15,000 meters deployed next year and then begin the very intense installation process in 2011 through to 2013. “We have projected that the combination of our smart grid and what we call smart energy pricing, which is another word for dynamic pricing, along with our demand response and energy efficiency programs, will reduce peak demand by more than 1700 MW. For BGE, that’s around a 25 percent reduction in overall peak demand, which equals a lot of new power plants we don’t need to build in order to meet growing demand. It also improved overall reliability because with the same level of resources

faster, and therefore restore service faster,” explains Case. He, as well as the leadership of BGE, understand the direction the industry is taking regarding smart grid – the Obama Administration’s stimulus package will provide up to $5.5 billion in federal grants to help stimulate smart grid projects, such as the one BGE is hoping will be approved. The company has recently submitted its application to the Department of Energy for a $200 million grant for smart grid deployment, and if successful this is sure to accelerate the pace of the project. “There’s a lot of economic development in job creation that goes along with smart grid. It will allow us to bring the benefits of smart grid to our customers even faster,” Case says. “Ultimately it lowers the cost of the project. BGE’s project is estimated to be about $500 million, so a $200 million grant from the federal government would help to significantly lower the cost to customers of implementing smart grid. I believe it’s going to be successful and BGE’s customers are going to benefit in a number of ways. “In total, we have estimated the savings from smart grid at $2.6 billion over the life of

“Tougher economic times and higher energy prices just encourage this sort of program even more” and a reduced demand, this is a region that has been worried about the potential for reliability problems in the next three to five years. By taking advantage of lower cost ways to reduce demand, we improve reliability significantly. “Secondly, at a more local level, by virtue of the advanced meters notifying BGE’s outage management system when an outage occurs, it allows us to quickly capture the scope of how large the outage is, diagnose what the probable cause is and then dispatch the right amount of crews. We no longer have to rely on a phone call from a customer to let us know that they’ve lost power at their home; we will be able to diagnose the extent of an outage and cause much

the new meters. The benefits to customers include significant savings on their energy bills, significant improvements in reliability and a great deal of environmental benefits through reduced carbon emissions. We will also gain the ability to accommodate greater levels of renewable energy and to accommodate plug-in electric vehicles as they begin to develop and deploy, as well as a number of service-related benefits in terms of outage protection and doing away with estimated bills and then the economic development benefits. There’s a whole robust set of benefits that will accrue to customers and we’re very enthused about it and believe it will be successful,” he concludes.

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TECHNOLOGY

RISE OF THE MACHINES

How Southern California Edison is developing and deploying cutting-edge technologies.

ederal and state policymakers may only just be recognizing the need for an advanced, more robust electricity infrastructure, but Southern California Edison is already ahead of schedule. Th rough a system of integrated high-tech digital devices across transmission, substation and distribution systems, Southern California Edison is positioning itself as the solution of future energy needs. As the company’s VP of Advanced Technology, Paul De Martini is using all of his expertise to optimize the company’s electric services as well as empowering its customers to make informed decisions. His previous role at ICF International makes him more than adequately equipped for the role – at the energy and environmental consulting firm, De Martini was responsible for assessing emerging energy demand and response and other grid-based technologies, and working alongside government officials, regulators and utilities to actualize their adoption. He was also responsible for helping companies develop business models in emerging markets and creating market opportunities for utilities to deploy these technologies. President Obama’s economic stimulus package is influencing the industry at its core. The target to create five million green collar jobs and the pressure it is placing on utilities to adopt this strategy is infiltrating almost every business model, making it essential for a good model to now incorporate environmentally conscious strategies. De Martini explains that this shift in focus is what was driving his work at ICF. “That’s one of the strengths of ICF International,” explains De Martini. “The environmental dimension was a big component. “At the time, they were the principal manager for the EPA’s Energy Star Program, so there was a lot of focus on the environmental dimension and how that was evolving into the marketplace in terms of adoption of these technologies to achieve a better outcome. As translated into Southern California Edison, the work that I was doing first on the smart metering program was an extension of that, because the smart meter program was driven by a need to reduce overall peak demand on our system. “Some of the work I had done previously was looking at smart meter technologies and in understanding how to look at the utility marketplace, but the smart meter program examined how we benefit as a utility in terms of building a robust business case. It addressed how we maximize the value of a smart meter technology and work with the vendor community in the

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industry to develop a better technology product, and we have ultimately selected Itron as part of that process,” he says.

Customer programs Southern California Edison’s smart metering program, Smart Connect, is what De Martini describes as a fairly broad program: it incorporates the deployment of five million meters to the company’s small commercial and residential customers and operates to enable dynamic pricing and energy information for said customers to take advantage of, choosing how and when to use energy. He also notes the energy conservation benefits, which are derived from operational efficiency from the utilities and are already more than substantial. “The benefits are utility operational efficiencies, with other benefits related to peak demand reduction, through load control programs, voluntary smart thermostat programs and dynamic pricing options for our customers,” says De Martini. “Energy conservation benefits from our customers also play a part: them having the information and understanding and changing their behavior in terms of how much energy they use. “We have around 375 thousand customers signed up on a program that gives us real benefit in the summer when we have the peak on our system to reduce their usage. We realize, though, that we need to take this further, and part of that effort is to think a little differently about this and bringing some additional insights. “We engaged IDEO who do a lot of product and service design in the consumer marketplace and they helped us think about how we have an opportunity with changing these meters. For the fi rst time in a very short period, we’ll have an opportunity to reset our relationship with our customers and communicate with each of them individually on a proactive basis, which will be five million customers in 10 years’ time. So we have an opportunity to start a new journey with them on how they can manage all the choices they’ll have in terms of managing their energy use, which will allow them to save money, ultimately, and create a positive difference for the environment,” he explains. Southern California Edison has been working behind the scenes getting the back office systems ready so that when the meters are deployed they are fully function and can support the customer. “The fi rst step was getting the soft ware systems in place, then vetting the meters to through the testing process and then starting the mass deployment,” says De Martini. “Th is phase of the program is well under way. The meters are the most visible part, but there’s been a lot behind the scenes in terms of getting everything in place. It’s a big logistical challenge to deploy five million meters in three years, including building up the team to go out and swap the meters out in the field.”

Implementation In order to successfully implement the new metering system, the company has been working alongside other utilities. “We took an approach at the outset back in 2005 of adopting the open innovation model. We clearly don’t have a monopoly on all the best ideas, so we look at how we can work with other utilities in the US and internationally. We also look at how we can work with the various manufacturers of products, research universities and others, to get insights on how we shape this program, both in terms of

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“We’ll have an opportunity to reset our relationship with our customers and communicate with each of them on a proactive basis”

effective decisions based on the results, reducing the likelihood of large, wide-scale blackouts, as well as integrating intermittent resources, such as wind, more effectively. “On the demonstration side for research and development we’re pursuing two proposals, one regarding battery storage for wind integration and managing the transmission grid and system, and the other looking at a regional demonstration where we can link, for the first time, all these various concepts that we talk about in the industry, from plug-in electric vehicles, energy smart appliances, net-zero energy homes, distributed energy storage devices and now self-handling distribution networks. “This large list of opportunities are pretty exciting, and they may come in 10 years’ time or more in terms of being the standard way of doing business. We see the opportunity now to do a demonstration to understand what it takes to integrate those various components into a single system, and what that is going to take in developing reference design for how this might be then deployed more broadly over time.”

Battery storage

Battery storage, another arena connected to the grid, is also fast gaining popularity, and as car manufacturers have begun ramping up the level of hybrid designs, new partnerships are arising between the two. De Martini explains that lithium ion battery technology is the most promising “If we can get the manufacturing cost economies over time, it has the what the technology is – soft ware, meters, the program designs themselves performance potential to be used very broadly in a number of different – and how we propose the different rate structures for the dynamic pricing applications that could be beneficial from a grid management perspective. options and the demand response programs that we’re going to be offering, “That’s why we’re putting a lot of focus into that area. It has a nice and the technologies in the home. link in that the basic technology, the chemistry, and even the modules in “We’ve been working with a lot of consumer products companies come cases, are exactly the same as what will be in the electric vehicles. to help them understand how they can take advantage of the inforThere’s a nice synergy between the two so that we can drive down the mation that will be available to customers in order to offer competicost of the technology, which will make it even more effective on the grid. tive products directly. We see this as a broader ecosystem that we’ve We’ve been doing a lot of work at our electric vehicle technology center, been trying to be part of, recognizing that this is an enabling platform where we’ve been conducting battery technology testing for quite some and the means to the end, and how we work with others to do that. time. Th is is a center that President Obama visited back in the spring. So So right from the beginning and all the way until today, we’re quite proud of that. we have been working with companies like Microsoft “In terms of plug-in electric vehicles, we’re and Google, with the sort of products that they’ve inspending time on the partnerships that we have troduced this year to take advantage of this information with Ford and looking at how we integrate the veand enable our customers to achieve their objectives. hicles effectively into the grid, and at the same time The end objective being, of course, reducing energy use preparing for what we expect to be the launch of and also reducing our overall peak,” he says. this next generation of electric vehicles in 2011.” Southern California Edison began implementing He notes that the adoption of these new techthe beginning phases of smart grid long before it became nologies must generate significant consumer intera popular topic in the industry, but how will the recent est, and it is the responsibility of utilities to ensure federal focus and its smart grid investment funds benefit that they are prepared and ready for the time when the utility? De Martini notes that the company has parcustomers readily buy plug-in vehicles and use Paul De Martini is VP of Advanced ticipated in the two areas of funding available – investment them within the grid. Technology at Southern California Edison. grants and research and development. The futuristic approach that Southern California The company has partnered with other utilities in Edison is adopting is to ensure the customer remains the western United States regarding a technology called sychrophapivotal. This is a significant change in how the electric system is being adsor measurement, which will allow the group of partners to manage dressed and the company is in the process of building this future, not only the transmission grid more effectively. It will provide fast information in its smart meter program, but through its other capital investments. De during a short time period, and will allow utilities to monitor what is Martini describes the progression as, “The next generation of investments happening on the grid in near to real time. Utilities can then make more towards building a smarter grid.”

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INDUSTRY INSIGHT

Mobile workstations David Wilkinson looks at the beneﬁts of electronics mounting solutions.

AM Mounting Systems has set out to change the everyday approach to design. Offering a truly revolutionary product line, RAM addresses the obvious and not so obvious needs of fleet vehicles and the mobile professionals that use them. The creation of a mobile workstation in vehicles has been commonplace for years and is essential to the daily activities of fleets across America. RAM has dedicated significant resources to creating a truly unique solution for a common need. RAM Mounting Systems, a company known worldwide for electronics mounting solutions, has introduced the RAM ToughBox line of vehicle products. The evolution of a common fleet vehicle product has finally taken a huge leap forward. Up to 30 percent lighter than similar products on the market, the RAM Tough-Box vehicle console is functional and durable but without the unnecessary weight and bulk of comparable systems. Constructed of high strength composite, steel and aluminum materials, the RAM Tough-Box system has dramatically improved and increased the options when selecting a console system. Outstanding performance and a long product life are just a few of the initial benefits when choosing a RAM Tough-Box console system. Another key feature is the incorporation of molded parts, which create tight seams and eliminate sharp corners and edges. Th is helps to avoid contamination of sensitive electronics mounted in the console and assures that occupants aren’t injured in an accident by sharp edges and corners. Keeping in mind the

safety of the vehicle occupants, as well as ease Utilizing strategically positioned perforaof use and installation, these consoles were tions on the side plates of the RAM Angled crafted to meet and exceed expectations from Console, the box can be easily resized to acan operational and safety standpoint. commodate the exact needs of each specific In terms of dramatic change, an all-in-one vehicle. Using a standard set of tools, modifisolution can be a space saver but will likely force cations can be made onsite to reduce installathe user to sacrifice quality and performance. tion times and keep costs down. Beyond being Changing that perception is the goal of the new able to change the length, these consoles also RAM Angled Consoles, which offer openings for coolare part of the Tough-Box line of ing fans, accommodate products. The Angled Console is 12-volt power panels truly one of a kind. You will not for wiring accessories, find anything else like it on the and have a variety of market today. This new design is mounting hole patterns easily modified by the installer around the perimeter to use across a wide range of for mounting additionapplications. With a single part al items such as GPS or number or SKU, customers have cell phones. a product that is almost univerIn addition, the sal for a variety of fleet vehicles. Angled Console is deQuite often console systems livered in pieces rather are manufactured so the user than as a large, bulky David Wilkinson is part of the marketing and design team of needs to order the exact size to product. Th is equates to RAM Mounting Systems in Seattle, Washington. With a background in suit their needs. Factors which less shipping costs and science and technical writing, his affect the size of the console box inventory space which job is to assist in product design and advertising. Finding new markets include the number of devices all equates to saving and attracting new customers is Wilkinson’s focus for 2009. that need to be mounted, any money and time. Aloptional accessories required though these changes such as cup holders, arm rest or may seem almost insigprinter mounts, as well as whether a computer nificant, every penny saved is money that can or mobile data terminal needs to be mounted. go to paying salaries, advancing technologies This can equate to a logistical nightmare for and keeping Americans employed. Now more fleet managers or installers since there are times than ever it is important to consider these when they will not know what equipment needs facts and assure that decisions are made in to be mounted in the vehicle until the installathe best interest of the organization from an tion process begins. economic and operational standpoint.

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INFOGRAPHIC SMART GRID

THE DEVELOPMENT OF THE SMART GRID It is currently difďŹ cult for consumers to see how much electricity they are using. Smart grid devices are being developed to help consumers monitor and cut back their electricity usage, allowing them to cut down their energy bills and pinpoint off-peak hours in which to run their energy-intensive machines.

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INFOGRAPHIC SMART GRID

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ROUNDTABLE

Seamless integration into the grid Power & Energy talks to a panel of experts about the future of smart grid. With AT&T’s Kevin Jones, Malcolm Unsworth of Itron, Jim Hanson of Motorola Inc., Andrew A. Bochman of IBM’s Ounce Labs, Allan Breitmayer of Sierra Wireless and TELUS Business Solutions’ Roland Labuhn. What is your deﬁnition of smart grid? Kevin Jones. Smart grid is more than AMI or a self-healing electricity delivery system. It is a true transformation of how our utilities operate, support and touch their customers. The smart grid will require sophisticated enterprise-wide digital communications to enable the rapid transfer of data between smart meters, in-home gateways and utility back office systems where critical decisions will be made. Building a smarter grid could be equated to the effort required when telecommunication providers overhauled their systems to move from an analogue to a digital voice and data network. It will provide a new and better way to generate, deliver and manage our energy. It is possible that no one can truly comprehend the future benefits or capabilities of a smart grid. Jim Hanson. Within a smart grid, business critical information flows seamlessly among a utility’s wired and wireless networks to connect grid infrastructure, work teams, business processes and customers. The smart grid will use high speed communications to enable multiple smart grid data applications, including sophisticated energy management and control of transmission and distribution equipment, power quality, line and outage monitoring, and to support various load control and demand response programs at the customer level. This will provide real and near real-time connectivity throughout the utility enterprise to improve service delivery, overall productivity and energy conservation and will help to promote the increased use of renewable energy, resulting in a greener environment. While smart grid is machine-to-machine data-centric, it will also enable the utility to connect information about infrastructure outage, restoration conditions and problem areas requiring maintenance to its mobile workforce and customers, and in the process increase grid efficiency and improve customer service levels, resulting in an even smarter, connected utility enterprise. Andrew A. Bochman. As we say on our blog, the smart grid is a growing digital information network and modernized power generation, transmission, distribution and consumption system. Construction of the smart grid has begun, as it builds on the antiquated electric system that exists today. To this, utilities and others are adding modern computer and networking technologies that will give us a system in which power and information flows to and from all stakeholders. Essentially, the smart grid is made out of software. Functionality and applications we can’t even imagine will soon spring up as the data networks are established. And all this is being done in an effort to greatly enhance its reliability, efficiency, manageability and flexibility. Allan Breitmayer. Smart grids deliver electricity from suppliers to residential and commercial customers by leveraging the latest advancements in hardware, software and wireless communications. Wireless connectivity en-

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ables smart metering applications to measure, collect and analyze energy usage, from advanced devices such as electricity meters, gas and water meters on request or on a pre-defined schedule. This infrastructure includes hardware, software, communications, customer associated systems and meter data management (MDM) software. Meter data management and advanced metering infrastructures (AMI) are two critical components in today’s smart grid technology. Roland Labuhn. A smart grid is an electrical infrastructure that is overlaid with communications technologies, applications and services, and that supports efficiency, reliability, security, conservation and sustainability of our electrical system. The smart grid is the digitization of the entire power industry, transforming an electro-mechanical infrastructure to a system with widely distributed and integrated digital solutions. There are many different applications and services that help accomplish this transformation, and all those efforts are part of the smart grid. At the front of all this change is network technology. This transformation is similar to what public carrier networks experienced during deregulation of the telecommunications industry – our carrier networks are now very much aware, they are IP-based and extend into homes.

“The challenge in developing and rolling out a smart grid is successful consumer adoption of these applications” Allan Breitmayer Malcolm Unsworth. At Itron, we tend to agree with the seven characteristics of a smart grid as defined by the Department of Energy’s Smart Grid Task Force. These characteristics are: enabling active participation by consumers; accommodating all generation and storage options; enabling new products, services and markets; providing power quality for the range of needs in a digital economy; optimizing asset utilization and operating efficiency; anticipating and responding to system disturbances in a self-healing manner; and operating resiliently against physical and cyber attacks and natural disasters. Itron’s smart grid technology enables several of these characteristics, and plays some role in all of them. For this reason, we’re proud to say we’re offering technology that is foundational to the nation’s burgeoning grid. With major funding coming from Washington for smart grid initiatives, how do you see the grid developing in the near future?

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RL. We need to understand that we are in the early days of what will be a multi-decade smart grid journey. Digital solutions have existed in SCADA networks for many years, but we are now expanding the pervasiveness and depth of these services. In the short term, funding is driving a wide range of technologies that support several project themes: automated meter installations, IT security and network planning. These are critical, however. The challenge with these initiatives is that they can be treated as isolated events within and amongst utilities. In order to integrate this rapidly expanding universe of solutions, utilities are taking a step back and assessing how to manage them all. This includes examining the broader network, application and IT security strategies. In addition, the broader challenge of interconnecting utilities requires industrywide IT standards. The new NIST standards are promising and ZigBee has gained a lot of traction, but we’re not there yet. Finally, the pace of change in smart grid is forcing utilities to consider new creative partnerships. This includes working together with telcos and integrating public carrier networks into the smart grid. MU. The smart grid is about more than just communications, technology and energy systems allowing us to secure our future. It’s about a cultural transformation for the utility industry and all consumers of energy.

Imagine the change from rotary phones to 3G cellular phones, from pensions to 401(k) plans, from three analog television stations to hundreds of digital channels, all rolled into one. The ‘how’ of this transformation is overwhelming. Gathering and integrating real-time information about renewables, generation, transmission, consumer use and more goes beyond any challenge the industry has ever had to face. Applying what Itron has learned from working on the leading edge of utility innovation for the past 30 years has never been more important. We’re using our knowledge and perspective to help make utilities successful in a smart grid world.

“Utilities should benefit from real, measurable visibility into how, where and when energy is being consumed” Kevin Jones AAB. I see the grid developing sporadically. With the early closing out of the Smart Grid Investment Grant Program, the future build-out looks less smooth and certain than initially thought. What was intended to be a threephase investment program in new approaches to energy and grid manage-

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ment has become a two-phase program, and likely a single shot of stimulus funds. Billions of dollars of federal stimulus kick-started the process, but in some ways may cause trouble as systems are developed and deployed before the early smart grid standards have time to firm up. As the benefits of the early pilots begin to accrue and the value proposition comes into focus, stimulus effects will recede and good old investment will return. JH. With funding from the American Recovery and Reinvestment Act, many utilities will be able to accelerate their smart grid initiatives with the deployment of smart metering infrastructure, demand response technologies and alternative energy sources. To support these applications, utilities will require a robust and flexible communications backbone. A data communications network that provides reliable and secure two-way monitoring and control of data across a diverse geographic service territory and with a range of data latency and bandwidth requirements will be important to the success of the initial phases of development but will be absolutely critical to the future success of any large scale adoption. Utilities will not be able to rely on public networks exclusively and as a result they will look to deploying private smart grid communications networks to meet their service territory coverage, and operational, reliability and ROI requirements. With the deployment of additional monitoring and control applications, the grid will become increasingly integrated throughout the enterprise, from generation, transmission and distribution to the commercial and industrial businesses and the consumer home. As a result, the utility enterprise will need to develop an enterprise-wide smart grid communication network plan that provides the coverage, capacity, capabilities, bandwidth and security required to ensure a truly reliable smart grid.

“To support these applications, utilities will require a robust and flexible communications backbone” Jim Hanson AB. The grid is already seeing a strong trend appear in the development of renewable energy and energy reduction programs, being pursued through a large ecosystem of technology partners. The stimulus funding is fostering advancements in clean and efficient energy applications, and spawning the development of new partnerships between energy minded corporations. This stimulus is funding the co-development of smart grid applications in energy management algorithms, demand response appliances and advanced load control strategies. The challenge in developing and rolling out a smart grid is successful consumer adoption of these applications. Utility companies and their suppliers are going to great lengths to demonstrate to the public that these applications will help utilities better manage load and forecast demand, resulting in true cost savings to consumers. A fundamental goal within the framework of smart grid initiatives is the promotion and adoption of standards, which drive device interoperability. Those failing to recognize or adopt the evolving standards are going to be left behind with yesterday’s technology.

KJ. One of the primary initiatives is the increased interest in smart metering and some of that is taking place without federal funding; however, federal funds are likely to accelerate smart meter deployments. Since smart meters alone are probably not going to provide the consumer with actionable information or capabilities, the federal funds may enable demonstration projects that will help the industry to formulate, test and validate new theories and ideas, which will lead to breakthroughs in the generation, storage, delivery and especially the consumer management of energy. What beneﬁts will a smart grid provide for utilities and for consumers? AB. Smart grid and smart metering solutions enable utility companies to collect data on energy consumption and allow consumers to make smart choices about their energy use. Sierra Wireless works with companies to offer high-speed wireless technology that can enable applications, including power infrastructure manage-

Kevin Jones is an industry solutions practice manager with AT&T, where he supports smart energy initiatives across electricity, water and gas. He has over 20 years of experience in the IT, telecommunications and utility industries. Currently, he is focused on the communications and data analytic technologies required to support the next generation of utility ecosystems.``

Allan Breitmayer is Senior Manager, Marketing Americas at Sierra Wireless. An established veteran in the wireless industry, he has over 25 years of experience, commencing with Motorola’s Land Mobile Radio division serving the public safety and utility mobile data markets. Prior to joining Sierra Wireless, Breitmayer directed the distribution channels for Airbiquity, AT&T and @Road in the LBS/transportation verticals.

ment, meter data management, back-haul transmission, and distribution measurement and control. Other benefits include decreased costs to transfer and collect data, fast and secure information transfer, and improved distribution system planning by utilizing real usage data. JH. Smart grids will enable utilities to better manage their transmission and distribution infrastructure to more efficiently deliver energy and minimize outages, while providing the tools to consumers to monitor and understand their energy consumption patterns so that they can better manage their own personal energy footprint. The smart grid will create a much closer energy partnership between utilities and their consumers that will enable them to jointly manage both energy delivery and consumption, resulting in more efficient use of our valuable energy resources leading to increased energy independence and to a greener society.

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“Utilities cannot offer the same solution to everyone and expect the same customer satisfaction” Roland Labuhn RL. At a macro level, the benefits to utilities from smart grid are widely known and discussed. Utilities achieve cost savings from flattening peak loads and demand response, supply-side benefits from conservation and energy efficiency, and renewable supply with distributed generation of green power. Consumer benefits are much more difficult to assess and depend upon the pricing, technologies, billing and marketing programs that consumers experience. Utilities need more data on customer segments and what solutions consumers desire. In the telecommunications business, deregulation forced us to

A highly respected executive both domestically and internationally, with broad experience throughout the utility industry, Malcolm Unsworth was named Chief Executive Ofﬁcer of Itron in March 2009. Prior to taking up his post as CEO, he was Itron’s President and Chief Operating Ofﬁcer.

Jim Hanson is Energy and Utility Industry Director for Motorola’s Enterprise Mobility Solutions business. He has been in the energy and utility smart grid/AMI and mobility systems and solutions ﬁeld for over 20 years, having held senior management positions in operations, sales and business development.

deeply understand customer segments and the value/benefit consumers derive from various offerings. For example, the new millennials will likely want energy solutions that align with their current preferences, such as an iPhone, and older customers may not tolerate complex technology solutions. Utilities cannot offer the same solution to everyone and expect the same customer satisfaction. Maximizing consumer benefits requires creative discussions and partnerships between service providers, including telecommunications and power companies. MU. Too many discussions about the smart grid are being framed with only the world’s largest utilities in mind. The key players, of course, have a big stake in the grid’s future, but all utilities need to be able to access the grid and use it in ways that meet their unique objectives. We understand that there are common challenges all utilities face. We also understand that smaller utilities – like those owned by municipalities or co-ops – need smart grid benefits for themselves and their customers. This point hasn’t been discussed enough, but if we don’t meet all utilities’ needs, the smart grid won’t succeed. For consumers, the smart grid is creating new ways to understand energy use and behaviors. With this comes the development of new roles. We have moved from a one-way process to a two-way conversation. No longer will utilities send out energy and then collect data back to be used solely for issuing a bill. The smart grid allows us to deliver not just energy, but also pricing information, load data and knowledge to help consumers make smart, informed decisions. Utilities will gather not only billing information but also data about patterns of use, consumer preferences and much more. The information and data being delivered today are moving the needle towards changing behavior and ultimately shifting the way we think about and use energy.

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KJ. Utilities should benefit from real, measurable visibility into how, where and when energy is being consumed. Improved monitoring and communication with the various aspects of the transmission and distribution grid will likely assist in ensuring that vital energy services are available to consumers in a reliable manner. The conservation and demand-based pricing benefits have been well covered in a variety of publications, but utilities could also leverage insight from analytics and emerging forms of real-time customer interaction to build closer relationships with their customers. Consumers will likely benefit from the natural ecosystem of information services that will spawn from the availability of energy information. We’ll probably see rolling phases of technology introduction followed by cultural adoption. For example, previously expensive home automation platforms are likely to reach new price points that trigger mass adoption. This may transpire because the smart grid roadmap is likely to promote, through lower entry barriers, motivated individuals and groups to participate. The rate of innovation can be directly influenced by the cost to innovate.

“The smart grid is about a cultural transformation for the utility industry and all consumers of energy” Malcolm Unsworth AAB. For the utilities, smart grid is all about business optimization via the infusion of new types of previously unavailable knowledge on their customers’ usage patterns, on the parts of the transmission and distribution system that affect them and on their own systems. Where once utilities viewed their roles as relatively static, they will now achieve performance and business improvements by being proactive – an entirely different mindset. For customers of all sizes, from small households to international enterprises, the benefits are several, but mainly revolve around the fact that they no longer have to be completely passive. Most household customers don’t even know their electrical utility provider’s name. This will change when some of them begin generating their own electricity and via net metering, start selling it back to the utility. What types of technologies and solutions can utility companies use to ensure the seamless integration of smart grid into their operations? AAB. There is no way to ensure integration with a system that’s still in its infancy, whose business models are still forming and for which most of the standards have yet to be formulated. What a utility can do at this point is watch, listen and learn. Watch the pilots and the standards committees’ drafts and early standards, listen to what their customers are saying, learn from everyone, and possibly build on existing systems and keep their options open. The smart grid won’t work if organizations view it as something completely new, a project that they can adopt wholesale, which will somehow not be intimately connected to their existing infrastructure. Evaluate any new smart grid project or investment with a sensitivity to the way in which they operate now, so that new projects will enhance, not endanger, the core businesses of managing or delivering power. In a market where development is in its infancy, it’s impossible to project the detailed direction of new technologies. It is the nature of something

so new to be extremely dynamic and volatile. As such, the best plan is one that starts with what is stable and known. Then evaluate and adopt new components in ways that can be understood and partitioned, until they themselves become more mature and mainstream. JH. Increased use of standards-based smart meters and intelligent electronic devices (IED) in the transmission and distribution system coupled with standards-based wireless wideband and broadband communications technologies will foster the migration to new smart grid solutions that will still need to be interoperable and compatible with legacy grid equipment and back office management systems. At the same time, these technologies will help to provide a stable platform to support the growth of future smart grid devices like smart thermostats, distributed generation, PHEVs and alternative energy sources like solar and wind power. MU. Hardware, software and standards must work together. Clunky, ‘patchwork quilt’ solutions will fail. Sometimes patches can be a good thing: a mended hole in a garment; a band-aid that helps a wound heal. By definition, a patch is a temporary fix, a short-term solution. But imagine an energy grid where functions along the network were patched together and incompatible. Itron has seen firsthand what happens when incompatible hardware, software and communications are shoved together. It doesn’t work, and we can’t afford to make that mistake: the stakes for the smart grid are too high. We need solutions – hardware, software and communications – that work in concert to deliver reliable energy at the lowest possible cost. KJ. In the past, utilities often owned most of their communications systems. Field service was handled through proprietary wireless systems. Often these systems in their current form are obsolete and upgrading them is difficult, expensive or not an option. Furthermore, due to their proprietary nature, interoperability is at risk.

Andrew A. Bochman is an energy security lead at IBM and contributor to government and industry working groups on energy and cyber-security issues. He is the founder of the Smart Grid Security (http://smartgridsecurity. blogspot.com) and DOD Energy Blogs and is an active member of the MIT Energy Club. Bochman was formerly Customer Advocate at Ounce Labs, an IBM company.

Roland Labuhn is the Vice President of TELUS Business Solutions’ energy sector, serving the oil and gas, and utilities markets. He joined TELUS from Quorum Business Solutions where he was President of Quorum’s Canadian operations and has 10 years of experience in the energy practice at Deloitte, delivering strategy and operations leadership.

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“Where once utilities viewed their roles as relatively static, they will now achieve performance and business improvements by being proactive” Andrew A. Bochman As the deployment of smart meters and other monitoring devices on the smart grid becomes more widespread, they will have to be controlled and managed. Bandwidth and latency factors will also have to be carefully considered, especially if a utility intends to use private networks with a limited amount of frequency spectrum. A paradigm shift toward national and international communications interoperability already has occurred – one example is with the GSM standard on which the AT&T network is based. GSM is a global communications technology that is deployed in over 200 countries and has over three billion users worldwide. The good news is that this enabling technology already exists to help utilities communicate throughout their enterprise and service area. With the availability and scale of public networks like AT&T’s, it is no longer practical for utilities to cobble together proprietary communications systems with varying standards or different functional purposes.

Examples of Sierra Wireless’ integrated smart grid technology include smart metering or advanced metering infrastructure (AMI) applications where partners use embedded products to provide two-way communication at either the meter head itself (under glass) or in a private RF mesh network using wireless concentrators backhauling data over the public network. Demand response is another example: embedded modules and M2M solutions are used in large retail and wholesale customers to monitor and control their system loads within the smart grid network. In times of peak demand, air conditioners and other high energy consuming equipment controlled under the DRM host would receive a wireless message requesting them to curtail or reduce their consumption. These solutions provide valuable options for utilities with diverse metering data collection requirements that can vary by cost, coverage, urban density or other unique deployment challenges.

AB. Wireless technology for smart grid deployments should include ruggedized devices compliant with industrial environment specifications, cellular IP connectivity, RF integration expertise, open platforms and remote device management capabilities. Sierra Wireless offers a diverse product portfolio of high speed embedded modules and wireless gateways enabling the collection and distribution of information to customers, suppliers and utility companies, allowing businesses to either participate in, or provide, demand response solutions, products and services. Providing information to customers, the system advocates a change in energy usage from their normal consumption patterns, either in response to changes in price or as incentives designed to encourage lower energy usage at times of peak-demand periods or higher wholesale prices or during periods of low operational systems reliability.

RL. Effective integration requires defining long-term IT strategies that consider all solutions as part of that plan: network standards, applications impacts, gap assessments and IT security strategies. There is much debate today in the power industry regarding network standards. Is the future IP/MPLS based? What role will legacy networks, such as Sonet, play? Our experience over the last decade is that IP/MPLS is where we have brought our networks and it is where utility networks must go to enable a truly smart and aware grid. However, migrating towards this future vision requires a pragmatic approach, and accepting a realistic time frame to transition to this future state. Achieving seamless integration of the smart grid is a journey that requires the setting of ‘big bet’ IT strategies now. Our belief is that widely accepted standards, such as IP, will be a critical element of any long-term plan to achieve seamless integration. n

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3/11/09 11:00:42

SECURITY

RISK ASSESSMENT Annabelle Lee of the National Institute of Standards

and Technology explains the organization’s role in creating a safe and reliable telecommunications infrastructure.

s utilities countrywide begin implementing the early phases of their programs on to the grid, security of information is becoming increasingly important. Following the Energy Independence and Security Act of 2007, it is the responsibility of the National Institute of Standards and Technology (NIST) to develop the framework of information for the interoperability of a smart grid system, and with the support of the Obama Administration’s American Recovery and Reinvestment Act, the institute has been assigned $10 million to ensure successful implementation. Security of information is essential to safeguarding against natural disasters or hackers and ensuring seamless operability of the system.

Security focus As Senior Cyber Security Strategist, Annabelle Lee has the responsibility for organizing a team to develop the grid’s safety. Her team was first formed following the 2007 legislation, during a time when NIST had no real focus on security. She established the Cyber Security Coordination Task Group, which only had its first teleconference in March this year. Lee explains that her first task was laying out a strategy defi ning a set of security requirements for the overall grid, which was done using a high-level risk assessment framework, looking at threats, vulnerabilities and impacts. “I put a call out to all of the people here at NIST to request participation in this task group from anybody who is interested in cyber security. The current participation list is unbelievable – around 240 people. It is from all three sectors: the electric sector, IT and telecommunications and

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all levels up to chief technologies and chief security officers. We also have representatives from federal agencies, from state regulatory agencies and from academia; so it covers all people who are interested in this area. Our schedule, like all of the NIST work, was with our new administration and the significant push on the smart grid.” The group is a collection of individuals committed to the development of smart grid security – everyone volunteers and there is no additional salary involved. It published its first draft document in September which involved the creation of an overall strategy. As security is an area involving multiple cost resources, the report is a risk assessment justifying the requirements and explaining the importance of these. “There’s one section that looks at vulnerabilities, and we utilized a lot of the work from the IT and telecommunications sectors,” says Lee. “We looked at a lot of the material that’s available from NIST, other federal agencies and other standards bodies, and came up with a set of vulnerability categories that we will use when we put together our requirements to make sure we’ve addressed them. We want individuals who are implementing their systems within the smart grid to be able to use that material.” The big issue in implementing the report is the overlaying of these new requirements and countermeasures on top of the existing electric infrastructure – certain pieces of equipment are almost 40 years old. “They have limited or no security, so we need to figure out how to include security without requiring the different organizations to go out and replace all of their equipment, which would be incredibly expensive. “The time frame for some of these large transformers is a couple of years. You can’t just go out and get it tomorrow, so we are going to be looking at some potentially compensating controls or a way you can address this, recognizing that some of this old equipment doesn’t have security in it. That will be interesting and we’ll have to wait and see how that works out.” She continues by explaining the report’s responsibility for educating those who will be following its guidelines – a bottom up group is in charge of looking at very specific issues starting from the very low level. “They’ve put together another excellent list that will be used in assessing the requirements but that can also be used by individuals implementing systems. So those two sections are unique, as we will use them in our document but we also want to make them available to individuals who actually have to implement security in the smart grid. “In the document itself we have an overall risk framework and then we have a section on privacy – if there is more capability and more intelligent devices in individuals’ homes, then there’s going to be data that

will be provided to utilities and other third-party organizations. How do you protect that information?” Each of the various groups working on the report has a weekly teleconference. When they believe their developments have reached a certain level of quality, they then distribute them to the entire task group. The groups also work alongside affi liations to provide more accurate requirements. “On the logical interfaces, there were previous NIST workshops for the smart grid; the Federal Energy Regulatory Commission identified four areas that they believed should be emphasized first under NIST’s work. So we took those four areas and there were two additional ones: the advanced metering infrastructure and distribution grid management. The working groups at the workshops put together diagrams, identified all of the interfaces and did a couple more reviews of them and then put the interfaces in categories. “We have to identify requirements at the interface level, so if we took every interface individually we’d have to come up with 200 or 300 sets of requirements. That’s not realistic. We can group those interfaces into categories, and we have just had our first teleconference to look at these categories. We have 15 or 16 now, but the number will probably go up and down as we work a little further. We will identify the security requirements for interface categories, which will make it a lot easier,” says Lee. One group that Lee’s team worked very closely with was the Advanced Security Acceleration Project smart grid, initiative partially funded by DOE as well as by several private sector utilities. They’re focusing on the AMI as many of their members participate in NIST’s task group, and as a result many of their requirements have been included in Lee’s document. For its starting point NIST is using a document that was produced by Homeland Security, ‘Special Publication 853’, and was tailored for control systems that slightly differ from a typical IT system. As well as this, NIST is also collaborating with the North American Electric Reliability Corporation (NERC) and the Critical Infrastructure Protection (CIPS), looking at documents and standards that are already published and implementing requirements from these. The combination of this selective information has been carefully processed into the first draft of NIST’s document, which was placed on the website for a 60-day review, with the intention to have another on the next draft. The first draft is a functional architecture, to be followed by a security architecture in the December second draft. The schedule for the finalized version of the document is due to be released in March, and with such a short time frame Lee’s team are working hard to keep up with the pace at which smart grid technology is moving, to ensure that security is included in its deployment.

“We need to figure out how to include security without requiring the different organizations to replace all of their equipment”

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INDUSTRY INSIGHT

often referred to as a services gateway, which provides connection and network management as well as back-end enterprise application support, becomes a critical element of your system deployment. The best services gateways include capabilities that accelerate system integration by taking care of issues such as device applicaServices tion programming interfaces (APIs) that have Gateway a steep learning curve. These capabilities make it possible for the utility to focus on the ‘business logic’ that must be programmed into their soft ware rather than learning how to communicate with devices and manage them. Simplified device configuration and/or provisioning is also a key element to look for in creating a flexible, long-lived solution. Incorporating the capabilities such as provisioning groups of devices at one time, utilizing built-in reporting, configuration profi les and network management in a user-friendly GUI can help ease the typical pain points of deployments. Once the system has been designed, built Jeff Newman explains the importance of implementing and deployed, ongoing maintenance comes into wireless technology into the energy grid. play. As needs change, it is sometimes necessary ith billions in stimulus standardize on a stable technology and retain to update or reconfigure these devices. This dollars committed by the backward compatibility throughout the multibecomes feasible with capabilities that make US government, as well as year deployment of systems. Utilizing the it easy to deliver firmware updates, soft ware governments across the internet backbone and internet protocol (IP) to upgrades and other necessary device changes. globe, the energy grid is fi nally getting the standardize how systems Perhaps it’s just changing the relong overdue attention to update and moderncommunicate has enabled porting and/or business logics for ize the infrastructure. Whether supplying or significant reductions in triggering specific events, but it’s consuming energy, bringing more real-time maintenance and deploybeing able to do so in a mouse click information to everyone arguably improves ment time. versus complex programming. decision-making, thus leading to operational In the wireless world, The service gateway manages and efficiency and customer satisfaction. there are many nuances maintains complicated session Many utilities are incorporating wireless with the various netand device management logic for communications both at the meter and at works. Standardizing on how devices are utilized. points throughout the network to remotely do packet-based connectivity The second part, and perhaps meter reads, monitor sensors/sites, as well as can provide the bridge to more importantly, is getting the set triggers to improve information flow and bring together new and information securely from these Jeff Newman joined Enfora in June visibility. However, managing a multitude of older systems in a cohesive wireless devices back to enter2001 as Vice President of Business connections from multiple technologies – PLC, manner. However, in an IP prise applications and databases Development and recently added the role of Chief Strategy Ofﬁcer. cellular, RFID and others to name a few – creworld, you fi re and forget. for real-time decision-making. A As CSO he is responsible for setting corporate strategy and identifying, ates a challenge unto itself. The ultimate goal Your application shouldn’t good service gateway will autodeveloping and managing new is being able to manage large-scale wireless have to keep track of matically organize and parse the business opportunities for Enfora’s next-generation wireless products. deployments in a consistent manner regardless whether or not your dedevice information for transfer of technology. It comes back to getting access vices are physically condirectly into the application, to the information to manage your business nected to the network, a frequent occurrence using standard data formats. without technology creating a barrier. for wireless. Nor should the application need All of this serves the broader vision: proThere is always a balance of implementto understand the idiosyncrasies of the various vide decision-makers with valuable, real-time ing new technologies while bringing together wireless networks. The application should be information needed to make more profitable older disparate systems. The immense growth truly network and connection agnostic. decisions in the most efficient and cost effecin the internet has brought the opportunity to To solve the problem, system middleware, tive manner.

Managing information in a wireless environment

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SPECIAL FEATURE

Marie Shields takes a look at the current state of the renewables sector in two key regions: the US and Europe.

urope and the United States: both Western, developed economic powerhouses, and by extension, voracious consumers of energy. Both also chasing ambitious targets for generating a portion of this energy from renewable sources: in the US, 10 percent by 2012, rising to 25 percent by 2025; and in Europe, 12 percent by 2010 and 20 percent by 2020. What are the differences that lie under these surface similarities? Below, we take a look at the unique challenges faced by each region in its quest to safeguard our energy future.

Current status Known primarily as Kyoto foot-draggers under the Bush Administration, the US government is once again a friend of the environment

thanks to the election of President Obama last year. The Bush government gave $72 billion in subsidies to fossil fuels between 2002 and 2008, with renewables receiving $29 billion in the same period. Obama and his team must now try to redress this imbalance, starting with the $6 billion earmarked for renewable energy and electric transmission technologies loan guarantees in the American Recovery and Reinvestment Act. The countries of the European Union, regarded by many as the global leaders in renewable energy development, have a longer track record of environmental consciousness. As long ago as 1997, the EU set a target of working toward 12 percent of energy from renewables by 2010. David Levy, Director of the Center for Sustainable Enterprise and Regional Competitiveness at the University of Massachusetts, Boston,

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and author of the blog Climate Inc., points out that while renewables have traditionally been lower on the radar in the US, Americans are also very good at pushing ahead with an idea once they latch on to it. “I think it’s true that there is some catching up going on,” he says. “There’s a huge amount of wind power that is now being installed in Texas; and California is leading in terms of really large grid scale solar thermal installations. “It’s been hard to get fi nancing. Renewables haven’t had the kind of sustained, predictable subsidies here in the US that Europe has had, and we lacked a mandatory cap-and-trade system. The European Trading System for carbon and national targets provided a clear signal for business to take renewables seriously. It has been slower here in the US.” Despite its slower start, the US appears to have already moved ahead of the EU in terms of renewable energy consumption. According to the Energy Information Administration, renewable energy accounted for around 11.1 percent of energy produced in the United States in the fi rst half of 2009. In Europe, meanwhile, figures from Europe’s Energy Portal indicate that 9.2 percent of Europe’s fi nal energy

consumption came from renewable sources in 2006, the last year for which confi rmed data are available. It should be noted, however, that 7.4 percent of the US total came from conventional hydroelectric power, with only 4.7 percent coming from ‘new’ sources such as biomass, geothermal, solar and wind. As things stand, the EU may not succeed in reaching its original target 12 percent in 2010. In an attempt to address this situation, in 2008 the European Commission released its Renewable Energy Framework Directive, with an even more ambitious target of achieving 20 percent of generation from renewables by 2020. Christine Lins, Secretary General of the European Renewable Energy Council, believes that Europe can meet the 2020 goal: “We are on track, but we must see some further impetus that this development will really happen. Progress so far has been made by five or six EU member states. The challenge we have ahead of us is to make sure that all 27 member states are being serious about renewables and developing them to their full potential.”

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US WIND POWER

The top ﬁve states in total operating wind capacity are:

1. Texas 8797 MW

4. Minnesota 1805 MW

2. Iowa 3053 MW

5. Oregon 1659 MW

3. California 2787 MW Lins’s point is that the overall figures mask a large variation between individual countries. Sweden topped the list of renewable-friendly countries at 41.3 percent according to 2006 figures, with Latvia at 31.4 percent, Finland at 28.9 percent, Austria at 25.1 percent and Portugal at 21.5 percent. At the bottom of the list, Malta generated none of its energy from renewables in 2006, with Luxembourg and the UK not doing much better, at 1 percent and 1.5 percent respectively. Lins says: “At the moment, development as far as renewables are concerned is coming from certain countries. However, there is a lot of potential in all the other member states. One of the major outlines in the renewables directive is that countries by June next year have to come up with national renewable energy action plans, outlining how they foresee reaching their binding national renewable energy targets. The hope is that these action plans will effectively provide the stability and framework for making sure that the objectives are achieved.”

Blown away Wind and solar are two main areas of focus for renewables on both sides of the Atlantic. Wind energy is starting to take off in the US, according to figures from the American Wind Energy Association (AWEA),

which put installed wind power capacity at the end of the third quarter of 2009 at over 31,000 MW, generating enough electricity to power the equivalent of nearly nine million homes. The state posting the fastest growth was Arizona, which installed its first utility-scale project. Pennsylvania ranked second in growth with 29 percent, followed by Illinois with 22 percent, Wyoming with 21 percent and New Mexico with 20 percent. Texas remains firmly at the head of the pack overall, however, with 8797 MW of operating capacity. “Wind power installations are up, and that is good news for America’s economy, environment and energy security,” said AWEA CEO Denise Bode in a statement. “But manufacturing, which has the potential to employ many more Americans in good, clean energy jobs, remains uncertain. A fi rm, long-term national commitment to renewable energy is still needed for the US to become a wind turbine manufacturing powerhouse.” AWEA says that since the early July announcement of rules to implement the American Recovery and Reinvestment Act, the wind industry has seen more than 1600 MW of completed projects, and more than 1700 MW of construction starts, which equates to about $6.5 billion in new investment. AWEA does not expect the fourth quarter of 2009 to be as strong as the fourth quarter of 2008, since the 5000 MW now under construction is nearly 38 percent lower than the 8000 MW under construction at this time last year. In Europe, a report by the European Environment Agency confi rmed that wind power has the potential to meet and even exceed the continent’s energy needs. The report, entitled ‘Europe’s Onshore and Offshore Wind Energy Potential’, states that in 2020 the amount of electricity that could be generated from wind power could be as much as three times greater than demand. Germany, Denmark, Spain, Portugal and Ireland have particularly strong bases in wind power. Figures from the German Wind Energy Association show that 19,460 wind turbines, with a total capacity of 22,247 MW, were installed in country by the end of 2007, and that 39.5 TW of wind electricity were generated during that year, equalling more than seven percent of Germany’s electricity consumption. As of 2009, its installed capacity is 25 GW. Denmark has been vying with Germany for the top spot, with 19.7 percent of electricity production and 24.1 percent of capacity in 2007. The European Wind Energy Information Network puts the annual median growth of the European wind power market at 35 percent, with EU member countries contributing about 75 percent of the world’s wind power. The wind power market is estimated to have helped create 25,000 jobs within the EU.

Sunny days “The US solar energy industry grew to new heights in 2008.” So proclaims the Solar Energy Industries Association’s report ‘2008 Year in Review’. The report points out that capacity grew by 1265 MW in 2008, up from 1159 MW installed in 2007. “Th is brings the total installed capacity up by 16 percent to 9183 MW,” it goes on to say. “Capacity in both photovoltaic (PV) and solar water heating systems grew

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at record levels. And while no new concentrating solar power plants in California. The company failed in the early 1990s after drastic cuts were completed in 2008, projects totalling more than 6000 MW are in in federal tax credits to the solar thermal industry. the pipeline, most with signed purchase power agreements. Solar pool “In Arizona and the Southwest, we’re seeing much bigger solar heating capacity grew at a slower rate than in 2007, reflecting condithermal installations,” Levy continues, “whereas with solar PV, comtions in the residential real estate market.” panies are losing money because of the cut-throat competition. PV is The growth rate was found to be highest for grid-connected PV selling below cost, and even so, power generation is still too expensive electric systems, with an increase of 58 percent, to a total of 792 MW. for grid scale production.” Domestic PV manufacturing capacity also increased by 65 percent, with preliminary estimates putting the total PV manufacturing capacity at 685 MW per year as of the end of 2008. Photovoltaic solar power also has a strong base in Europe, at least according to the European Photovoltaic Industry Association (EPIA). The association recently commissioned a study on PV power in Europe, ‘SET For 2020’, from the management consultancy AT Kearney. The study concludes that PV power can supply as much as 12 percent of Europe’s electricity needs by 2020, assuming appropriate policy-driven support and evolution in the set-up and functioning of the electricity distribution system. “The fundamentals of the PV industry are and remain strong,” said - Christine Lins Secretary General of the EPIA Adel El Gammal at the sixth European Photovoltaic Industry Forum held in September in Hamburg. “It needs an ambitious policy support for the next three to nine years, until photovoltaic power is able to compete with conventional electricity on price.” Further evidence of solar thermal’s resurgence may be exemplified Solar thermal power is also growing in the US. The largest solar by the re-emergence of Luz as Luz II, now called BrightSource Industries. thermal generating installation in the world – the Solar Energy GenerThe new company claims to have advanced solar thermal technology by ating Systems (SEGS), a group of nine solar thermal power plants – is developing a proprietary design that increases solar-to-thermal converlocated in California’s Mojave Desert. The plants use parabolic trough sion efficiency from about 36 percent (for the older parabolic trough solar technology along with natural gas and have a combined generattechnology) to above 40 percent. ing capacity of 354 MW. Future directions On the European side, the European Solar The US and Europe may both be moving Thermal Industry Federation conducted a Renewables in Europe full steam ahead with wind and solar power, study “to provide the European Union and its EU countries with the highest but there are other areas in which they remain member states with substantiated information share of renewable consumption quite far apart. The US, for example, with its on the contribution solar thermal can make to to gross ﬁnal energy consumption long history of coal-fi red power generation, will the 20 percent renewable energy target set by not easily give up its dependence on carbon. the RES Directive.” Market statistics released by Th is may explain why it is investing so much the ESTIF show that the solar thermal market Sweden 41.3 % time and effort into developing new carbon in the EU and Switzerland grew by more than Latvia 31.4% sequestration technologies, despite widespread 60 percent to 3.3 GW of new capacity. disapproval from environmental groups. Despite the positive messages put out by Finland 28.9% In Europe, where the coal lobby is not as both sides of the solar energy sector, UMass’s strong, carbon capture has a much weaker David Levy believes the focus is shift ing from Austria 25.1% focus. David Levy also mentions geothermal PV to thermal. He points out that the ecoPortugal 21.5% as a high area of interest in the US, less so in nomic crisis has prompted several countries, Europe. By contrast, Europe is far more adincluding Germany and Spain, to cut back on Denmark 17.2% vanced in the development of wave power. subsidies to consumers for the installation of Romania 17% In the end, though, it doesn’t really matter PV panels – although he also underlines the what the differences or similarities are, or who cyclical nature of such interest: “Solar thermal Estonia 16.6% achieves their target fi rst – the US with its was doing well a few years ago, but then when Slovenia 15.5% can-do attitude under the new administration, Luz went bankrupt, many people said, ‘We or Europe, with its stronger historical groundcan’t do solar thermal.’” Lithuania 14.6% work. What matters is that we get there, someIsrael-based Luz Partners were the origiSource: www.energy.eu how. The future of our planet depends on it. nal builders of the SEGS solar thermal plants

“At the moment, development as far as renewables are concerned is coming from certain countries. However, there is a lot of potential in all the other member states”

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GENERATION

Pushing

the

boundaries

American Electric Power’s Nick Akins tells Power & Energy how technological innovation is diversifying the company’s fuel mix.

of cclimate change

technology

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uch of American Electric Power’s (AEP) fleet is coal-fi red generation, making climate change the foremost important issue in the company’s agenda right now. As EVP of Generation, Nick Akins spends the majority of his time focused on the development of technology, understanding the changing role of coal and how it is used and perceived. AEP is also focused on developing a balanced portfolio, including renewable sources such as wind power, natural gas and solar, as well as nuclear. The company is also experimenting in other forms, such as sodium sulfide battery storage technologies. “We are focusing on what we need to do in the future to meet customer demand,” says Akins. “As EVP of Generation, I have the fossil and nuclear generation fleets, our capital construction program that includes environmental and new generation, our barge lines and our commercial operations part of the business, as well as our fuel procurement. As one of the largest utilities in the US, it’s a very significant operation. We purchase from 75 to 80 million tons of coal a year, which is the largest in this country. We follow the legislative activities associated with climate change; we are involved with several activities in that regard.” Akins points out that AEP has taken an active part in developing federal legislation related to climate change, and was involved with the American Clean Energy and Security Act of 2009, also known as the Waxman-Markey Bill. Akins cites AEP’s main motivation for this involvement as the opportunity to match up the technology needed to meet the reduction targets set forth by the American Recovery and Reinvestment Act. Understanding how credits will be allocated is vital to AEP’s future plan, ensuring it has the technology to match the stipulations so its customers don’t have to. “We’re intimately involved with the legislative side because we are doing things that give us the credibility of talking about the technology advancement to match up with, in a realistic fashion, reduction targets that Congress may come up with. “We have a lot of coal-fi red generation; our customers need those credits that are allocated to us, so we can use those allowances to pay for construction to improve our fleet from an environmental performance standpoint, relative to CO2. We also wanted to see international provisions placed on how the rest of the world will move forward. We still have some work to do on those, but we’ve been very focused on that legislation as it moves through Congress. “We are at the forefront of development of carbon capture and storage technology. In September we installed the fi rst fully integrated capture and storage program at one of our power plants in West Virginia, which will take a small, 20-megawatt electric slipstream, capture the flue gas, convert the CO2 and then store it approximately two miles below the surface of the ground. It is a significant step toward commercialization of capture and storage technologies,” he explains. Th is is by no means AEP’s only power plant pushing the technological boundaries. The John Turk Power Plant is the fi rst ultra-supercritical coal unit in the US – a much more efficient form of combustion coal

technology. Ultra-supercritical plants operate at very high levels of efficiency, with very high steam temperatures, which supports combustion at higher temperatures. The amount of coal used is significantly less and there are lower emissions as a result. “The efficiency on today’s ultra-supercritical versus supercritical is around three percent,” he says, “which although it may seem small, in the long-term when you talk about year in/year out operations, it’s a pretty significant reduction in the amount of coal that you would have to use. It’s at least 10 percent better than the existing coal facilities that were built in the late 1970s and early 1980s, so it’s a huge improvement.

“It is absolutely critical for renewables, particularly wind, to be transported to the load centers” “The ultra-supercritical coal technology is a step up from supercritical. It will run at temperatures exceeding 1100 degrees Fahrenheit, which improves the overall efficiency of the generation itself. It’s driven by metallurgical differences, because the piping associated with the boiler has to be able to support those ultra-high temperatures, and whenever you have the metallurgical aspects support higher steam temperatures that improves the efficiency. The metallurgical aspects enable you to use higher steam temperatures and improve the efficiency,” reiterates Akins.

Climate legislation He believes that climate legislation will undoubtedly become mandatory, but knowing when it will happen is the question. As early a date as 2010, with it becoming effective in 2015, is possible. Akins points to the company’s integrated gasification combine cycle technology that it proposed in West Virginia and Ohio, and its failure to be approved in Virginia because carbon capture and storage had not yet been proven from a commercial standpoint. “It’s important for us to advance those technologies,” he continues. “From a portfolio management standpoint, we are heavy on coal in a carbon neutral environment; we have to be focused on other base load forms of technology, which includes nuclear. We believe nuclear and coal are the two base load opportunities we have, but you have a lot of load that you serve in an intermediate and peaking type standpoint. It’s become a priority for wind energy to be brought in, because the energy cost is less. “Overall, the cost is more, but when you account for CO2 coal costs will go up as a result and that means it’s important to have wind power. It’s also a priority for us to be able to uprate our nuclear station: we have plans on uprating nuclear by 400 to 500 megawatts and that is a relatively small cost; at least a lesser cost than a new coal-fi red station. “We are also looking at natural gas facilities, and have several facilities that are coming online. Here in the US there is a lot of fracturing of the new supplies of natural gas and prices are pretty tempered, so that is likely to be one of the ways where we manage that transfor-

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mation. Natural gas, new coal-fi red generation, nuclear and solar from a rooftop standpoint are a priority for us. We’re also looking at sodium sulfide batteries to inject in certain parts of our system.” Akins’ singling out of wind energy is a pointer to the pivotal role it will play in AEP’s fuel mix, as the company has begun expanding its activities and capacities in this area. The company owns some of its own wind farms, but the majority of its resources are purchased from the output of other farms. Akins explains that this is done because of the capital situation being driven by the economy. AEP has trimmed its capital budget back from $3.75 billion to $1.8 billion, a significant drop, and is now fi nding itself in a position where priorities must be made. Although the company is able to order a substantial amount of environmental retrofitting, it knows the areas in which to create economic efficiency. AEP continues to develop the construction of its own wind power projects, but its sole focus for wind is purchasing power arrangements. Akins does not shy away from noting the effect of the economic recession on integrating more renewables into the company’s energy mix. He adds that capital projects included transmission projects; environmental retrofit projects for scrubbers to remove sulfur dioxide, nitrogen dioxide and mercury; as well as other projects where rehabilitation of the system in general have been deferred as a result of the economy. The US has lost nearly 20 percent of its industrial load, and the loss of capital projects as a result was a natural occurrence.

Down the line

JOHN W. TURK, JR. POWER PLANT Estimated completion date is summer 2012. The cost of the plant is approximately $1.6 billion. SWEPCO’s investment will be 73 percent, around $1.2 billion. Plant construction will create over 1000 jobs at the height of construction. The plant will bring an estimated 110 permanent jobs to the area. Annual payroll is projected to be $9 million.

Transmission is an essential component to the renewables energy mix. “As far as transmission is concerned, it is absolutely critical for renewables, particularly wind, to be transported to the load centers,” The US federal government’s stimulus funding is attracting almost says Akins. “Typically in the US, wind power is generated in areas of every utility in the industry, and AEP is no exception. The company is the country that are very sparsely populated from a currently evaluating the areas in which it can take load perspective, so transmission is critical in order advantage of the funding and is working alongside to move that renewable energy. the state authorities – a large portion of the money “We at AEP have the largest transmission is handed from federal to state jurisdictions for system in the US and the highest voltage, 765 KB evaluation. AEP is looking for funding assistance transmission, and we’ve proposed several transin its carbon capture and storage projects: “We’ve mission projects around the country to move these asked for the next phase of our carbon capture and renewable resources to the load centers. It remains storage project to go to 235 megawatts, which is to be seen how that’s going to progress, but to furthe fi rst commercial scale we’re asking for stimuther optimize and make sure that our entire genlus funding associated with. We’re also looking eration portfolio, including renewables and base at support for our gridSMART technologies for load generation, is operating in the most efficient advanced metering for other forms of renewable fashion will require substantial investment in new projects as well,” explains Akins. transmissions. AEP’s efficiency aims are also based on a local “There’s a lot of discussion of the effect of inlevel with its smart grid initiative ‘gridSMART’. cluding renewables within the transmission system The system analyzes what the customer does on as the actual operations of the power system change his side of the meter to determine when he uses Nick Akins is Executive Vice President of as a result. A lot of studies are being done in that electricity, installing efficiency at the customer Generation for American Electric Power. regard, and we’re participating in those studusage through to the generator activity. “Th rough ies to make sure that when we do add substantial the advancement of our gridSMART technologies, amounts of renewables we can respond from a system stability standwe’re looking at efficiency gains that could be made all along the path point to ensure that we can continue to allow those renewables to be from generation to the customer to make wise decisions from a cusinjected into the system.” tomer standpoint.”

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AEP’s Renewable Portfolio Solar AEP’s activities in solar energy have focused primarily on education and outreach. More than 125 schools participate in AEP’s ‘Learning From Light’ and ‘Watts on Schools’ programs. Wind AEP owns 310.5 MW of wind generation capacity in Texas and also has agreements to purchase 742 MW from several wind power facilities in Illinois, Indiana, Oklahoma and Texas. Both of its farms, Trent Mesa Wind Farm and Desert Sky Wind Farm, sell the energy that is produced to wholesale energy supply contracts. In addition to owning and operating its own facilities, AEP also is a major purchaser of wind power from wind projects, such as FPL Energy’s Southwest Mesa and Weatherford Wind Energy Center. Hydroelectric AEP’s 17 hydroelectric facilities in Virginia, West Virginia, Ohio, Indiana and Michigan generate more than 800 MW of electricity. Smith Mountain Hydro Project, on the Roanoke River southeast of Roanoke, Virginia, was the nation’s first major development combining run-of-the-river hydro with pumped storage generation. Biomass Until the company sold the Fiddler’s Ferry and Ferry Bridge power plants in 2004, AEP co-fired biomass in 4000 MW of coal-based power generation in the UK. AEP also has conducted biomass co-firing tests and analyzes at several of its power plants in the US.

Technology In order to incorporate renewables into its generation and successfully transmit that energy across its service area territory, technological innovation is AEP’s key to continuing its success into the future. Akins exemplifies the company’s coal generation – currently it can generate off a single coal unity approximately 2.5 cents per kilowatt hour; and its comparison to wind power, which is approximately 10 cents a kilowatt hour. Solar is around 25 cents a kilowatt-hour; so the advancements of these technologies is critical. “Solar continues to make efficiency gains from a production standpoint, and the same applies to wind power, so we continue to see advances there. These technologies will have to continue to improve from a cost standpoint to make sense to our customers,” he explains.

“We’ve proposed several transmission projects around the country to move these renewable resources to the load centers” “Clearly our main advances in technology are carbon capture and storage, to make sure that that becomes viable, as well as transmission and new technologies associated with generation. We have historically supported FutureGen; we pulled out due to the funding issues associated with it, but we continue to support that technology. We were the first innovating hydrogen technologies, which are a more advanced type of coal-fi red generation. We continue to push the envelope on new generation technologies,” concludes Akins.

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EXECUTIVE INTERVIEW

other technologies. With our technology, the cost of capital for building a factory is just $0.15 per watt, and the time to stand up each additional 50 MW line is less than six months. At SolFocus, we have already ramped our manufacturing capability for CPV systems to a 50 MW run rate, just 18 months after deployment of our first large-scale test project.

Innovations in solar technology

traditional PV technologies. CPV solutions have the highest conversion efficiency of any PV technology – at SolFocus, we are converting sunlight to electricity at over 25 percent efficiency with terms of cost, performance and scalability; howevheadroom to advance these levels rapidly. CPV er, CPV has begun to prove its ability to achieve systems also integrate the panels onto dual-axis high conversion efficiencies, and thus drive down trackers, which allow CPV technology to provide the cost of solar energy. a broad energy production profile throughout the day, providing energy producHistorically, new technolotion late in the day to provide a gies have taken as much as a better match to utility demand decade for the innovation to curves than other PV techreach a reasonable market nologies. Also, since CPV syspresence. Will this be the tems don’t suffer performance case for CPV? degradation at high temperaNH.We believe that CPV will tures as do other PV technolobe able to move from initial test gies, panel performance deployments, which took place remains high. In combination, over the past two years, into the high panel efficiency, large scale deployment much broad energy curve and perfaster than other technologies formance at temperature prosuch as silicon PV and thin film vide the highest energy yield in technologies. There are two prihigh sun regions. Nancy Hartsoch is Vice President of Marketing and Sales for mary reasons for this. First, CPV CSP systems, sometimes SolFocus, with responsibility for global marketing and sales has its roots in existing techcalled solar thermal solutions, activities in North America and nologies. It is a photovoltaic also are targeted to the high the Rest of World territories. Prior to joining SolFocus, she was technology, so implementation solar resource regions. If there CEO of Paciﬁc Technology Group, which she co-founded in of CPV technology in the field is is a limited supply of water in partnership with Taiwan-based similar to traditional flat plate the region (CSP consumes up Acer Labs Inc. (ALi). She has an MBA and a BA from San Jose PV. It is also a concentrating to 1000 gallons of water per State University. technology, similar to reflective megawatt hour), environmenmirror-based concentrating tal constraints around land use solar plants, which have been or protection of existing producing utility scale energy at scale for many ecosystems, or the desire to deploy smaller plants years. Also worth noting is that the ability to ramp from 1-50+ MW, then CPV provides significant manufacturing is much faster with CPV than advantages compared with CSP.

Nancy Hartsoch tells Power & Energy why concentrator PV has the power to revolutionize our energy system. Despite the fact that solar power has been around for several decades, it still hasn’t made a major impact as a renewable energy source. Is this changing? Nancy Hartsoch. Over the past two decades progress has been made in solar technology, moving it forward as a large-scale energy source. However, the historical low efficiency of solar panels combined with the relatively high cost of solar material has made it difficult for the economics to work on a large scale without incentives. Currently, the industry standard is crystalline silicon-based

“We are converting sunlight to electricity at over 25% efficiency” technology, which uses the semiconductor materials of the microchip industry to convert sunlight into electricity. Though proven and reliable, traditional PV technology suffers from the cost of systems compared with the amount of energy generated. As a result, solar technologies that reduce the amount of expensive PV material are quickly coming to market. Thin films have been a major step forward, bringing new milestones to the solar landscape. The latest advancement has been concentrator PV (CPV) technology, which uses optical concentrators to boost the output of small, highly efficient PV cells. All of these approaches have inherent advantages and disadvantages in

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Does concentrator PV provide a better solution than traditional PV or CSP for utility scale solar plants? NH.The right solar technology depends on where it is being deployed and the objectives of the project. Compared to other PV technologies, in regions where the direct solar resource is high, CPV brings a number of advantages not available from

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RENEWABLE ENERGY

SEPA’s Mike Taylor brings Power & Energy up to date on the storage and transmission issues that affect solar’s viability as a renewable energy source.

olar energy, in common with other renewable energy sources, has been enjoying a surge in popular support, both here in the US and internationally. But questions remain, primarily around reliability and ease of transmission. Mike Taylor, Director of Research and Education for the Solar Electric Power Association, points out that solar energy is more complicated than most people think. “Solar energy presents a more complex picture than traditional renewable or centralized generating sources,” he says. “There’s a market for distributed solar as well as centralized solar. With centralized solar projects,

there are a large number of announcements out there, a few thousand megawatts; at that scale, these projects will be able to fit into the existing transmission system. “But as the industry scales up even further, we will start to see transmission issues, similar to the wind industry, as being a limiting factor within the centralized project growth. They may diversify away from corridors where wind energy is; solar and wind areas of development aren’t necessarily going to overlap, so they’ll potentially be separated from one another. Solar is not going to necessarily align with the existing wind projects.” Taylor does concede that the general issue of transmission is similar to that of the wind industry, with both sectors experiencing rapid growth. “These solar projects need to find ways and transmission paths to get into the grid and find their way to load, and there are a number of groups and studies out there that are working diligently on this. The problem for the wind industry is here and now, whereas with the solar industry, the centralized projects are

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largely still in the announcement phase, so we haven’t run up against any practical, tangible limitations based on installed projects at this point. “You can certainly forecast that that would happen, but I think we’re still a few years away from seeing that as being the driving force in the industry. A lot of these announced projects have financing and permits to get; they have a number of issues to work their way through.” Taylor points out that by contrast, the other half of the solar industry, distributed solar, is a unique niche in which residential, commercial and utility projects are being done on a localized level. He explains that this is being accomplished, in some cases, through random disbursement, when a homeowner or commercial business decides to utilize solar. “A lot of the utility announcements have been for large aggregated projects that are individually one to two megawatts,” he adds. “They sit well within the distribution system, but they’re announcing them in chunks, anywhere from five megawatts up to 500 megawatts. “So you’re seeing these distributed projects being proposed and moving forward at a scale that matters. I call them ‘distributed power plants.’ The utility puts in one to two megawatt projects at 100 different locations around their territory, so they can fit within the urban grid on the distribution system. They can be strategically located so they’re not overburdening one distribution line. We’re starting to see this model being explored, especially by the California utilities Duke Energy in North Carolina and PSE&G in New Jersey are also stepping up with this model.”

“As the industry scales up even further, we will start to see transmission issues as being a limiting factor within the centralized project growth” According to Taylor, the growth of distributed solar changes the nature of the issue: instead of it being a transmission problem or a problem on the distribution line, those installing distributed solar must work with local city building and permitting offices, signing leases with large big-box warehouses or big-box office stores. He believes this is an innovative diversification that is unique to the solar industry.

Storage issues One of the major issues related to solar energy, and renewables in general, is the question of storage. Taylor says that at the distribution level, storage is not as critical because it is integrated into the system. It’s associated with load in a lot of cases, and the relative amount of solar to the load is not so great that it causes a huge problem. However, as penetration levels increase on any particular localized area, isolated issues do start to occur. From an operational standpoint, Taylor says that having these individual solar systems with a small amount of storage – on the order of 15 minutes to an hour – could assist in the coordination of the variability that a utility might experience. “As we get higher and higher penetrations on the distribution level, a small amount of storage can go a long way to helping 75 percent of the problem.

“You have two factors that are reducing the risk of that variability. One is geography: you’ve got all of these solar systems spread out over a 50 to 100 mile area. Not all of them are going to be increasing in power at the same time, so you’ve got geographic risk mitigation. You could also see, as utilities move forward with smart grid initiatives, smart meter initiatives and a small amount of storage integrated into these systems, that it becomes a much more powerful way to deploy this distributed resource. “It’s no longer about passively reacting to the sun and injecting the power into the grid, it could become a very usable and tangible resource that utilities can deploy. But that’s still in the near future, when these do need a small amount of storage. You do need smart grid capabilities and better communication capabilities. So that’s a near to medium-term ideal. “On a centralized system side, you have to again bifurcate it by technology, whether it’s concentrating solar power and using thermal storage, or whether it’s photovoltaics. At this point, there are no large-scale solar

History of SEPA The Solar Electric Power Association is a non-proﬁt, business-to-business organization that works primarily with electric utilities across the United States. Its aim is to bridge the gap between the solar industry and electric utilities, helping to facilitate the use and integration of solar power. The Association aims to help the electric utilities with their understanding of markets and technology and to help create dialogue between other electric utilities, so they can learn from each other, as well as with the solar industry. SEPA has more than 700 members, 110 of whom are electric utilities. Most of the major utilities across the United States are members of SEPA, and there are also a large number of solar industry members interested in learning about the utility market and utility issues so they can understand how we can facilitate the market through and with utilities, rather than against and opposed to facilities.

storage announcements for photovoltaics. There are no ready solutions for having a large amount of storage for centralized photovoltaic projects. There are for projects having 100-megawatts of storage that can deploy for an hour or two hours, but for larger projects it’s not technically or economically feasible.” The storage picture is looking better for thermal storage on the concentrating solar power side. Taylor cites as an example of this, projects in Spain that have integrated solar thermal storage, and research being done in the US, including the announcement for a project with fixed hours of storage in Arizona called Solana, for which Arizona Public Service will be purchasing the power from Abengoa Solar. Thermal projects generally have slower ramp rates than PV and wind, as Taylor explains: “They can adjust the flow rates of the fluids inside and, even without storage, manage them in a way that’s a little more friendly to the grid. There’s a better buffer in the way they operate, because thermal fluids have an

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inertia that you can manage. For example, if you know that you see clouds coming across the horizon, you can manage that. “But pairing it with three to six hours of storage does allow you to deploy this resource in a way that can benefit the utility grid and the project, in the sense that the better your project can perform and correlate with peak, providing a firm capacity backup, the better the economics of the project should be. You should be compensated for that benefit you’re providing to the grid.”

Coming events At the time of our interview, SEPA was busy with preparations for the annual Solar Power International conference in Anaheim. The conference, organized jointly with the Solar Energy Industries Association, attracts more than 22,000 attendees from both electric utilities and the solar industry. “It’s in the top two in the world, in terms of the size of the conference,” Taylor says. “It’s an expo and a conference, with more than 45 sessions that attendees can go to. We also have a large exhibit hall that has more than 800 exhibitors in a few hundred thousand square feet of space. “Anyone who is anyone in solar in North America and the western hemisphere, and increasingly, internationally, comes to this event to understand and meet with electric utilities. That’s where SEPA’s niche is, in coordinating events and sessions and workshops for electric utilities – networking events so people can meet each other and get to know the solar industry. The solar industry is there. The finance people are there. The installers are there. Pretty much anyone who is into the solar market goes to this conference. “There are a lot of solar and renewable events occurring: they’ve increased precipitously in the last two years. Because our event is organized by the two solar non-profits in the United States, we like to think we’re neutral to the profit motive. Revenues from this drive the work that SEIA and SEPA

Solar Power International Solar Power International (SPI), previously called Solar Power Conference and Expo, was created in 2004 when the Solar Electric Power Association (SEPA) and the Solar Energy Industries Association (SEIA) joined together in partnership to create a business-to-business solar conference and expo. With an industry growth rate of more than 40 percent per year, the two associations felt there was a need for a single event in which the industry could come together with potential customers, policymakers, investors, and other parties necessary for continued rapid growth. The event, held annually at the end of October, has grown from 1100 attendees to more than 22,500 in ﬁve years.

do to try to help feedback programs for, in our case, utilities, and in SEIA’s case, for the solar industry. We’re taking the proceeds from this event and driving them back into the respective membership and industries to help facilitate the marketing even further. “What always surprises me is that the conference holds 4000 or 5000 people. The other 15,000 to 20,000 people are coming to go to the expo to network and to learn about technology and to have meetings with each other. They’re not there to sit in conference rooms and watch presentations. They’re there to do business.” n Mike Taylor is Director of Research and Education for the Solar Electric Power Association.

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RENEWABLE ENERGY

Why Southern Company’s Chris Hobson believes clean coal should be part of our future energy mix.

ne of the more contentious issues currently under examination in the renewables sector is the concept of clean coal and carbon sequestration. There are those who view clean coal with suspicion, but Southern Company’s Chris Hobson believes it is an essential area to pursue. To this end, the company has been working with the DOE for 15 years to develop an integrated gasification combined cycle power plant for coal, which Hobson says is one of the three or four most significant technology steps the industry can take. “There is great promise in technologies around traditional pulverized coal because of advancements that are being made in materials of

construction – efficiencies that are being built into the process now – so I don’t want to discount those, but clearly from our perspective we see the gasification of coal as the most important technology advancement on clean coal that can be made.” Hobson, who is Southern Company’s Senior Vice President for Research and Environmental Affairs, points out that ‘clean coal’ is a phrase that’s been around for a decade or more and has meant different things at different times. For instance, when the Clean Air Amendment Act was passed in 1990, the focus was on traditional pollutants such as SO2 and NO2 and mercury. Back then the industry used the term to talk about the technologies that would be used to comply with that act. “Since then,” Hobson says, “the meaning of clean coal has been broadened to include technology advancements on the traditional pollutants, and also carbon dioxide. So clean coal to me is all about reducing the environmental footprint of coal to the extent that you can, and the next step for that is the technologies that are around carbon capturing ssequestration. Th is integrated gasification combined cycle is a huge technology step towards clean coal, as are the technology advances we are seeing in the capture of carbon dioxide. We are the leader in the

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United States in the electric utility industry in both IGCC technology advancement and in carbon capture sequestration advancement.” Environmental groups often accuse big utility companies of being all talk and no action on clean coal, adding that in any case the money would be better spent on developing renewable energy sources. Hobson, like many in the industry, insists that we need both, and that it is naïve to believe otherwise. He pours scorn on those who insist we can meet our future energy needs solely from sources like sun, wind and hydro. “To take that position indicates to me that they really don’t understand the role of renewables in the energy infrastructure in the United States, or worldwide,” he asserts. “Of course, there will be huge technology advancements made in renewables too, so what is true today might not be true 20 years down the road. “But right now the whole electricity energy infrastructure is built on base load generation – the generation that people expect to be operating 24 hours a day, 365 days a year. Then you build an infrastructure around that base load, which will take care of those periods of time when you are seeing increased loads. So we go from base load generation to the intermediate plants. They might not run 24/7, but they run as needed. “Then you move to that class of units called the peaking units, which operate in the highest demand periods. Renewables today cannot pierce even that intermediate level and certainly not the base load generation. The availability is not good, the cost is not good. You can’t dispatch those units because you don’t know when the wind is going to blow. You don’t know when the sun is going to shine. “So while renewables will be valuable to us and will have a role to play, to say that we should not be investing in clean coal in order to be investing in renewables is to misunderstand the role of coal and the role of renewables. We should be working on those things together. I can’t stop investing in coal research and in coal power plants simply to divert my capital funds over to renewables. we won’t have an energy infrastructure that works if we do that.”

However, he does not believe this applies in the case of renewable energy. “Renewable energy,” he says, “unlike coal and natural gas and nuclear, has a lot of technical issues associated with it, and one of the most important of those is that not every region of the country has the resources to deploy renewables in the same manner. “For instance, to state the obvious, the southwestern part of the United States has a lot of desert and many days of sunshine, which is a good environment in which to develop solar technologies. The midwest and the upper midwest have terrific wind resources. The southeast has none of those, and the midwest does not necessarily have real solar options either, so to try to set a one-size-fits-all renewable energy strategy without regard for regional differences in resources is not the right thing to do. While it might be appropriate for the federal government to set a trajectory for the use of renewables in the future, they need to then leave it up to each region of the country or each state to determine what is the best mix and what is the best level of penetration for them.” Hobson’s team deals with issues relating to environmental policy, as well as legislative and regulatory challenges on a national level, and he also oversees a research organization that scours the universe of technology developers to fi nd those technologies that will have some applicability to the company’s business. “Sometimes we have to go fi nd those and sometimes they come and fi nd us,” he says. “When we do fi nd something that has promise we work with the developer to put their technology into real world applications through pilot projects at our power plant, and help them take that technology to the next level so that it can be commercialized. We don’t do that for profit. We do that so we can better understand the applicability of technology to our business.” The second section within the research organization is focused on two things, the first of which is the next generation of fossil technology. “We have developed our own integrated gasification combined cycle technology and we are deploying it now,” Hobson continues. “We’ve done that in conjunction with the DOE and other industrial partners. “Because we are ready to go with the commercialization of technology, in conjunction with the DOE we are converting that to be the Department of Energy’s National Carbon Capture Center. A lot of carbon capture work is being done in laboratories, at universities and in other companies or in the national labs that the DOE operates. By contrast, what we’re trying to do is provide a real-world operating environment to which we can bring those technologies and demonstrate whether or not they have promise.”

“Renewables today cannot pierce even that intermediate level. You can’t dispatch those units because you don’t know when the wind is going to blow or when the sun is going to shine”

Government role The idea of renewable energy is so much in the spotlight these days that it has become hard to ignore. The Obama Administration has played a big role in this popularity explosion, with political attention and stimulus bill money helping to whip up interest across the country. But should it be up to federal policymakers to decide our energy future? Southern Company’s Chris Hobson believes the government does have a role to play, within certain limits. “It is their responsibility to set some trajectories both around technology and around environmental standards,” he says. “When those come together sometimes there are conflicts, but that is a legitimate role for the federal government. As long as you are dealing with technologies that are well understood and can be deployed throughout the country, having those trajectories set by the government is a good thing.”

Cleaning up According to Hobson, Southern Company is deploying more environmentally friendly power generation methods across the board. “We have under way two advanced nuclear units that we are working through the process on,” he explains. “We have begun site work and we have received certification from the Public Service Commission in the state of Georgia. The Public Service Commission is the financial regulatory arm of the

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state government; they approve our integrated resource planning process, which is where we take a look at the need and come to an agreement with the Public Service Commission on what that need will be like over time. “We then agree on what technologies best fit that, and we have received approval from the state of Georgia to proceed with those nuclear units. That means ultimately you would be able to recover the cost of them, so we’re excited about that. We have a certification for an integrated gasification combined cycle (IGCC) power plant in front of the Mississippi Public Service Commission that will use Mississippi lignite and will capture 65 percent of the carbon dioxide. It will be the most advanced coal-fired power plant, maybe in the whole world but certainly in the United States, because of its advanced coal technology plus its unique environmental footprint. No power plant of this kind will be capturing that much CO2. “We are also converting one of our coal-fired power plants in Georgia to be operated on 100 percent biomass. Biomass is probably our best renewable opportunity, and this will be the largest biomass-fi red power plant in the United States when we have it converted and operating. Then we have been deploying natural gas combined cycles over the last decade, and so we have been touching all the different supply side technology.” Even with current efforts to cut back and increase efficiency,

the world’s appetite for energy will likely continue to rise. What role does Hobson think the government should take in providing incentives for companies to develop technology to meet this future demand? “In the situation we are in now, the government has to be a partner in this R&D work,” he says. “Clearly one of the most important things they do is provide funding for research projects, and the DOE has a very good and a very robust research and development program around energy issue with companies across the country taking advantage of those fi nancial resources, but the DOE is also an important partner in that they bring a great deal of expertise to the issue. They have national labs around the country. They have the National Energy Technology lab in Pittsburgh, where they have highly trained experts who understand these technology issues as we do. “The DOE and the federal government can provide, but the DOE is also a valuable partner on the technology knowledge side. They need to continue to provide incentives for the development of this technology. What we saw in the Waxman-Markey bill were incentives for early deployment of some of these technologies, which is a natural next step. You helped incentivize the research and now let’s help incentivize the deployment of this technology. There is a very important role for the federal government and I think they understand that role and are fulfi lling it.” Another crucial question revolves around how utilities can be regulated to protect consumer energy costs if a cap and trade system is introduced. Hobson says government incentives will help defray costs for the most expensive power plan technologies, which will help protect consumers. “One of the key things they could do is to allow the market to work in reducing CO2,” he continues. “There has been a lot of talk about this being a cap-and-trade system and a market-based approach, and the truth is they put this defi nition out there around the market, but then the legislation constrains it so badly that if it were implemented, it would not allow the market to work freely. “We found out from our experience with the 1990 Clean Air Amendment Act that the market will work, and so the best thing they can do to help protect consumers is to, one, allow the market to dictate the price of carbon and then drive the technologies that get developed and deployed; and then secondly, continue to provide incentives for early movers to help with that push and pull of technology. “One of the things that is critical from the legislation that’s been out there so far is that we are not yet appropriately connecting the dots between the targets and the timetables we are setting and the availability of technology. The federal government in setting climate policy must keep in mind and must have a clear vision of what technology can do and what it can’t do. “Then maybe over time, we could have that process of evaluating technologies and how that might affect targets and timetables; have that be a robust, iterative process, so that maybe every five years you have a reassessment of technology and then a new set of targets and timetables for deploying that technology, and then you can set targets for CO2 based on that. But if we go out and set targets and timetables and don’t have the availability of technology in our minds, we will make some horribly inefficient and uneconomical choices.” Chris Hobson is Senior Vice President, Research and Environmental Affairs and Chief Environmental Ofﬁcer for Southern Company.

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EXECUTIVE INTERVIEW

Gregg Patterson examines how the utility industry will manage the growing deployment of PV to their grids.

THE FUTURE OF SOLAR ENERGY Can you tells us more of the SEGIS program’s signiﬁcant promise for accelerating the penetration and smooth integration of distributed generation (solar) onto the utility grid? Gregg Patterson. SEGIS addresses the challenges of significant distributed PV deployment onto the US electric grid. It is a great example of government working hand-in-hand with the industry to drive innovation and support the growth in clean energy. The program was a competitive process that started with proposals from more than 20 companies and resulted in the selection of five. We are honored that the PV Powered-led team was selected for the largest award. Can you tell us about the company’s team and its efforts? GP. We assembled a team of experienced leaders from the utility industry including Portland General Elec-

Do you believe that the solar inverter will be the intelligent interface between distributed generation resources and the smart grid? GP. The inverter truly is the intelligent node of a distributed solar PV system. The sophisticated power electronics in a solar inverter are the logical and most cost effective platform to overlay the two-way command and control infrastructure required to remotely manage distributed solar power within a utility portfolio paradigm. With the ability to monitor and control their distributed solar resources, utilities can then begin to develop strategies to use advanced features including low-voltage ride-through, VAR and frequency support, and a variety of additional ancillary services to maintain or improve power quality and reliability. The inverter provides the scalability and standardization that the industry needs for distributed solar power to grow from an unknown and potentially destabilizing factor on the grid to a significant component of our renewable energy portfolio. Gregg Patterson is President and CEO

tric, Schweitzer Engineering Laboratories and Sensus. for PV Powered, Inc. Prior to joining As the level of distributed solar increases, there will PV Powered, Mr. Patterson was a Vice President of Hewlett Packard within Can you tell us more about PV Powered? be a need for PV systems to provide their host utilitheir extremely successful Printing and GP. The team we have assembled at PV Powered has ties with much greater awareness and control. PV Imaging Group. His responsibilities at HP included general management of systems currently installed in commercial rooftop been relentlessly focused on designing and building $1 billion businesses spanning both enterprise and consumer segments applications must disconnect from the grid at the the most reliable solar inverters in the industry. We and direct involvement in mergers and fi rst hint of instability, but as PV system penetration took out a clean sheet of paper and designed a comacquisitions, successfully leading the acquisition and integration of several key increases this is not an effective solution for the host mercial inverter platform that will deliver 20-30 years companies bought by HP. utility or the system owner. In 2010 we will be demof reliable operation. Our industry-leading innovaonstrating the application of AMI infrastructure and tions have brought new materials, reliability modeling synchrophasor measurements to enable intelligent control over how PV and design rules from industries where uptime is a business requirement. systems respond to grid instability. Additionally, the PV Powered team We have validated these products through accelerated life testing and in is developing mitigation techniques that will smooth the ramp rates the field with an installed base of more than 15,000 inverters. We were of PV systems, which are caused by passing clouds and have achieved the first inverter company to provide our customers with a 20-year warinitial success in forecasting PV system energy production for one-hour ranty and will be introducing a 30-year warranty on our products for and six-hour time frames. Wind forecasting played a significant role in the utility industry. Our new 260kW inverter with 97 percent efficiency enabling large-scale wind power penetration and we believe that foreis the building bloc for our new MW platform that is an ideal platform casting PV production is less complex and will have similar results for for the larger commercial and utility scale distributed solar installations enabling industry growth. that our customers are designing today.

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EXECUTIVE INTERVIEW

Gregg Patterson examines how the utility industry will manage the growing deployment of PV to their grids.

tric, Schweitzer Engineering Laboratories and Sensus. for PV Powered, Inc. Prior to joining As the level of distributed solar increases, there will PV Powered, Patterson was a Vice President of Hewlett Packard within Can you tell us more about PV Powered? be a need for PV systems to provide their host utilitheir extremely successful Printing and GP. The team we have assembled at PV Powered has ties with much greater awareness and control. PV Imaging Group. His responsibilities at HP included general management of systems currently installed in commercial rooftop been relentlessly focused on designing and building $1 billion businesses spanning both enterprise and consumer segments applications must disconnect from the grid at the the most reliable solar inverters in the industry. We and direct involvement in mergers and fi rst hint of instability, but as PV system penetration took out a clean sheet of paper and designed a comacquisitions, successfully leading the acquisition and integration of several key increases this is not an effective solution for the host mercial inverter platform that will deliver 20-30 years companies bought by HP. utility or the system owner. In 2010 we will be demof reliable operation. Our industry-leading innovaonstrating the application of AMI infrastructure and tions have brought new materials, reliability modeling synchrophasor measurements to enable intelligent control over how PV and design rules from industries where uptime is a business requirement. systems respond to grid instability. Additionally, the PV Powered team We have validated these products through accelerated life testing and in is developing mitigation techniques that will smooth the ramp rates the field with an installed base of more than 15,000 inverters. We were of PV systems, which are caused by passing clouds and have achieved the first inverter company to provide our customers with a 20-year warinitial success in forecasting PV system energy production for one-hour ranty and will be introducing a 30-year warranty on our products for and six-hour time frames. Wind forecasting played a significant role in the utility industry. Our new 260kW inverter with 97 percent efficiency enabling large-scale wind power penetration and we believe that foreis the building bloc for our new MW platform that is an ideal platform casting PV production is less complex and will have similar results for for the larger commercial and utility scale distributed solar installations enabling industry growth. that our customers are designing today.

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SOLAR POWER

A perfect ďŹ t Rhone Resch of the Solar Energy Industries Association explains how solar slots into the energy puzzle.

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ong before the arrival of the American Recovery and Reinvestment Act, Rhone Resch and the Solar Energy Industries Association were working behind the scenes to highlight solar as a viable solution to America’s energy worries. With some of the world’s best solar resources, the US is well placed to create energy from the sun and has the opportunity to leverage solar to play a pivotal role within the country’s energy mix. However, Resch does admit that solar currently has some shortcomings. “Although solar isn’t more cost-effective at the moment, it certainly has the potential to be much more cost-effective than traditional sources of fossil fuels,” he says. “In large part it’s because you manufacture solar. You don’t mine it or drill for it, and because of that you’re able to scale up the manufacturing and drive down costs per unit; and as we do, so you will see the price of solar continue to go lower and lower while the traditional forms of energy continue to go higher.”

New jobs

American Recovery and Reinvestment Act Top solar provisions included in the bill, which was signed on February 17, 2009: • Creation of a Department of Treasury Grant Program • Improvement to the investment tax credit by eliminating ITC penalties for subsidized energy ﬁnancing • A new DOE Loan Guarantee Program • Create tax incentives for manufacturing by offering accelerated depreciation and a 30 percent refundable tax credit for the purchase of manufacturing equipment used to produce solar material and components for all solar technologies

Solar’s emergence as a viable alternative energy source is already beginning to show across the US. Attempting to kill two birds with one stone, President Obama’s tactic of deploying further jobs into the solar industry will hopefully meet the need of America’s rising unemployment rate. Obama has pledged to invest $150 billion into creating five million new ‘green collar’ jobs – solar manufacturing and installation forming an important part of that number. Resch notes that those states that have been hardest hit by the recession – Ohio, Michigan, Indiana and Illinois – are those that are now creating and filling solar employment positions. Workers made unemployed in the automotive or other manufacturing sectors are now turning to solar, while tradesmen are being employed to install solar units. “When you install solar you’re using the tradesmen, the backbone of our economy,” says Resch. “We’re re-employing those who have been let go by industries that can no longer survive in the United States; and we’re giving new opportunities in an industry that is sustainable, that provides good quality jobs, and well-paying jobs for the future.” Despite this, integrating solar as a vital part of the country’s energy mix is no easy task. In the second quarter of 2009, the SEIA spent $54,000 lobbying the government on solar power, whereas Chevron spent $6 million to further its own interests. The capital funds of fossil fuel corporations are much greater and have traditionally held the lobbying power in Congress. Key to overcoming this is presence, explains Resch. He notes that every quarter the association is increasing its presence and educating Congress on the value of solar energy. “It’s important to not necessarily just look at the numbers of dollars spent, but to look at some of the accomplishments that we’ve achieved over the last year and to see the return on the investment of those dollars. “For example, in the bailout bill in October of last year we got a long-term extension and expansion of the tax credits for solar energy in the United States, and that’s a 30 percent tax credit for businesses. It was expanded to be a 30 percent tax credit for homeowners as well, which is an eight-year extension, so that’s a huge victory providing stability for our industry to grow in the United States.” He also points to the 19 provisions in the stimulus bill for solar energy companies, significantly more than the oil and gas industry. The SEIA has been very strategic in working with Congress to ensure its policies and incentives are heard, and the market is likely to expand quickly. “What’s critical is that we’re getting the industry engaged and to appreciate the role that Washington can play in the energy sector,” says Resch.

Taken from www.seia.org

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“That means inviting their congressmen out to ribbon cuttings or openings of new factories. To invite senators to briefings on energy. To visit them when they come to Washington and tell them about the new employees that they’re hiring and the new technologies that they’re developing. Combined, what this creates is a grassroots capability that has the potential to be second to none, and the grassroots is absolutely critical if we are going to be successful in Washington.” Since the American Recovery and Reinvestment Act was announced, the DOE has systematically been providing awards and funding for solar, for R&D projects or university partnerships to addresses the technology barriers that create the high cost of solar usage. The number of solar awardees for the funds is high, but Resch explains that the technologies aren’t commercial yet. “We certainly can expect the R&D investment to result in new products in the next several years,” he says.

that solar can be used by utilities to alleviate some of the hot spots: certain areas of the grid have more congestion than others. By putting solar on buildings strategically in those areas, you can alleviate that stress on the grid. “The third is that you can build solar farms in the desert or on landfills or on brown field spaces or other areas and can directly connect to interstate transmission lines. These solar farms could range from five megawatts to 500 megawatts, and depending on the transmission infrastructure you can connect some smaller projects to existing transmission lines that have the capacity to absorb more electrons. Now, you may not be able to build a 500 megawatt power plant on that line, but you certainly can build a 50 megawatt power plant on that line. You will see solar start to improve the efficiency of transmission by making sure that the transmission lines are being as fully utilized as possible. “Finally, in the long run, we need to build new transmission in the United States. We have partnered with the American Wind Energy Association and developed a study and recommendations called Green Power Super Highways. It outlines all of the recommendations that are necessary in order to build new transmission in this country. It takes more than 10 years to build a new transmission line, and we cannot wait 10 years before we start to generate electricity from solar farms in the southwest. We cannot wait 10 years before we start to address climate change, so the siting and the financing and the permitting of these new transmission lines is critical,” he says. Resch believes that it won’t be long before solar reaches a par with traditional fossil fuels. Solar is already cost competitive in certain areas of the country and is a viable cost alternative for natural gas. Natural gas is used to generate peak electricity, as well as base loads, and aligned with the time that solar can be maximized. He notes that solar is displacing the most expensive electrons to consumers: “Peak prices in California vary depending where you are, but in PG&E they’re $0.37 per kilowatt hour and in San Diego Gas and Electric in the south, they’re $0.42 per kilowatt hour. “Solar is the lowest cost option in those areas already. It is critical is that state governments create an accurate price signal for electricity that not all electrons are the same. That you can’t have the same rate 24 hours a day, seven days a week. Rather, when the utility is paying more for its electricity, consumers should pay more for their electricity. That becomes a very clear price signal in the marketplace that will allow solar to compete more with traditional fossil fuels.” Public attitudes have long supported solar; promoting its benefits to the legislatures is the hard part. A recent poll conducted by Kelton Research on behalf of the SEIA showed that 92 percent of the American public want the US to use more solar energy. Support from solar transcends party lines and economic strata. “People strongly support greater use of solar energy – there are not many things in the world that achieve a 92 percent public support rate. It’s putting us up in a category with puppy dogs and ice cream in terms of popularity and that is fantastic, but what we also need to do is to be smart about it and to make sure that it’s not just a technology that people like, but a technology that people start to utilize and that we get Congress and the state governments to support greater use of solar energy.”

“There are not many things in the world that achieve a 92 percent public support rate. It’s putting us up in a category with puppy dogs and ice cream in terms of popularity” He notes the success of the provisions of the stimulus bill for the solar industry, which are now starting to pay dividends, such as making the investment tax credit refundable. By turning it into a grant, applicants can now receive a check from the federal government for 30 percent of the cost of the system, rather than a 30 percent tax credit. As well as this, the stimulus bill also created an expanded loan guarantee program and a new tax credit for manufacturing. “All of these are critical to address some of the challenges we face in a recession economy. Specifically, that those companies who used to invest in solar projects last year may not this year, because either they’re not loaning money on the debt financing or they don’t have the tax equity on the tax side, and subsequently we found at this time last year that investment dollars were drying up for the solar industry. We were able to address both of those issues in the stimulus bill and we’re starting to see in the third quarter the demand for solar increase significantly due to these new programs,” he says.

Solar transmission One of the worries surrounding a big change in America’s fuel mix is how the various types of renewable sources will fit into the grid, given that the transmission structure was built for the traditionally dominant fossil fuel resources. Resch explains that solar fits in many ways, one being distributed generation capacity. “Solar generates electricity at the point of consumption. By putting solar on your roof, you’re putting a small power plant on your home or your business that will provide a substantial amount of its energy, so it relieves some of the stress on the grid because those electrons come from the solar panels on your roof rather than a power plant that may be 100 miles away. “So greater use of distributed generation certainly helps to alleviate stress on the grid and cuts down on the need for major expansions. The second is

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TAX INCENTIVES

Gregory Burkart of Duff & Phelps tells Power & Energy how companies can get in on the ﬂow of grants and tax credits available for new projects in renewable energy.

he American Recovery and Reinvestment Act of 2009, popularly known as the ‘stimulus bill’, specifies billions of dollars in funding for renewable energy and electric transmission technologies. As Greg Burkart of Duff & Phelps explains, this represents a new source of funding: “Here in the United States, historically we’ve only had two levels where we’ve been able to obtain economic development funding, and that was either at the state level or at the community or city level. Now, with the Recovery Act, we have a new source of funds at the federal level.” These funds include direct loans, loan guarantees, grants and subsidies. Burkart points out that within that there are several different types of grants and several different types of tax credits, including the Section 45 Tax Credit, which is based on the production of electricity that is sold to third parties. “If you put up a wind farm,” he says, “and you sell the electricity into the grid, you could get a production tax credit under Section 45 with our code. The same thing would apply if a company puts a solar panel on its roof; it can then get an investment tax credit of up to 30 percent.” There are also tax credits for manufacturers of alternative energy components – such as blades or towers for windmills or PV panels for solar – as well as guarantees for companies developing projects to generate electricity from renewable sources, either using new technology or technology that is already commercially available. Grants also play a significant role in the stimulus package funding for renewables; and again, there are several different types: those that support research into the development of alternative technology, and those for who have invented the technology and are trying to demonstrate it. Companies also now have the option of taking a cash grant in lieu of the investment or the production tax credit, which Burkart says has been a very popular choice.

Making a choice With so many options available, how can energy companies choose the best one to meet their needs? According to Burkart, these applica-

tions tend to have three components: “Who are the project sponsors and are they experienced individuals in pulling off a project of this caliber? Secondly, what is the technology that they’re going to employ? Is it something that’s commercially readily available that we can all rely on or will it be something more new, more avant-garde that needs to be proved out? Then the third piece of the application is the fi nancial abstract of the project and also the project sponsors.

“When you dig down into them, you might find out that they would create 300 direct jobs and that they’re claiming 2700 indirect jobs” “Do these people have enough money to pull the project off ? Will the revenue from the project support the debt they will incur to build the project? The third part is where our fi rm helps companies. Because of the way the fi rm has been built over the years, we can provide almost 100 percent of all of the fi nancial advisory aspects of that application. “We can do you economic and fi nancial modeling. We can create pro forma income statements, balance sheets and cash flow statements. Some of the programs, like a loan guarantee, require the applicant to calculate a credit subsidy cost, and we can calculate that for you. “We have to be able to demonstrate how many jobs will be created or retained. We also have to be able to model what the Buy American provision and our Davis-Bacon requirements would do to the project.” Burkart explains that the length of time it takes to satisfy all these requirements can vary widely, depending on the program: a loan guarantee can take several years, while for some tack credits the deadline for submitting an application is a matter of months or even weeks. After the application is made, the Department of Energy may take 30 or 60 days to review it, then another 30 to 60 days to negotiate a fi nal agreement.

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“The federal government likes to see that somebody else has skin What then, can potential applicants do to ensure the process runs in the game,” Burkart says. He also argues that many people underesas smoothly and quickly as possible? Burkart says the fi rst important timate how much time the various agencies – whether it’s Treasury, point to consider is the standard of the technology being used. “For exDepartment of Energy, Department of Agriculture – how much time ample, the last thing you want to do is be somebody that has a conventhey spend digging into the fi nancial model. tional windmill, and you’re applying for a loan guarantee for new and “For example, what happens if the insignificantly improved technology. That’s a real quick terest rate spikes, or if oil spikes? What if way to get kicked out. But you’d be surprised how many the price of natural gas plummets, as we’re people call you and they have a commercially available currently seeing? They spend an inordinate technology and they want to apply for something under amount of time on this. A lot of times these ‘new and improved’. project sponsors and developers have just put “The second thing is we spend a lot of time on the together some spreadsheets that the bankers American Recovery and Reinvestment Act nature of the would have historically reviewed and acmoney. We try to help our clients focus in on the projects cepted, but the agencies have a completely that are shovel ready, things that are ready to go: if they’ve different perspective on this. They ask more got a check from the government, they could be digging what ifs, sensitivity-type questions.” dirt 30 days from now. Those are of high importance, In terms of the future, Burkart believes fi nding projects like that. that within the next six to 18 months, the “Then we also spend a lot of time demonstrating the industry as a whole will be in a phase of apjob. You’d be surprised how many applications the Deplying for the funds. After 18 months, he sees partment of Energy or the Department of Agriculture get, the emphasis changing to comply with the where people claim that they’re going to invest $100 million Gregory Burkart is a Managing Director at Duff & Phelps. various agreements that have been struck. and create 3000 jobs. When you dig down into them, you Another interesting development will be might find out that they would create 300 direct jobs and that the new partnership between the Department of Energy and fi nancial they’re claiming 2700 indirect jobs. The department will look at numbers institutions. “What they’ve done is reach out to the private sector and like that with a jaundiced eye, and so they should.” created a fi nancial institution partnership where they will partner with large banks that will then be lenders and applicants under the loan guarDoing it right To increase your chances of success at the federal level, Burkart antee program, where the bank will be the actual applicant. That means recommends trying to obtain a non-federal matching fund from the in the future we will have a much more sophisticated applicant. states and the local government. He gives the example of a client with a “The second thing that will happen is that banks in turn can go out project for about $270 million to create a new manufacturing facility to and help solicit applications for these loan guarantees. Banks are really manufacture lithium ion batteries. He says the company received $120 good at parlaying these opportunities into a much more market-acceptmillion of state incentives and the federal government then gave $150 able program than the government is, so in the future we’ll see banks million of federal matching funds to do the project. playing a larger role in our fi nancing programs in particular.”

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STORAGE

ADDING VALUE TO THE GRID The energy storage technologies that help make our electricity infrastructure more intelligent. By Brad Roberts

odernizing electricity grids around the world to accept large amounts of renewable energy resources plus adding more intelligence to make grids ‘smarter’ is fairly universally accepted as a necessity to build a clean and secure electric power industry. The best way to achieve this goal is a topic of debate among power system designers. Although energy storage in utility grids has existed for many decades, the impact of storage in future grids is receiving more attention by system designers, grid operations and regulators. The amount of storage in a grid and its value is a subject of debate. Understanding the leading storage technologies and how they can affect grid operations is an important first step in this assessment. In April 2003, the Department of Energy convened a meeting of 65 senior executives representing the electric utility industry, equipment manufacturers, information technology providers, federal and state government agencies, interest groups, universities and national laboratories to discuss the future of the North American electrical system. The goal of the meeting was to establish ‘Grid 2030’, a national vision for electricity’s second 100 years. From that meeting, energy storage emerged as one of the top five concerns for the future grid. Since then more attention has been given to storage in the grid at all levels, from large-scale bulk-storage systems to small units at or near the point of load. Other nations are ahead of the US with regard to bulk storage, as the value to grid operations was recognized sooner. The future of electric grids will be impacted by growing penetration of plug-in hybrid electric vehicles (PHEVs) and electric vehicles (EVs), which will represent a new dimension for grid management with vast amounts of energy storage present in the grid in the form of millions of electric cars.

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From gigawatts (GWs) to kilowatts (kWs), electricity storage devices will change the grid dramatically.

Spectrum of electricity storage Nearly every person in industrialized countries depends on some form of energy storage every day. Every electronic device, from cell phones to laptop computers, depends on battery power to function properly. The evolution of these storage energy devices continues to grow as newer applications are introduced. One application having a great impact on potential utility grid applications is electric cars. The technologies that have worked in electronic devices are being scaled up for higher power use in cars and the electric grid. Figure 1 is a storage technology chart published by the Electricity Storage Association (ESA), which shows various technologies in terms of total power (kW) and energy capacity (time). Power applications such as uninterruptible power supply (UPS) backup for data centers and automotive starting batteries represent the largest market for lead-acid batteries, whereas laptop batteries and power tools have fueled incredible growth for lithium-ion. For bulk energy storage in utility grids, pumped hydropower plants dominate, with approximately 100 GWs in service around the globe. In general terms, power applications would be storage systems rated for one hour or less and energy applications would be for longer periods. Each of these technologies is finding applications in the electric grid. The location in the grid will vary from the transmission system for bulk storage systems to the residential feeder circuit for smaller systems based on the economics of each technology.

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TYPES OF STORAGE >> Pumped hydro Utility system designers have seen the benefits of massive amounts of energy storage in the form of pumped hydro power plants. A typical pumpedhydro plant consists of two interconnected reservoirs (lakes), tunnels that convey water from one reservoir to another, valves, hydro machinery (a water pump-turbine), a motor-generator, transformers, a transmission switchyard, and a transmission connection. The product of the total volume of water and the differential height between reservoirs is proportional to the amount of stored electricity. Thus, storing 1000 MWh (deliverable in a system with an elevation change of 300m) requires a water volume of about 1.4 million cubic meters.

>> Compressed air The basic concept for compressed air energy storage (CAES) is a peaking gas turbine power plant that consumes less than 40 percent of the gas used in a combined cycle gas turbine and 60 percent less than a single-cycle gas turbine to produce the same amount of electric output power. This is accomplished by blending compressed air to the input fuel to the turbine. By compressing air during off-peak periods when energy prices are very low, the plant’s output can produce electricity during peak periods at lower costs than conventional stand-alone gas turbines.

>> Battery Advancements in battery technology over the last 20 years have been driven primarily by their use in consumer electronics and power tools. Only in the last 10 years have efforts to design better batteries for transportation resulted in possible uses for power grid application. One driver that has helped make potential utility applications possible is more efficient cost-effective power electronics. To be practically applied in the AC utility grid, reliable power conversion systems (PCSs) that convert battery DC power to AC were needed. These devices now exist and have many years of service experience, which make a wide range of battery technologies practical for grid support applications.

>> Flywheel Spinning a weighted mass on the end of the shaft of an electrical motor or generator to provide ‘ride-through’ energy during short input power sags or outages has been around for decades. Slow speed (up to 8000 RPMs) steel flywheels have been used as ‘battery substitutes’ in the uninterruptible power supply (UPS) market for many years. These devices are practical for ride-through times up to 30 seconds. Achieving longer storage times at high power levels requires significant changes to the flywheel design and choice of materials.

>> Electrochemical capacitors Commonly called ‘supercapacitors’, electrochemical capacitors look and perform in a similar way to lithium-ion batteries. They store energy in the two series capacitors of the electric double layer (EDL), which is formed between each of the electrodes and the electrolyte ions. The distance over which the charge separation occurs is just a few angstroms. The extremely large surface area makes the capacitance and energy density of these devices thousands of times larger than conventional electrolytic capacitors.

>> New battery technology The interest in energy storage for greater use in transportation and renewable energy research activities is increasing in private industry, universities and national laboratories since Congress mandated increased funding for R&D in energy storage. Major universities like the Massachusetts Institute of Technology (MIT) have work under way to design new storage technologies. MIT is investigating ways to create very large-scale batteries capable of storing enormous amounts of power in the utility grid.

>> Thermal storage All of the energy storage technologies discussed are targeting ways to help the utility grid cope with balancing generation and load in the most optimal ways possible. Utility grids have been traditionally designed to deal with the highest load peaks that occur typically less than a few hours per day for only a few days per year. Any storage device that helps meet this objective should be considered in utility system planning, just like batteries and peaking generators. Thermal storage devices that can be deployed at the residential and commercial level should be given more attention. Modular ice storage systems can generate ice during off-peak power periods to power air conditioning systems for several hours each day during the peak afternoon load times. Similarly in cold climates, modular heat storage systems can capture electric power during off-peak periods and use that energy to store heat in a ceramic heatsink to be dispatched in higher peak periods during the winter. As more utilities consider real time pricing of energy based on actual cost, all forms of energy storage will provide more value and contribute to lower the overall peak demand.

>> Hydrogen Development of hydrogen-based fuel cells as clean energy sources continues around the world. In the transportation arena, PHEVs appear to be developing a commanding lead over fuel cell power vehicles as the clean energy choice. Hydrogen economy proponents argue that large wind farms could be used to power hydrogen processing facilities and pipelines could carry bulk hydrogen to major population centers as the energy source in lieu of large electrical transmission lines. Like today’s large natural gas pipeline networks that store gas conveniently in the system to match customer demand, hydrogen would be stored as necessary to match the demand of fuel cells for electricity and hydrogen powered cars.

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FIGURE 1 – Electricity storage by technology

Conclusions

Discharge time (hr)

Education about the value of energy storage in operat100 ing electric power grids has been lacking for a long time. As 10 revealed in the 2003 conference on establishing a vision for the future smart electric grid, storage was identified as play1 ing a vital role in managing new and more complex networks. Since that time more attention has been given to the 0.1 benefits storage can provide. The infrastructure stimulus bill passed by Congress provided increases in funding for stor0.01 age in the electric grid and significant monies to advance storage devices for PHEVs. 0.001 As countries around the world continue to increase their renewable energy portfolio, namely wind power, the partic0.0001 0.001 ipation of storage in the success formula needs attention. Like wind power, storage can benefit from financial stimulus to support the growth and demonstrate the value in actual performance. The US, Japan and Germany currently benefit from having fairly large amounts of storage (pumped hydro) in their grids. Recognizing the value of storage in dealing with variability of renewable resources is essential to harnessing the maximum potential of wind and solar power. Fortunately, storage systems used in grid applications will benefit from

PSH

Li-lon

Na-S

CAES

Zn-Br L/A Ni-MH Ni-Cd FW Na-S

EDLC

0.01

0.1 1 10 100 Rated power (MW)

CAES Compressed air EDLC Dbl-layer capacitors FW Flywheels L/A Lead-acid Li-lon Lithium iron Na-S Sodium-sulfur Ni-Cd Nickel-cadmium Ni-MH Nickel-metal hydride PSH Pumped hydro VR Vanadium redox Zn-Br Zinc-bromine

1000

10,000

the huge investment in electric-based transportation. In fact, growth of electric vehicles to 50 million units (45 kW capacity average) by 2030 would dwarf the installed capacity of major renewable energy sources. The real technology challenge will be making all of the new electric power resources function in a fully integrated ‘smart grid’. Adapted from an article originally published by IEEE.

BATTERY POWER

Bradford Roberts is the Power Quality Systems Director for S&C Electric Company and Executive Director of the Electricity Storage Association.

Comparing battery storage Sodium-sulfur The sodium-sulfur (Na-S) battery is a high-temperature battery system consisting of a liquid (molten) sulfur positive electrode and molten sodium as the negative electrode, separated by a solid beta alumina ceramic electrolyte. The electrolyte allows only positive sodium ions to pass through it and combine with the sulfur to form sodium polysulfides. Flow battery technology Flow batteries are a class of batteries that perform similarly to hydrogen fuel. They employ electrolyte liquids flowing through a cell stack with ion exchange through a micro porous membrane to generate an electrical charge. Several different chemistries have been developed for use in utility power applications. The advantage of flow battery designs is their ability to scale systems independently in terms of power and energy. Lithium-ion The battery technology with the broadest base of applications today is lithium-ion. This technology can be applied in a wide variety of shapes and sizes, allowing the battery to efficiently fill the available space, such as a cell phone or laptop computer. This packaging flexibility is accompanied by light weight relative to aqueous battery technologies such as lead-acid.

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Lead-acid Lead-acid is the oldest and most mature of all battery technologies. Because of the wide use of lead-acid batteries in a variety of applications from automotive starting to uninterruptible power supply use, lead-acid is the lowest cost of all technologies. Lead-acid battery plants are still used for back-up power sources in large power plants as ‘black start’ sources in case of emergencies. Their long life and lower costs are ideal for applications with low duty cycles. Advanced lead-acid The high volume of production of lead-acid batteries offers a tremendous opportunity for expanded use of these batteries if their life could be signiﬁcantly extended in cycling applications. Adding carbon to the negative electrode seems to be the answer: lead-acid batteries fail due to sulfation in the negative plate that increases as they are cycled more. Adding as much as 40 percent of activated carbon to the negative electrode composition increases the battery’s life. Nickel-cadmium Nickel-cadmium (Ni-Cd) batteries represented a substantial increase in power in middle of the last century. Ni-Cad batteries quickly gained a reputation as a rugged durable stored energy source with good cycling capability and a broad discharge range.

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INVESTMENT OUTLOOK

RENEWABLE RECOVERY Despite a tough year, the future is bright for green energy, says Mike Eckhart.

too are suffering a sudden loss in demand for their products.”

Federal leadership Recognizing the potential for renewable energy to jump-start the economy – in addition to mitigating the effects of climate change – President Obama called for a doubling of renewable energy in three years. “To fi nally spark the creation of a cleanenergy economy, we will double the production of alternative energy in the next three years,” he said, during his January 2009 speech. “In the process, we will put Americans to work in new jobs that pay well and can’t be outsourced – jobs building solar panels and wind turbines, constructing fuel-efficient cars and buildings, and developing the new energy technologies that will lead to even more jobs, more savings and a cleaner, safer planet in the bargain.” President Obama made renewable energy a key aspect of his legislative agenda – giving hope to the industry despite the harsh investment environment. In addition to proposals for a renewable electricity standard and a cap-andtrade system, President Obama incorporated renewable energy as a major feature of ARRA, which became law in February 2009.

2010 and beyond

he outlook for the renewable energy market in the United States remains positive, despite lagging levels of new investment in 2009 compared to the boom years of 2007 and 2008. The American Recovery and Reinvestment Act (ARRA) of 2009, Particularly contains a number of provisions widely expected to stimulate investment and contribute to a major scale-up of the industry in the US, beginning anew in 2010. Investment in renewable energy relies on two primary factors: the availability of capital to fi nance projects – which have high upfront costs – and commodity prices of electricity and fossil fuels. Th roughout late 2007 and the first half of 2008, commodity prices were high, giving renewable energy projects comparatively high returns, and money flowed into

the sector, especially where state governments provided incentives. After the financial market crisis of late 2008 and early 2009, however, commodity prices declined. Simultaneously, the credit market became constrained as lenders sought to increase earnings and reduce and avoid risk. As a result, renewable energy investment in the first half of 2009 dropped substantially compared to the fi rst half of 2008. Th is inability to fi nance renewable energy projects and companies can have serious consequences for continued growth of the industry and the economy in general. “Th is year, the rate of renewable energy installations has fallen by about half, largely due to an inability to secure fi nancing,” says Sanjay Wagle, a Renewable Energy Advisor at the Department of Energy. “In addition to lost construction jobs, renewables manufacturers

Renewable energy investment in the third quarter of 2009 is showing signs of resurgence. As of mid-September, third-quarter venture capital and private equity investment has far surpassed second quarter investment levels, suggesting that the market is recovering. Experts predict that although 2009 investment levels will continue to rise, they will still be below 2008 levels. In 2010, however, ACORE anticipates that the industry will experience strong growth, continuing in the years to come, as long as long-term policy frameworks – including cap and trade, a national Renewable Energy Standard and a federal fi nancing authority – are implemented. Provisions in current proposed legislation in both the House and Senate would establish all three of these long-term policy frameworks. One of the most influential policies to promote long-term growth in the sector is the proposed Clean Energy Deployment Administration (CEDA), or Green Bank, that would provide affordable fi nancing for the accelerated

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A helping hand To mitigate the high cost of financing renewable energy projects, ARRA created and enhanced a number of mechanisms to finance projects and boost markets. Cash Grant In-Lieu of Investment Tax Credit To help eliminate the challenges associated with tax credit financing, ARRA offers eligible projects the option of receiving a cash grant instead of the 30 percent Investment Tax Credit. The cash grant offers immediate funding for renewable energy projects placed in service before 2011 and is intended to address the lack of readily available project finance during the recession. “This new program directly addresses the problem, by turning existing tax credits for renewable energy projects into upfront capital, enabling companies and firms to secure financing and begin construction again,” says Sanjay Wagle, Renewable Energy Advisor at the Department of Energy. The Department of Energy expects the grant program to support the construction of up to 5000 renewable energy projects, supported by over $3 billion in cash grants. According to Wagle, “The $3 billion in grants could enable between $10-14 billion of capital investment in projects that would not be financed without this program – projects that are ready to be built but are waiting to close financing and start construction.” Section 1705 Loan Guarantee Program In addition, ARRA expanded the Loan Guarantee Program, which was originally established under Title XVII of the Energy Policy Act of 2005 to help pre-commercial energy technologies bridge the ‘Valley of Death’ between technology development and commercialization. The Recovery Act creates the Section 1705 Loan Guarantee Program, intended to facilitate rapid deployment of renewable energy and transmission projects by strengthening investor confidence in the ability of borrowers to repay loans. Section 1705 aims to promote commercially ready technologies, whereas 1703 was established to advance pre-commercial, cutting edge technologies. In late July, the DOE released two funding solicitations for the Loan Guarantee program, which are expected to provide up to $30 billion in loan guarantees for renewable energy and transmission infrastructure projects by the end of 2011. Manufacturing Tax Credit On August 13, the Department of Energy released guidelines for the implementation of another Recovery Act program – the Qualified Advanced Energy Project (QAEP) tax credit for renewable energy manufacturers. ARRA included $2.3 billion in tax credits for companies that “re-equip, expand or establish” facilities that manufacture renewable energy property. Intended to increase both energy independence and economic development, the credit provides up to 30 percent of the cost of investment in qualifying facilities.

deployment of clean energy, energy infrastructure and manufacturing technologies. Current proposals in Congress would allocate up to $10 billion for the creation of an independent government corporation that could provide loans, loan guarantees and other fi nancing for clean energy technologies. Combined with the Recovery Act provisions – which will successfully bolster shortterm growth in the industry, these policies are necessary to ensure long-term growth and investment in the US renewable energy sector.

“The US Senate will be taking up the energy and climate legislation this fall” However, there is already debate in the administration and in the Congress about why the federal government (hence, the taxpayers) should continue to have a direct role in renewable energy fi nancing. They are asking: “Can’t the private sector do this without government being involved?” The answer is in the magnitude of the capital needed to achieve two percent renewable energy by 2020. According to the Hudson Clean Energy Partners, the US will need $350 billion to $500 billion of project fi nance to achieve the goal, or about $30 billion per year. The highest level of investment was less than $20 billion in 2008. Some experts believe the federal government will be needed to help establish a stable policy environment to attract the $30 billion per year in private capital, and it might be needed to help fi nance the new technologies as they come with the market. The US Senate will be taking up the energy and climate legislation this fall. The schedule recently slipped because of the healthcare debate and the urgency of passing re-regulation of the fi nancial sector, but we remain optimistic that the energy and climate bill will be passed this year or next, giving us a national Renewable Electricity Standard and a CEDA/ Green Bank initiative. If so, renewable energy will get back on a rapid growth path and stay on it through at least 2020. ■ Mike Eckhart is Executive Director for the American Council on Renewable Energy.

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TRANSMISSION

As California attempts to meet its renewable energy targets, transmission infrastructure remains the greatest obstacle. We ask what the Golden State is doing to overcome this challenge. By Stacey Sheppard

GRIDLOCK?

alifornia is the most populous state in the US, and imports more electricity than any other state, with a total energy demand second only to Texas. However, the Golden State is rich in conventional energy resources and leads the nation in electricity generation from non-hydroelectric renewable energy sources, including geothermal power, wind power, fuel wood, landfi ll gas and solar power. Meanwhile, its hydroelectric power potential ranks second in the country behind Washington State. The generation of clean energy may well be getting easier, but moving it to market is not, and renewable energy projects are suffering due to the limitations of the power grid. Dreams of replacing all fossil fuels in the near future are coming up against the reality of a grid that cannot handle the new demands. If President Obama’s vision of renewable generation is to be a success, greater investment in transmission infrastructure will be required. The Department of Energy has identified transmission limitations as the greatest obstacle to realizing the enormous economic, environmental and energy security benefits of obtaining at least 20 percent of electricity from wind power.

According to a joint publication by the American Wind Energy Association and the Solar Energy Industries Association there are currently almost 300,000 MW of wind projects, more than enough to meet 20 percent of the nation’s electricity needs, that are waiting in line to connect to the grid because there is inadequate transmission capacity. In California alone, more than 13,000 MW of large solar power plants are waiting to connect to the grid. US Infrastructure spoke to Susanne Garfield-Jones of the California Energy Commission to fi nd out how California intends to overcome the challenge of inadequate transmission infrastructure in order to meet its renewable energy targets. The lack of transmission infrastructure to access remote renewable energy resources is the most critical barrier to California meeting its renewable energy targets of 33 percent by 2020. What is the State of California doing to improve its transmission infrastructure? Susanne Garﬁeld-Jones. Executive Order S-14-08, signed by California Governor Schwarzenegger on November 17, 2008, establishes a Renewables Portfolio Standard (RPS) target that directs all retail sellers of electricity to serve 33 percent of their load with renewable energy by 2020. The order directs state government agencies “to take all appropriate actions to imple-

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ment this target in all regulatory proceedings, including siting, permitting and procurement for renewable energy power plants and transmission lines.” The Executive Order and associated memoranda of understanding by and among several state and federal agencies established a joint statefederal Renewable Energy Action Team (REAT). The REAT’s primary mission is to streamline and expedite the permitting processes for renewable energy projects, while conserving endangered species and natural communities at the ecosystem scale. The Executive Order recognizes the major role of the California Renewable Energy Transmission Initiative (RETI) in achieving the RPS target. The Executive Order directs the California Energy Commission (Energy Commission) and requests the California Public Utilities Commission (CPUC) and the California Independent System Operator (California ISO), to work with RETI stakeholders to develop a product that identifies top priority renewable energy zones that can be developed reliably, cost-effectively and with least environmental impact. RETI is a statewide initiative formed in September 2007 to help identify the transmission projects needed to accommodate California’s renewable energy goals, support future energy policy and facilitate transmission corridor designation and transmission and generation siting and

permitting. RETI is an open and transparent collaborative process in which all interested parties are encouraged to participate. It is assessing all of the competitive renewable energy zones in California that can provide significant electricity to California’s consumers by the year 2020. It is also identifying those zones that can be developed in the most cost effective and environmentally benign manner and will prepare detailed transmission plans for those zones. The lack of timely permitting for transmission in California has long been a concern. What advances have been made to tackle this problem? SGJ. To allow the timely permitting of transmission for renewables, the state must ensure the establishment of the critical link between transmission planning and transmission permitting decisions. This issue is being addressed in two forums. As part of its biennial Integrated Energy Policy Report proceeding, the Energy Commission develops a Strategic Transmission Investment Plan. In recognition of the importance of coordinated statewide planning as a pre-requisite for timely, effective permitting, the Energy Commission held two workshops on this topic as part of its 2009 Strategic Transmission Investment Plan

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proceeding. The Energy Commission will formulate recommendations based on the workshop record in its 2009 Strategic Transmission Investment Plan, to be released in draft form by October 1, 2009. The CPUC, which has jurisdiction over transmission permitting for investor-owned utility projects, has opened an investigation into the barriers to transmission for renewables. Cost allocation issues also pose a signiﬁcant barrier to developing transmission infrastructure. How is this issue being addressed in California? SGJ. Cost allocation for in-state projects within the California ISO territory is not a barrier, as transmission costs are spread among all users of the California ISO-controlled grid through a transmission access charge. Publicly owned utilities (POUs) in California allocate costs among their own customers. Cost allocation may be a barrier for interstate transmission projects for accessing renewable generation. There is potential federal legislation that would establish new Federal Energy Regulatory Commission authority for siting and cost allocation that would address this issue.

“Making this link will ensure that needed projects are planned for and are permitted in a timely and effective manner that maximizes existing infrastructure and rightsof-way, minimizes land use and environmental impacts” What are the main regulatory barriers to new transmission and how can they be overcome? SGJ. Major regulatory barriers include the lack of coordinated statewide transmission planning and fragmented transmission permitting jurisdiction. This has made it difficult to site and permit transmission to interconnect remote renewable resources in a timely fashion. The state should ensure the development of a coordinated statewide planning process that is open to all stakeholders and will lead to the development of needed facilities, including joint investor-owned utility (IOU)/POU projects. Such a planning process needs to build on the RETI stakeholder-driven process to ensure environmentally acceptable projects are identified that help the state achieve its RPS goals. In California, projects proposed individually by investor-owned utilities, publicly owned utilities or third parties are within the jurisdiction of different permitting agencies. This is seen as a barrier to the development of joint transmission projects that may be in the best interest of the State of California in the furtherance of its policy objectives. A solution could be the consolidation of transmission permitting authority within one agency, regardless of project proponent. Furthermore, linking coordinated transmission planning with consolidated permitting authority would result in the timely permitting of appro-

RETI WORK IS ORGANIZED INTO THREE PHASES Phase 1: Identification, characterization and ranking of Competitive Renewable Energy Zones (CREZ) specified for solar, wind, geothermal or biomass energy facilities in California and neighboring regions. Phase 2: Development of a statewide conceptual transmission plan to access priority CREZ, based on more detailed analysis of CREZ. Phase 3: Development of detailed plans of service for priority components of the statewide transmission plan. The final Phase 1B report with the CREZ rankings was completed in January 2009. The initial Phase 2 report was completed in August 2009. Particulars about RETI Phase 3 have not been determined and will ultimately be influenced by how the California ISO and electric utilities respond to RETI stakeholder efforts to this point. For more information on RETI, please see the following website: http://www.energy.ca.gov/reti/index.htm priate transmission projects that are both environmentally acceptable and economically efficient. Construction of renewable energy facilities and transmission lines may offer significant environmental benefits, but any new construction risks facing public opposition for aesthetic, economic or environmental reasons. What have been the main challenges that California has faced in its mission to achieve its renewable portfolio standard? SGJ. With regard to the development of transmission to access renewable energy, the main challenge continues to be the public opposition due to land use concerns. This challenge is being addressed by RETI using a collaborative stakeholder-driven planning model whose goal is to balance land use and environmental concerns with electric transmission needs. The planning results from the RETI process should facilitate the permitting of appropriate transmission facilities to meet the RPS goals by resolving contentious environmental issues early in the process. If California were to benefit from an upgraded and modernized transmission infrastructure, what could it potentially achieve in terms of energy generation from renewables? SGJ. The recent RETI Phase 2A report identified 102 transmission line segments that can deliver 160 percent of the estimated renewable ‘net short’ for a 33 percent RPS by 2020 target. The net short calculation takes into consideration 33 percent of load-serving entity sales minus the contribution from existing renewables. Th is 160 percent of net short equates to 95, 536 gigawatt-hours of renewable generation. A total of 36 competitive renewable energy zones (CREZ) were identified by RETI with at least one transmission line segment accessing renewable generation from each CREZ. It should be noted that there is considerably more renewable generation that can be developed in the CREZ than the 160 percent of the estimated renewable net short identified by RETI.

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LEADERSHIP

Looking for a new breed of CEO Anita Hoffmann of Heidrick & Struggles’ Alternative and Renewable Energy Practice says a new kind of hybrid leader is needed for the cleantech sector to reach its potential in combating climate change.

he emergence and rapid growth of the cleantech sector has been referred to by some commentators as the sixth technology revolution. The recent creditcrunch related investment dip aside, growth by way of increased European venture capital has been staggering – compound annual growth rate of almost 40 percent between 2004 and 2008. In fact, the cleantech sector is pulling in a quarter of all investments made but it’s a fast-moving revolution that’s running short of leaders; more specifically, the right kind of leaders with the seemingly incongruous mix of entrepreneurial athleticism, company-building skills and organizational know-how.

Choosing a leader Sourcing leaders is a crucial issue in the development of this relatively nascent sector because to make a meaningful impact on climate change we need cleantech to hit its mark and achieve world scale sooner and not later. Investment will also flow back into the sector soon as the credit crunch eases. It’s important for investors that cleantech companies start positioning the right kind of leaders now. Clean technology is a broad industry. Its sweep includes renewable energy generation, biofuels, energy efficiency, carbon reduction and all their supporting technologies, components and services. CEOs coming into cleantech companies naturally look at how their skills from other sectors translate to cleantech, rather than relying on direct experience in these markets. The cleantech CEO often faces the trifecta challenge of raising capital, building teams and even plants – and going up against traditional energy all at the same time. Th is unique collusion of demands on the CEO is considerable and unlikely to have been similarly faced in other sectors. The pressing issue for cleantech as a new sector is this: technologies and companies go through critical transition points from both a technical and leadership point of view during their growth. The need for different leadership changes radically at the stages of 10, 100, 1000 and 10,000 employees. A company’s character and complexity also

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changes radically at these points. Failure to recognize the need for different leadership can cause companies to flounder and prevent them from reaching their full potential. Rarely will the same leaders take the company from 10 to 100 people or from 100 to 1000 or beyond. Th is is the context against which cleantech companies poised for growth need to think when choosing a leader. One of the key themes to emerge from the 2009 New Energy Finance Summit – and supported by further research by Heidrick & Struggles – is that a new leadership profi le is needed for these unique challenges and demands, the ‘extreme corporate entrepreneur CEO’. Th is is someone who is uniquely entrepreneurial and operational at the same time; someone who is an ‘ultra-visionary’ and an ‘ultra-operator’. Th is corporate entrepreneur blends the skills and competencies of the visionary entrepreneur and the professional manager. Th is hybrid CEO has the foresight and energy to take a company through rapid growth while, at the same time, giving enough structure and process to deliver results. In addition, this leader needs to be extremely attuned to, and able to influence regulatory issues in their industry, driven as it is by regulatory incentives and frameworks. Few, if any, executives are strong visionary entrepreneurs and company builders, and effective operators at the same time.

Chairmen spend a lot of time thinking about how companies can be the best at what they do, and getting the best possible management team in order to deliver this. There are questions that can be posed now that help them do this, such as: looking at the short as well as the medium and long term, are you confident your executive team can deliver the required growth and profitability? If not, what can you do to develop them, could you complement their skills with advisors or interim executives who bring the missing strengths?

“This longer-term approach doesn’t preclude taking action now for companies yet to find their extreme corporate entrepreneur”

Other relevant questions include: can your current executive team step up and generate serious growth if and when the market allows? Do you know their strengths and weaknesses and do you have an external benchmark for how good they really are? Do you have a strategy in place for replacing key leaders at critical points in the company’s growth? Where do we ﬁnd them? Similarly, investors can also ask questions now that allow them to There will be gifted and talented individuals who are the excepbetter develop an evolving leadership strategy and plan for the comtion, but the reality is the sector will probably struggle in the shortpanies they invest in. The following questions help pin down the talent term to fi nd enough extreme corporate entrepreneurs needed for the management challenges inherent in these fast-growing cleantech comsector to take off and achieve scale. Strategies can be panies: is your management team still the right put in place to develop and phase in talent, but the one to deliver the operational efficiencies needed longer-term solution would be for the sector to work now, and for future growth? If not, how do you with governments and educators to ensure leaders plan to grow the business from where it is today, of tomorrow are given a solid grounding in both to where you want it to be in five to seven years, traditional and new management skills. to real scale? What could you deliver if you had Ideally, these new skills would include dealing a CEO or a team with very different skills and with much more complexity, managing in different capabilities, in the next two years, years three to contexts and communicating effectively to an ever-infive and years five to eight? creasing and varied stakeholder group. The creation of Investors typically back a competent managepost-graduate and mid-career education programs to ment team from the start of an investment to exit help executives already in this sector acquire the right and construct executive packages accordingly. mix of skills to grow companies to real scale would also There is often little flexibility to change managemake a significant difference. ment. Going forward, investors in the cleantech This longer-term approach doesn’t preclude taking sector need to think through both at the point of Anita Hoffmann is Partner, EMEA Alternative and Renewable Energy/Climate action now for companies yet to find their extreme investing and at other investment milestones. Change and O&G for Heidrick & Struggles. corporate entrepreneur. Investors and boards should While these are questions investors, boards be looking at the competencies and composition of and chairmen should be asking now, the answers their executive team as a key strategic imperative. They should be investing will, nonetheless, point to a problem for which there is no instant cure: the same time and effort in understanding and reviewing their talent and there are just not enough extreme corporate entrepreneur CEOs to go planning as they are in developing financing and operational excellence. around. The long-term solution will be to work with government and For example, instead of expecting one person to take the business educators to ensure executive education and training is complemented from start-up to scale, there are two options worth considering: pair up with new management programs to develop the hybrid leaders needed in one corporate entrepreneur CEO with an excellent COO; or put in place an the cleantech sector. These skills will not only ensure that the solutions operational CEO for the next one to two years while planning and setting for climate change grow to scale, but will also help traditional sectors about the hire of the corporate growth entrepreneur for when the credit renew and expand. The future of both our environment and the returns crunch eases. for investors in cleantech are at stake.

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CONSTRUCTION

The outlook for power plant construction in a range of energy sectors.

ith the United Nations Climate Change Conference fast approaching, all eyes are now firmly focused on energy policy. The need to balance the security of America’s energy future with the growing need for more efficient, sustainable and environmentally friendly energy sources has never been greater. A more diverse energy supply – one consisting of fossil fuels, as well as biofuels, wind, solar and nuclear – has been heralded as the answer to both energy security and environmental issues. But whatever energy path we decide to follow, the fact remains that demand will soon outstrip supply. We need to make the most of traditional fossil fuels while investing in cutting edge research to develop sustainable sources. Another national priority is the need to reduce our dependence on foreign sources of energy, such as imported oil. The North American power sector now finds itself at a crossroads. The impact of the financial recession and a vastly greener agenda from the new ad-

ministration have sparked a downward trend in generating plant development costs in the last year, uncovering opportunities in some fuel sources and sounding alarm bells for others. According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2009, electricity demand is set to increase by 26 percent by 2030, an average of 1.0 percent per year. Estimates also show that coal will continue to provide the largest share of energy for US electricity generation, with only a modest decrease from 49 percent in 2007 to 47 percent in 2030. As of June 2009, 36 new coal plants had been permitted, or were under construction or near construction in the US, with 47 more announced. Concerns about greenhouse gas emissions are predicted to have little effect on construction of new capacity fuelled by natural gas, the generation of which is set to increase to 21 percent in 2027, before dropping to 20 percent in 2030 – about the same level as in 2007.

Predictions The EIA’s outlook also sees the generation from nuclear power increasing by 13 percent by 2030, as additional units and upgrades at existing units increase overall capacity and generation. The nuclear share of total generation will decrease, however, from 19 percent in 2007 to 18 percent in 2030.

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NUCLEAR POWER PLANTS IN EUROPE

Country

IN OPERATION Number Net capacity MWe

Belgium Bulgaria Czech Repuplic Finland France Germany Hungary Lithuania Netherlands Romania Total

7 2 6 4 59 17 4 1 1 2 103

5824 1906 3634 2696 63,260 20,470 1859 1185 482 1300 102,616

UNDER CONSTRUCTION Number Net capacity MWe 2 1 1 4

Renewable generation on the other hand is predicted to increase by more than 100 percent from by 2030, by which time it will account for 14 percent of total generation. As electricity demand grows and 30 GW of existing capacity is retired, 259 GW of new generating capacity will be needed by 2030. If we are to believe the EIA’s predictions, the majority of this new capacity will be in the form of renewable generation and coal-fired power plants. However, it is difficult to attach too much weight to these predictions, particularly regarding the development of new coal-fired power plants. A recent report by the National Energy Technology Laboratory (NETL) entitled ‘Tracking New Coal-Fired Power Plants’, states that experience has shown that public announcements of coal power plant development do not provide an accurate representation of actual new operating power plants. It is not unusual for projects that have been announced to then be cancelled before or during the permitting stage. Figures from the NETL state that actual plant capacity, commissioned since 2000, has been far less than new capacity announced; the year 2002 report of announcements reflected a schedule of over 36,000 MW to be installed by 2007, whereas only 4500 MW (12 percent) was achieved.

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1906 1600 1600 5,106

According to the Earth Policy Institute, since the beginning of 2007, 95 proposed coal-fired power plants have been cancelled or postponed in the United States – 59 in 2007, 24 in 2008, and at least 12 in the first three months of 2009. This covers nearly half of the 200 US coal-fired power plants that have been proposed for construction since 2000.

Delays

There are many reasons why delays and cancellations occur, including the fact that the cost of building a new power plant is astronomical. According to Cambridge Energy Research Associates (CERA) the costs of building new power plants more than doubled between 2000 and 2008. The latest IHS CERA Power Capital Costs Index (PCCI) shows that the cost of new power plant construction in North America rose 130 percent in this period. These costs increases could be partly explained by rising prices for commodities such as steel, nickel and copper, as well as supply issues and longer deliver times. Issues also arose due to the lack of skilled engineers in the workforce, as older workers retired and were not replaced. This resulted in shortages in plant design teams and delays to scheduled construction. This further increased the likelihood of cancellations, which are more prevalent as prospects of fulfilling all projects in the queue become impractical. The NETL points out that delays and cancellations have been attributed to regulatory uncertainty regarding climate change. There are hopes that the Copenhagen Climate Change Conference in December will help clear up some concerns surrounding environmental regulations, but this is by no means certain. Since the US went into recession, the cost of developing power plants has declined somewhat, so many of the obstacles that stood in the way of new construction have now been alleviated, creating new opportunities for increases in capacity.

International outlook Across the ocean, construction is due to start in 2012 on two new nuclear reactors at Sizewell on the UK’s Suffolk coast. Following the acquisition of British Energy, French power giant EDF Energy plans to build two reactors generating 1600 MW, which together with another plant in Somerset, could supply 13 percent of the country's electricity. The region’s business leaders are keen to ensure that local companies benefit from the employment and other opportunities offered by the multibillion-pound development. Work on the existing Sizewell B power station, which was commissioned and built between 1987 and 1995, involved 2000 suppliers, half of which were from East Anglia. At a conference organised by the Nuclear Industry Association (NIA) in late October, EDF bosses and industry chiefs said a broad range of work will be available. Keith Parker, Chief Executive of the NIA, commented “The development of new nuclear power stations could have a huge impact on the region. EDF has announced its intention to build at Sizewell. These

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reactors at their peak of construction are going to be employing 3000 to 4000 people. “There are opportunities not only for high-tech engineers but also construction companies and civil engineering and there are knock-on impacts for smaller companies within the area, including transport companies and caterers. The potential is enormous, and that's just during construction. Once it is built the power station will operate for 60 years, employing 300 to 400 people at each reactor, offering well-rewarded, well-qualified jobs. It will have a big impact on the local economy.” The UK is not the only European country to see new nuclear construction. As of September 2009 there were a total of 196 nuclear power plant units with an installed electric net capacity of 169,711 MW in operation in Europe and 17 units with 14,710 MW were under construction in six countries. In 2008, France held the top position in terms of electricity generated by nuclear energy, with a share of 76.2 percent, followed by Lithuania with 72.9 percent, the Slovakian Republic with 54.4 percent, Belgium with 53.8 percent and Sweden with 42 percent.

“Western Europe generates about 22 percent of the total world demand for hydroelectricity” Coal power generation is also on the increase in Europe. In 2008, Italy’s major electricity producer, Enel, announced that it would convert its massive power plant from oil to coal and increase the percentage of its power generated by coal to 50 percent. Italy’s total reliance on coal is predicted to rise from 14 percent to 33 percent over the next five years. Other European countries are expected to put into operation about 50 coal-fired plants over the same period, which are expected to be in use for the next five decades.

Renewables Consumption of hydroelectricity and other renewable energy sources combined is expected to be between 37 and 47 quadrillion BTU in 2010. Renewable energy sources are projected to account for nine percent of the total world energy consumption in 2010. Hydroelectricity, while remaining a minor factor in terms of world energy consumption, is important regionally. The consumption of renewables in the US is expected to grow more slowly than the rest of the world, at two percent per year over the period 1990-2010,

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with most of this growth coming from renewable sources other than hydroelectricity. In Canada, nearly two-thirds of the homes in the province of Quebec are run entirely on electricity, most of which is supplied by hydropower. The provincial utility, Hydro Quebec, is the second largest provider of electricity in Canada, with a generating capacity of 27 GW. Western Europe generates about 22 percent of the total world demand for hydroelectricity, although most practical hydroelectric resources have already been exploited there, and little further development is expected. France, Norway and Sweden account for more than half of the total hydroelectricity consumption in the region. Demand for renewable energy in Western Europe is expected to grow to 7.6 quadrillion BTU by 2015, an increase of more than 1.8 percent per year. n

EXECUTIVE INTERVIEW

Tech-savvy design Alan Saunders explains how technology is changing the design process for utilities.

Why is design so important in utilities today? Alan Saunders. With utilities facing aging infrastructure, smart grid deployments and new renewable generation projects, there is more design work being done by utilities and their engineering and construction fi rm partners. Not only is there more design work than ever before, networks and facilities are more complex and require greater accuracy, collaboration and efficiency in design. At the same time, long-term engineers and designers are retiring and being replaced by new designers who are more tech-savvy but have less practical utility experience. With that background, utilities large and small are examining their design processes and investing in solutions that will improve design quality and process efficiency. Is design a standalone process, or does it have signiﬁcance beyond the engineering department? AS. Utilities are ultimately asset managers, so having accurate and precise infrastructure asset information is critical for them. For new and retrofit projects, this asset information originates in the design tool, which is very often one of our Autodesk products. We find that for many utilities, getting the accurate and precise

“Benefits are realized across the project lifecycle, with more sustainable designs, improved collaboration and increased operational efficiency” as-built data into the system of record is a great opportunity for improving data quality and

process efficiency. Once the as-built data is accessible to operations and maintenance (O&M) teams, it can become the foundation for better management of the assets across their lifecycle, effectively improving decision-making, analysis and reporting. Just imagine the opportunities to reduce truck rolls if the O&M team has confidence in their infrastructure model and can visualize assets in their real world context before leaving the office.

use the model to automatically generate accurate cost estimates and bill of materials for the construction team. Benefits are realized across the project lifecycle, with more sustainable designs, improved collaboration and increased operational efficiency.

How can technology help address the changes in this utility workforce? AS. The new generation of engineers and designers entering the utility today have different expectations regarding technology than their What about creating models for built facilipredecessors. First of all, they are not going ties and networks? to be satisfied searching through fi le cabinets AS. This is another area where utilities are investing, particularly as they prepare for smart for paper drawings of networks and facilities. grid projects that require better intelligence They expect to be able to access this informaabout what is in the field today. Many utilities tion online from wherever they are working. have told us that they consider They also want to be able to their GIS and asset records to work in a 3D, model-based be only 60-70 percent complete, environment where they so they are in the process of can automate workflows surveying and acquiring locaand business rules, consider tion and condition data on their scenarios, understand the existing assets in the field. We real-world context for their have many utility customers designs, and avoid clashes using our design tools to create and confl icts before the an infrastructure model from project goes to construction. existing records, raster data Th is changing workforce, and field survey data, including and the requirements they LiDAR and aerial photography. are driving around intelAlan Saunders is the utility and telco industry lead for Autodesk. He is ligent, model-based design responsible for Autodesk’s global utility design solution strategies. Do you see model-based tools has been a key factor He has over 25 years of experience design being used in utilifor many of our customin the global energy and utilities business and has led successful ties? If so where? ers who are updating their initiatives in distribution planning, design, operations, customer service AS. Yes. For utilities and design environments. and business development. engineering firms designing networks, treatment plants, What changes does Ausubstations and other utility facilities, it’s todesk see in utility design over the next not sufficient to produce drawings that are few years? essentially just pictures of the assets. They AS. We see continued evolution towards want their designs to be models that reflect model-based design from our utility customreal-world objects, have data associated with ers. We will focus on leading the way with them and keep track of relationships between solutions that improve design quality and objects. They want to be able to visualize and enable design data to add value across the analyze these models before they are built, and asset lifecycle.

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CUSTOMER OPERATIONS

SAVING MONEY

THROUGH ENERGY

EFFICIENCY Joseph Forline explains how PSE&G is giving back to its the customers.

ublic Service Electric and Gas Company (PSE&G) is developing programs in its New Jersey service territory that are consistent with the federal energy master plan, encouraging investment in energy efficiency and helping contribute to the federal aim of increasing the number of green collar workers. By encouraging its customers to participate in energy efficiency initiatives, Public Service Electric and Gas Company (PSE&G), New Jersey’s oldest and largest publicly owned utility, seeks to decrease its climate change footprint across its service territory. Th is task is made more challenging by the fact that PSE&G’s customers have low incomes, live in inner city environments, and often face problems meeting their own basic energy needs. “In our program we identify target areas and customers that are interested and conduct energy audits,” says Joseph Forline, VP of Customer Operations. “Based on the outcome of the energy audits, we determine what type of work we can do to save them money on their energy bill. These are things that could be as simple as changing the light bulbs from your standard lightbulbs to compact fluorescent lightbulbs, to changing their heating and air conditioning systems, sealing up their insulation, putting additional insulation in the attic, changing the windows; typical things. The cost of it is not carried completely by the customer. A big contribution to the cost is made by the utility and we get that back in rates,” explains Forline.

“Many of the hospitals in our territory had been struggling to make ends meet” Aside from its residential projects PSE&G is operating a program supplying energy to the hospitals situated within the company’s territory. Currently covering approximately 40 percent of the state of New Jersey, the territory borders the New Work-Philadelphia corridor and so supplies much of the inner cities’ energy needs. Within this there are between 75-100 hospitals and PSE&G is heavily focusing on ensuring they are able to provide a hospital efficiency program. “Many of the hospitals in our territory have been struggling to make ends meet or have been looking for ways to reduce their energy bills,”

says Forline. “In our hospital efficiency program we have contacted 52 hospitals, and 33 of those hospitals have put in applications to participate in our program. We conduct an investment-grade energy audit and we come out with investments that can reduce their energy use, whether it’s lighting, heating and air conditioning systems, insulation or other energy efficiency investments. “We also have another program that does the same types of things but focuses on the small business segment and there are existing energy efficiency programs run by the state of New Jersey. We try to identify the opportunities in between those segments to fi ll a need in the marketplace and also drive the initiative.” In order to facilitate these programs, PSE&G is supporting federal policy and creating green jobs. Forline explains that the company has created 700 employment positions, partnering with post-secondary educations such as technical schools to develop training programs and be able to hire employees directly into the initiative positions. He notes that many of these positions are being taken by the employment of inner city residents. “Our company’s a little unique in the industry in that we do a significant amount of work with an internal workforce, as opposed to contracting out a lot of that work and we are continuing that effort with some of these new growth areas. PSE&G is one of the leading companies and we are focused on creating green jobs and supporting investments in energy efficiency and renewable energy,” says Forline.

Customer focus From deployment of energy to employment of its customers, PSE&G is determined to succeed in its customer-centric approach. “We put a lot of focus on the customer via benchmarking and analysis of our performance versus the industry and based on a couple of different measures, we are one of the leading utilities in the country from a customer standpoint and that starts with our reliability,” he explains. “We’ve received a PA Consulting Award as the most reliable utility in America for three of the last four years, and we’ve been the most reliable utility in the northeast for seven consecutive years. “We also put a tremendous amount of emphasis on listening points, surveys and customer feedback, and these include customer perception surveys, which are built in through the goals and targets of every manager and union employee through our shared savings program. We do perception surveys of many attributes: we measured 42 attributes of our customers across all segments. We also do something we call a ‘moment of truth survey’, which is a survey we give customers right after they deal directly with one of our employees, and that’s whether they’re calling our call center or if they’re getting serviced by one of our field technicians for a new meter set or a heater repair, so we take a lot of pride in our customer surveys. We have customer perception working teams where we identify four or five key initiatives every year that will drive improvements in our customer satisfaction. “One of the other areas that is very unique to our company is the fact that we do have an appliance service business, and we think that that has been helpful in our customer service scores over the years. A lot of utilities got out of this business in the 1990s, and this is where we have about 900 employees that go out and fi x heaters, water heaters, ranges and dryers, anything that burns natural gas. We handle that.

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“That’s where a lot of the gas utilities started but we’ve expanded that to air conditioners, washers, dishwashers, refrigerators, all electric appliances as well, including replacement services, so again, it’s another unique area that we have. It’s all within an internal union workforce, and that business has really helped us move into these green jobs and this energy efficiency arena because we have skills and expertise inside our company that know how to do that type of work and the energy efficiency green jobs,” he explains.

Customer education In order to educate its customers PSE&G has recently introduced an electronic newsletter, sending out a monthly email to different portions of its customers such as its municipal customers, large and small business customers, and a large section of its residential customers. The newsletter provides energy tips and promotes the company’s energy programs. “We promote the New Jersey Board of Public Utilities Clean Energy Program through that and that includes links to the websites,” says Forline. “We have also recently introduced a brand new website and new customer system called iPower. We’ve made a $160 million dollar investment in the last two years and any customer can go in and enter the size of their home, what appliances they have, how many people live in the house, whether or not Joseph Forline is VP of Customer Operations at Public Service Electric and Gas Company. they work, when their house was built, and model your energy efficiency and get suggestions on how to reduce your cost. Generally they’re things that tie into our programs.” PSE&G have adopted a customer-centric approach, and one that’s likely to pay off, not only supplying its consumers with their energy needs but also their employment needs. It remains to be seen if this is likely to attract more new customers.

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INTHE BACK 124

COMMENT

Getting serious about climate change NATALIE BRANDWEINER looks at the emerging issues in the run-up to the United Nations Climate Change Conference in Copenhagen in December.

he Copenhagen summit means nothing less than crunch time. Speeches have been glossed and promises made in this year’s run up to the UN Climate Change Conference, with each country wanting to seem the most ambitious. December is fast approaching though, and smiles are quickly fading as the reality sets in and financial commitments need to be made. Following President Bush’s complete rejection of the 1997 Kyoto protocol, now is the time for America to stand up and set an example to the rest of the world. President Obama has reiterated time and time again his intentions to reduce 80 percent of carbon emissions by 2050, but putting his money where his mouth is seems to be his biggest sticking point. Developing countries, such as China and India, believe it is the responsibility of wealthy countries to not only set an example, but also to provide hundreds of billions of dollars to help them adapt to the effects of carbon emissions. UK Prime Minister Gordon Brown recently announced that funding of $100 billion a year, each year until 2020, was needed for this to be successful. But with each country still in a state of recovery from the recession, developed nations are looking increasingly reluctant to part with their cash.

The slow pace of negotiations leading up to the conference and the absence of any agreements on the financial aspects has widened the gap between the US and the developing world. Carol Browner, Obama’s energy advisor, recently created controversy by stating that she did not expect the US senate to vote on its global warming bill before the Copenhagen summit, which is expected to limit Obama’s ability to formulate any serious policies regarding climate change. The division between the US and the developing world also deepened following the former’s continued opposition to the Kyoto Protocol and its urging of other rich countries to create a new legal agreement. The EU sided with the US, which angered China and India most significantly – China stated the protocol to be “not negotiable”. Although China is currently the world’s biggest emitter of CO2, it is supporting India’s standpoint that because its historical emissions are much less than that of the US, it should not be subject to such high carbon restrictions. China and the G77, a group of 130 developing countries, accused the US and the EU of attempting to “fundamentally sabotage” the Kyoto agreement. The US approach of moving away from a universally binding legal agreement to one where emission cutting targets would be set on national timetables can be said to allow developed countries to do little, and avoid any firm constitution that would protect poorer nations from the catastrophes of global warming. At the Bangkok climate change talks in October, India’s environment minister, Jairam Ramesh, pointed out that it was the developed world that caused the current global warming crisis, and refused to accept limits on his country’s growth. India’s failure to negotiate shows worrying signs for December. Hoping to win back China’s support, Obama will be undergoing a series of talks with China’s President Hu Jintao in Beijing on November 16 in an attempt to secure a bilateral deal. Such agreements made prior to the UN summit are regarded as the building blocks to future negotiations, but whether Obama is simply buttering up the Chinese president to accept his terms remains to be seen. Gordon Brown has highlighted the seriousness of the December talks and proclaimed the potential future of killer heatwaves, floods and droughts to be “catastrophic”. This is the last chance for negotiations before such effects become unavoidable and with the opportunity to drastically change the environmental stage, groundbreaking legislation is vital. Whether richer countries choose to use their increasingly scarce cash to do so will be critically important to the future of our planet.

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REGIONAL FOCUS: DENMARK

Setting the standard for green living, Denmark has been selected as the host for the UN Climate Change Conference in December. A Scandinavian country located in Northern Europe, Denmark has been called the â&#x20AC;&#x153;happiest place in the world,â&#x20AC;? as well as its capital, Copenhagen, being named the most livable city. Its five million citizens enjoy all the benefits of living in a country with strong social programs, as well as that of an environmentally conscious community. Denmark is ranked as the 10th greenest country in the world; historically it has been a campaigner and activator of environmental preservation, establishing a Ministry of Environment in 1971 and being the first country to make legal an environmental law in 1973. It is a signing member of international agreements such as the Climate Change-Kyoto Protocol, the Antarctic Treaty and the Endangered Species Act. Despite Denmark being the fi rst European country to experience the effects of the recession, its recovery has been fast. Experts in the Danish business believe the route out of the recession lies in the link between fi nance and environmental policies, which also provide an opportunity for the country to further realign itself with environmental goals.

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Amalienborg Palace, Copenhagen

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Green city guide: Copenhagen As the country’s capital, Copenhagen is regarded as being one of the most environmentally friendly cities in the world, receiving the European Environmental Management Award in 2006. Comprised of 700 cleantech companies and 46 research institutions, the city is described as a cleantech cluster and the spearhead of the bright green environmental movement, an ideology founded on the belief that the union of technological change and social innovation is the most successful path to sustainable development. December 2009 will see the long awaited UN Climate Change Conference take place in Copenhagen, where the world’s leaders will be discussing, with a plan to formulating, action to mitigate climate change. It is hoped that Copenhagen will set an example of a bright green environmental city.

Danish Prime Minister Lars Lokke Rasmussen at the World Business Summit on Climate Change, May 2009

The Little Mermaid statue in Copenhagen

Utility companies of Denmark DONG energy procures, produces, distributes and trades energy and is Denmark’s leading energy company. It has market shares of 49 percent on electricity production and 35 percent on heat production and owns production facilities across Denmark, Germany, Norway and the UK. It is committed to renewable energy and operates hydro and wind power in Norway. Energinet.dk is an electricity and natural gas transmission operator. It is state owned and was formed in 2005 following the merger of power grid operators Eltra, Elkraft System and Elkraft Transmission. The company owns and operates a 400 kV electricity transmission grid and is also the co-owner of the power interconnections with Sweden, Norway and Germany.

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PHOTO FINISH

Activists demonstrate outside the United Nations building in Bangkok, Thailand, during the recent climate change talks held in the city.

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