Cap and Trade for Traffic

Great article today on a study suggesting that traffic congestion is created by the marginal driver, and more interesting, from the marginal driver from specific and predictable locations.  Maybe 1% of commuters leaving from specific neighborhoods have a big increase on traffic congestion and commute time for everyone. The link to the study is here.

We dealt with this in the demand response market for energy.  With regulators 10-15 years ago creating free markets enabling companies to sell a reduction of energy demand to the power companies instead of increase generation.

We dealt with this in the carbon, Renewable Energy Credit, and Acid rain sphere by creating cap and trade style mechanisms enabling the rest of the market to pay some marginal actors just enough for them to drop out first.

There are bars that change the price of beer based on demand.

The stock market handles real time demand pricing every day.

Why not for traffic?  Hammer congestion and air pollution.  Create localized markets where the transit or roads authority, like Caltrans, TexDOT, or the local air district, instead of spending my tax dollars only on new roads, infrastructure, or regulations, used cellphone apps to pay a few dollars to commuters who would drop out of the critical commute paths at the right times.  Perhaps credits on your toll road account?  The more who apply, the less each make? Compliance tracked against your cellphone GPS?  A thousand ways to address the myriad technical issues with payments, tracking, compliance, verification, and additionality.

Small investment, massive social, environmental and economic benefits.

Holy Grail 12.0: Is Our Quest At Its End?

I’ve been working with new energy inventions and their creators for almost 15 years now.  I don’t know how many times I’ve heard a new technology described as “the Holy Grail”:  solving all of the world’s problems forever.

Well, here’s the newest one using the Holy Grail cliche:  a supposedly carbon-neutral method of using microbes to convert electricity into natural gas.

Thanks to an article written by Brita Belli of Ecomagination at GE (NYSE: GE), I was pointed to the recently-reported work of a team of researchers led by Alfred Spormann at Stanford University and Bruce Logan of Penn State University.  These researchers have determined that an organism called Methanobacterium palustre, when submerged in water on an electrically-charged cathode, will produce methane (i.e., natural gas, CH4) — supposedly at an 80% efficiency rate.

The carbon-neutrality of this approach stems from (1) using surplus electricity generation from non-emitting wind or solar and (2) the microbe extracts the carbon atom for the methane from the CO2 in the atmosphere.

So, in theory, one can make an infinite supply of a relatively clean fossil-fuel from renewable electricity by sucking carbon out of the air.  And, given the extensive natural gas pipeline, storage and distribution network, this fuel could be used for baseload power generation, traditional space/water heating and cooking purposes, and even transportation (e.g., natural gas vehicles).

The catch:  as is often the case with early discoveries in university labs, the researchers don’t know how to scale the technology and achieve consistent/stable results at commercially-useful levels.  The economics are also highly uncertain.

Don’t hold your breath.  This type of invention could take a very very long time to turn into something that’s viable for the energy marketplace.  As a long-time executive from one of the supermajors once said to me, it takes 12-24 months to really prove something at the next order of magnitude — and in energy, it’s usually several orders of magnitudes of expansion from the laboratory to the field.  Thus, what seems like an overnight success story usually has a decade or more of development behind it.

So, while this discovery might turn out to be the Holy Grail — and it definitely seems worth monitoring — one should not get too excited just yet.  There are a lot of potential hurdles to be overcome, and some of them may not be surmounted.  Even if the technology develops favorably, it’s a long way from being ready for prime-time.

In the meantime, this is the only Holy Grail to which I will pay attention.

Danger: Silly Season Ahead

Here’s a musical experiment for you:  play a song such as “Penny Lane” from The Beatles (or, if you prefer classic rock, “Whole Lotta Love” by Led Zeppelin will do nicely) on your sound system…but with the balance set all the way to one side or the other.  There will be enough recognizable content for you to still recognize the song, but you will not be able to hear the whole song, and will miss many important elements.

This is like getting your information on topics of the day from Fox News or MSNBC:  significant portions of the story being reported upon will simply not be heard.

If you play “Penny Lane” (or “Whole Lotta Love”) through an old monophonic transistor radio, you will hear both “sides” (as it were) of the song.  But, the fidelity will be very poor, and you won’t hear the nuances and richness of the song.

This is like getting your information from the USA Today, or most local newspapers:  any deep appreciation of the underlying issues will remain out of reach, because it is inherently lacking from the reporting.

As we move into the so-called “Silly Season” of election politics, in an era of “sound-bites”, incumbents and aspirants — and perhaps more importantly, thanks to the Citizens United decision, the flotsam of PACs and SuperPACs that wallow around the political discourse — are flinging about half-truths about all sorts of important issues. 

Most of these issues — health care, fiscal policy, immigration, “values” — are ones in which I claim no sort of expertise, and accordingly I will not render any public assessments on them. 

However, a large number of polemical skirmishes on the 2012 political battlefield are shaping up to be based on energy and environmental topics.  The list is long:

Keystone XL pipeline.  High gasoline prices.  EPA regulations.  Fracking and shale.  Nuclear energy.  Energy independenceSolyndra.  Extension of the wind production tax creditSubsidies to fossil fuels.  Dumping of solar panels from China.

The airwaves are crackling with a cacophony of messages for and against these issues…and I’m hearing lots of misstatements and oversimplifications.

I’ve been ruminating on the advent of Politifact, that aims to prove or debunk political claims in as unbiased a fashion as possible, and thinking that there ought to be some similar effort focused on the issues of importance to us in the cleantech community.  Maybe someone will take this on…

…But, in the absence of such an effort, and lacking the personal will to tackle it comprehensively on a topic-by-topic basis, I will use the remainder of this post to offer general advice to thoughtful citizens wishing to weigh energy and environmental issues in something other than a knee-jerk or dogmatic fashion. 

First, I am reminded of some advice from mentors upon beginning my career in the late 1980’s, as an economic analyst of various energy and environmental policy issues on behalf of (primarily) Federal clients:  “Be an ‘equal-opportunity offender’.  If you’re pissing off people on both sides of an argument, then you’re probably close to the truth.”

In my experience in the energy sector over the intervening 25 years, this is so much more a truism than can possibly be imagined.

The implication of this insight is that any message you might hear or read from any one source — unless that source is doggedly determined to be unbiased — is likely to in fact be highly biased.

If the only source of information you use to develop a perspective on energy issues is, for example, Americans for Prosperity, you will arrive at a selective and skewed view.  As noted in this articleThe Guardian recently reported on how AFP, and other groups of its ilk, are making a deliberate effort to discredit many policies to promote renewable energy, and so are unlikely to present any evidence that paints renewable energy in any positive light. 

Then again, it should further be noted that The Guardian is pretty well-known to have an agenda it seeks to advance.  Indeed, even most highly-respected newspapers known for excellent reportage — from the Wall Street Journal to the New York Times — have editorial boards that are widely-recognized to have a distinct political philosophy that they aim to espouse.  So, one must always take what information is obtained, even from the most reputable of sources, with a grain of salt. 

Alas, there is little substitute for decades of direct experience in an industry, examining issues from multiple angles, working productively (or at least trying to) with people from across the spectrum of interests.  It could be argued that this is the only professional asset and advantage I have accumulated over the years.

In addition to being slanted and aiming to press forward a position — regardless of whether the facts fully support it or not — most reportage of energy and environmental topics suffers from woeful lack of basic understanding of science and economics.  Publishers and journalists are approximately equally guilty. 

And, with its grave innumeracy — and the consequent inability to make tradeoffs — the electorate is subject to being swayed and stuck to a position only because it sounds right, best “fitting” their pre-existing and fairly unmalleable mental model, coming from a source they unblinkingly accept.

In energy and environmental issues, just about everything involves tradeoffs.  There is no perfect solution, no silver bullet.  There are benefits, but there are also costs, to all possible options.  When confronting a world of this much complexity, it may be comforting for many to resort to idealistic dogma.  However, those positions — which tend to be on the extremes — is not where reality usually lies, and it’s not where the action is.

If you were to limit my intake to one and only one general information source, I would choose (drum roll, please) The Economist.  OK, this is surely no surprise to those who have followed me for awhile.  Sure, I was trained as an economist,  but that’s not why I endorse the publication.  Simply, I find its weighing of all the diverse factors, and its understanding of the underlying facts and evidence, to be more thorough and — yes, actually — fair and balanced than other outlets.

Even so, The Economist can’t cover all energy and environmental matters.  A better approach to developing a healthy and informed perspective on these topics involves more work, accumulating from a variety of sources from across the spectrum.  It is unfortunate but seemingly the case that certain media — and especially, the blogosphere — has joined politics in becoming an adversarial contest of opposing views, where one side or the other will not let certain facts get in the way of telling the story they want told.

In the upcoming Silly Season, I urge conscientious voters to weigh all sides of energy and environmental issues, from multiple sources of information, before coming to any conclusions.  Don’t take what is said by the Democratic or Republican candidate, or their PACs, as gospel.  Don’t blithely assume that what environmental advocates or industry trade groups are reporting is the truth, the whole truth, and nothing but the truth.

It’s a very rough generalization — and as Alexandre Dumas once said, “All generalizations are dangerous, even this one” — but I submit that most pro-environmental positions underweigh economic considerations.  It’s simply naive to argue for tighter environmental control and then dismiss any possibility of negative economic consequences.  And, environmentalists are sometimes prone to “sky-is-falling” hyperbole, which undercuts their credibility in legitimate policy debates.

On the other hand, self-interested messages from the conventional energy sector are often disseminated through the filter of so-called “astroturf” (phony grassroots) organizations, that sound as if they’re representing the views of Bob & Betty Buckeye but instead actually are reciting the scripts of oil, gas, coal and utility companies.  The old adage from Watergate still applies:  “Follow the money.”  It’s incumbent upon the citizen to pierce the fog and see through to who is paying a lot for these media buys so you can hear their opinion.  Also:  don’t forget that the conventional energy sector has a lot more money to throw around than the other side in telling the stories they want you to hear.

And, in the end, to maintain your sanity in the face of inanity, it’s a good thing to fall back on this gem of folk wisdom.

Banking on a Low-Carbon Energy Future

One of the world’s largest banks, London-based HSBC (NYSE: HBC) issued last September a very interesting research report entitled “Sizing the Climate Economy”.

At less than 60 pages, it’s an excellent read for those interested in the future growth of the advanced energy economy.  There are really too many highlights to capture all of them in this blog post, but here are a few snippets.

HSBC pegs the global low-carbon energy market — comprising low-carbon energy supply (renewables, nuclear, and carbon capture/sequestration) and energy efficiency (vehicles, buildings, industrial, energy storage, and “smart-grid”) — at $740 billion in 2009.

The HSBC authors characterize four potential scenarios between now and 2020:  ranging from a “Backlash” scenario where most world economies retrench from commitments to reduce or limit carbon emissions, to a “Green Growth” scenario in which many nations commit (and actually follow through on those commitments) to clamp down on emissions to an even greater degree than in earlier headier days of 2009. 

Even in the most-pessimistic (in my view, most realistic) scenario, the global low-carbon energy market is projected by HSBC to more than double by 2020, to about $1.5 trillion, representing an annual growth of over 6%.  By any account, and even under this uninspiring scenario, the low-carbon energy market is a solid growth market of the next decade.  If the dominoes fall right and we get a result similar to HSBC’s most optimistic scenario, then the low-carbon energy market would nearly quadruple to $2.7 trillion by 2020, for a 12.5% compounded annual growth rate.

The numbers in the HSBC report need to be taken with a grain of salt.  Any system or market as complex and multi-faceted as the global energy sector cannot be modeled with any great degree of precision.  If HSBC’s forecasts for 2020 end up within +/- 50%, I’d say they would be doing well.  What’s more valuable, in my opinion, about studies of this type are the qualitative conclusions that can be drawn.

In general, the energy efficiency side of the ledger fares better in HSBC’s analysis than low-carbon energy supply.  No doubt, this is because many effiicency options are lower cost (certainly, lower cost per ton of emissions reduced) than new low-carbon supply options — and because the demand for new energy supply options will inevitably be depressed as more efficiency is implemented.  HSBC is particularly bullish on electric vehicles, especially in the second half of the decade — an optimism that I’d like to share, but can’t at present based on the decidedly mixed results of 2011 for electric vehicles (as discussed in my last post here).

For most of the report, HSBC uses their “Conviction” scenario as “the most likely pathway to 2020″, in which Europe meets their renewable energy targets but not their energy efficiency targets, China more than meets their clean energy targets and becomes the largest market for low-carbon energy in the world, and the U.S. (disappointingly, but predictably) experiences relatively limited clean energy growth.  So, for those of you in the clean energy marketplace, the place to be is….NOT the U.S.

This report was written by a team of HSBC analysts based in Europe — and it shows in many places. 

The text refers several times to human-driven climate change as a phenomenon that’s commonly-known and understood to be a real issue, and the need for public sector intervention to address the issue — if not cap-and-trade or carbon taxes (which seems unlikely for the foreseeable future), then command-and-control regulation.   Alas, much of corporate America and most of one of the two major political parties in the U.S. (lots of overlap here) contends that climate change is unproven at best or a hoax at worst — and therefore undeserving of any policy initiatives.   

This study could never have been issued by a U.S. bank, or even a U.S. based team of a global bank, or else they would be disavowed.  It certainly won’t help HSBC grow market share for U.S. corporate banking services.

Notwithstanding the lack of political will and leadership (especially in the U.S.), HSBC is more hopeful about progress in lowering carbon intensity, because other co-aligned forces will be powerful in the coming years.  In particular, austerity will squeeze out inefficiencies.  Furthermore, the authors note that many countries are pursuing low-carbon strategies because such an emphasis fosters industrial innovation or offers the prospect of creating many “green jobs”.

As HSBC notes, “a low-carbon economy will be a capital-intensive economy”.  This makes intuitive sense, as the use of carbon-based fuels implies an ongoing set of economic activities to continually extract and consume the resource.  Put another way, low-carbon energy will be more about capital expenditures and less about operating expenditures.  And, a LOT of capital will be required:  HSBC estimates about $10 trillion of capital cumulatively through 2020, tripling from 2009 levels to reach an annualized rate of $1.5 trillion per year — “a large but manageable sum in our view”. 

Where will this investment capital come from?  “It will be private capital from corporations and consumers that will finance the climate economy — with governments setting the framework and providing capital at the margin.”  In typical understatement, HSBC notes that “the challenge for investors, however, is the lack of certainty over both policy intentions and actual implementation.”

That’s a polite way of saying the world will likely muddle through, somehow.

Shale gas drives oil / gas spread to a new record

On January 13, 1994 the ratio(*) of the price of oil to the price of natural gas was 1.14.   Today it hit a record high over this period of 5.26.   Gas traded at $3.28 today, just 21% of the $15.38 / mmBtu it traded for on December 13, 2005.   Shale gas is providing gas in volume at moderate cost driving this record high price disparity.

IMO, the impact of moderately priced gas hasn’t been factored into energy policy to any great extent.   Nor has the balance of the energy market had time to react.  And the media hasn’t realized this is happening.

But there should be many winners – combined cycle generation, CNG vehicles, chemical processing that uses gas, and gas consumers.  Why isn’t there a stamped into new fleet conversions to CNG….it’s way cheaper than gasoline?

The will also be disruption, – coal, climate change strategies, and renewable generation will be impacted.   Why sequester carbon when you can replace a coal plant with a super efficient, super clean, combined cycle plant and emit 50% less CO2?

My prediction for 2012 – electric generation clean tech feels some competitive heat.

(*) The energy price ratio is the price of crude on a $/mmBtu basis divided by the price of natural gas on a $/mmBtu.  The crude prices used are the front month NYMEX contract for WTI crude at Cushing Oklahoma.  The $ per barrel price is converted to $/mmBtu using 5.8 mmBtu / bbl.   The gas price used is the front month NYMEX contract for natural gas at Henry Hub Louisiana.

Originally posted here

The Great State of Uticana

Last week, at the stunning student union of The Ohio State University, Battelle convened a meeting entitled 21st Century Energy & Economic Summit on behalf of Ohio Governor John Kasich, who both opened and closed the conference with some observations.   The agenda covered a wide spectrum of energy issues facing Ohio, and didn’t lack for interesting moments.

One of the hot issues in Ohio energy policy is whether the renewable portfolio standard and energy efficiency provisions of the last major energy act, SB 221 from 2008, are vulnerable.  Indeed, some of Kasich’s fellow Republicans in the Ohio Senate recently released SB 216, a bill to completely eliminate the renewable and efficiency requirements of SB 221 — although it is widely viewed that the bill has no chance of passage.  Acknowledging this, as reported by The Columbus Dispatch, Kasich said in his introductory remarks that several parties are “trying to get me to say we don’t need renewables here.”  But, he continued, “of course we need renewables.  Of course we need solar and of course we need wind.”  In his concluding remarks at the end of the two-day event, he reiterated that “I believe in renewables.  My kids believe in renewables.”

Kasich also had a kind comment for his predecessor, noting that the Strickland Administration had done “a number of good things on energy efficiency for the state” that needed to be built upon.

Nevertheless, expect some retrenchment that will not fully please renewable and efficiency advocates:  in his closing remarks, Kasich circled back and noted that he thought SB 221 would probably benefit from some tweaking, using as an example his exasperation that cogeneration hadn’t been given appropriate eligibility.  All signs point to hearings in the Ohio Assembly later this year to re-evaluate SB 221, although the Governor’s stated position providing some cover to renewables and efficiency seems to indicate that SB 221 at least won’t get entirely discarded or thoroughly trashed.  Stay tuned.

Indeed, one of the central themes of Kasich’s comments was that all players in the energy sector need to get along, that there’s a place for everyone, albeit maybe not to the degree that any one segment would ideally like.  As the Dispatch termed Kasich’s comments, “company executives in gas, solar, coal and other energy sectors needed to agreed to give up some turf as his administration crafts its policy.”  In kicking off the event, Kasich asked for “natural gas to work with coal, and coal to work with natural gas, and renewables to work alongside fossil fuels, and for the utilities to get along — well, that might be too much to ask,”  a perfect segue into the electric utility panel.

Attendees got to see some pretty feisty verbal jousting between Tony Alexander, CEO of First Energy (NYSE:  FE), and Mike Morris, CEO of American Electric Power (NYSE:  AEP), who differed strongly on whether competitive markets or regulated rate-base recovery mechanisms led to the best outcomes for electricity prices to consumers.  Not surprisingly, First Energy favors competitive markets — as they’ve spun off all their generation into an unregulated subsidiary and can earn attractive margins on their deeply-amortized powerplants — and is therefore unenthusiastic (to put it mildly) about renewable energy and energy efficiency requirements.  On the other hand, AEP believes that only regulation can provide enough price certainty and stability to ensure investments in new generation capacity that are both prudent for investors and customers alike. 

Keith Trent of Duke Energy (NYSE:  DUK) tried to split the difference, arguing for competitive energy markets to induce operational efficiencies and regulated capacity markets to foster capacity investment decisions that avoid boom-and-bust cycles of tightness-and-glut.  Perhaps even more striking was the different stance of American Municipal Power (AMP), the generation and transmission cooperative serving several municipal utilities in the Midwest.  To be sure, they do have a significant reason to have a different perspective:  as a non-profit corporation, they are exempt from regulatory oversight by the Public Utilities Commission of Ohio and not subject to any of the requirements of SB 221.  AMP’s CEO, Marc Gerken, indicated that his customers — the municipal utilities — were driving AMP to invest more in renewables such as hydro and wind, in large part to insulate themselves against the likely prospect that wholesale power prices will only increase due to rising fuel prices, more stringent environmental requirements and tightening capacity markets.  

Regarding coal, which the Dispatch article referred to as “long a driver of the state’s energy economy that is still subsidized with state taxpayer dollars,” Kasich noted that “we’re not going to walk away from coal.”  I remember Kasich also saying that “we’ll be using coal for the rest of my lifetime.”  However, Kasich said that we also “have to be mindful of the downside of it.  And we’ve got to think about cleaning it.”  In a subsequent interview with ClimateWire, as reported in The New York Times, Kasich acknowledged climate change as a legitimate concern, not taking the skeptical or denial positions so common to the beliefs of many of his fellow Republicans:  “there isn’t any question that the activities of humans have an impact.  As to what the extent of it is, I don’t know.”  

So, while he’s keeping the door open for coal, and supports its continued use, he’s also not blindly defending it to the death either.   I wonder if Kasich was amused or embarrassed by the impassioned rant of Robert Murray, President and CEO of Murray Energy Corporation (a privately-held Ohio-based coal mining company), in which he loudly called for the defeat of “Barack Hussein Obama”. 

All of this was preamble to the clear centerpiece of the event:  the discussion of opportunities afforded by the Utica Shale resource underneath much of Ohio.  And, the star of the show was Aubrey McClendon, CEO of Chesapeake Energy (NYSE:  CHK), by far the most visible cheerleader for shale gas exploration and production in the U.S.

As reported by BusinessWire, McClendon stated that their early test drilling results indicate that the Utica shale opportunity was likely to be very large — as large or larger as the most productive shale plays in the U.S., such as the Bakken, Barnett, Eagle Ford and (closer to home) Marcellus.  Also, it appears that it offers the potential for a three-prong play:  natural gas, gas liquids and oil.  When pressed to give a sense of magnitude of the Utica prize in Ohio, McClendon offered that he thought it could be worth $500 billion — “I prefer to say half a trillion dollars, it sounds bigger”.

McClendon restated what he had claimed in an early August appearance on Jim Cramer’s “Mad Money” CNBC show:  that he can foresee $20 billion of investment per year in Ohio for the next 20 years to pursue Utica opportunities.  Coinciding with the event, the Ohio Oil & Gas Energy Education Program (OOGEEP) released initial results of an economic analysis that estimated about 203,000 jobs in Ohio to be created by 2015 — just three years from now! — associated with pursuit of Utica shale gas.

Of course, these kinds of incredible (non-credible?) numbers being thrown around cause officials in economically-challenged Ohio to salivate.  According to the New York Times, Kasich said that “we’re sort of experiencing a gold rush.”   

The only pushback to unfettered pursuit of Utica is the rising chorus of concern from a wide range of environmental advocates about the use of hydraulic fracturing, more commonly-known as fracking, to produce gas from shale.  Among other places, New York, New Jersey and Maryland have issued moratoriums on fracking, primarily due to worries that the process will lead to water contamination, and secondarily due to fears that the activity may lead to ancillary emissions of methane (a potent greenhouse gas) and may increase prospects for earthquakes.

In the New York Times account, Kasich was adamant:  “There’s no problem with fracking.  I dismiss that.”  One of the reasons Kasich feels so confident:  under the prior Strickland Administration, the state of Ohio passed SB 165, a set of laws concerning oil/gas production that are claimed to be among the most stringent in the nation, including strong requirements for triple-casing all drilled holes to mitigate the potential for contamination or leakage to seep into other strata or release to the surface.

It appears that the Kasich Administration is bending over backwards to clear the path for Utica shale development, recently reassigning David Mustine from being the head of the Ohio Department of Natural Resources to a position that Kasich called “Shale Czar” in the newly-created privatized economic development agency JobsOhio.  From being invisible a year ago, Chesapeake has become a high-profile sponsor of Ohio State football — probably the most-scrutinized activity in Ohio — and McClendon has been known to meet frequently with top officials from Ohio.

Personally, I worry that the Utica shale is being viewed by the Kasich Administration and by certain segments of the government and private sector as the answer to all of Ohio’s issues.  Based on what I’m seeing, the state may soon be renamed “Uticana”.

I have no problem with environmentally-responsible fracking, which I believe is in fact doable, and endorse the pursuit of shale gas as long as it is truly “done right” (a phrase used often during the two-day event).  However, I fear that the Utica shale opportunity will be less spectacular than claimed — and if so, then putting all of Ohio’s eggs in that basket will have been a mistake.  McClendon and others on the shale panel noted frequently, as a disclaimer, that the drilling test results were still preliminary.  And, as the experience in other shale basins indicates, decline rates from shale production have been very steep — much more so than from conventional gas wells.

For the U.S. has long been insufficiently diversified:  we have an energy system that depends way-too-much on oil for transportation and coal for power generation.  As a result of that long over-reliance, we’re now painted into a challenging corner on a variety of environmental, geopolitical and economic fronts.  I don’t believe that any one energy solution — even those I have advocated for in Ohio, such as the offshore wind efforts being undertaken by the Lake Erie Energy Development Corporation (LEEDCo) and its partners — is the cure-all for our current challenges, or the road to future successes. 

Betting the farm on any one thing, even something as seemingly-compelling as Utica shale, will just paint us into another corner a few years from now.  To avoid this outcome, we need a more resilient and robust energy system — one that only diversification can provide.  In turn, this will require regulatory innovation, technological innovation and capital.

If I have a criticism of the two-day summit, it is that the last two input factors — technological innovation and capital — were mainly excluded from the proceedings.  There was literally no discussion of financing of the energy sector in the coming deacdes.

As for technology, the master of ceremonies, Joe Stanislaw, helped frame the conference at its outset with some big-picture remarks, including his provocative observation that “energy represents the new Great Game for the 21st Century”:  there is an intense global competition not only for the energy resources of the world, but the technologies to enable continued access to affordable energy to fuel economic growth.  Alas, the discussion panels never picked up on Stanislaw’s point.

If Ohio is to be something more than Uticana, not only does it need to pursue other energy options with some degree of vigor, it must also commit to creating an environment conducive to cleantech innovation and entrepreneurship — the font of much job-creation and wealth-creation in the 21st Century.  Surely, this is something that should be well-appreciated by Mark Kvamme (Kasich confidante, head of Jobs Ohio, and long-time venture capitalist at Sequoia Capital) and Wilber James (Kasich confidante, long-time venture capitalist at RockPort Capital, and planner of the agenda for this two-day event).

Notwithstanding the potential riches associated with the Utica shale, we cannot allow Ohio to become primarily a resource-extraction economy.  While some degree of resource-extraction is inevitable in modern society, examples near (West Virginia) and far (Nigeria) suggest that overreliance on this segment of economic activity is a path towards massive inequities and injustices, environmental degradation, low standards of living, and a wide variety of social ills.

Building Energy Performance: The Johnson Controls White Paper Library

Without much fanfare, Johnson Controls (NYSE:  JCI) has developed a number of very good white papers relating to building energy performance:  energy efficiency and renewable energy implementation for buildings.

The list of white papers includes coverage of topics such as:

  • Lighting retrofits for industrial facilities – including an illustrative example of the economics associated with a retrofit indicating a payback on investment of 1.24 years (presumably, one of the more favorable examples that JCI has encountered themselves).
  • Solar energy systems on building rooftops — summarizing the issues associated with implementing a solar project, backed by anecdotes from several case studies.
  • Combining on-site renewables with energy efficiency – reflecting the important concept that it’s typically cost-inefficient to supply electricity to a building with (usually higher-cost) renewable energy without first capturing many of the (usually lower-cost) energy reduction opportunities available from a variety of efficiency measures.
  • “Net zero” buildings – articulating a vision of building performance that requires extreme co-alignment and collaboration among all parties involved in the execution of a building:  the owner, the occupant (not always the same), the developer, the architect, the engineer, the general contractors and their subcontractors.
  • Financing of energy efficiency and renewable energy projects for buildings – providing an overview of the various lease and debt options that can be found in the marketplace.

Of course, it goes without saying that these are marketing pieces designed to promote JCI’s capabilities and offerings.  Even recognizing this bias, they are well-written, clear and concise on the germane issues facing building professionals in considering energy efficiency and renewable energy possibilities.  JCI’s library is a good addition to the resources available in the cleantech space.

Ford and SunPower Simplify Solar Charging of EVs

Ford and SunPower offer a rooftop solar system that will allow Focus Electric owners and other electric car drivers to “Drive Green for Life” by providing renewable energy to offset the electricity used to charge the vehicle. The SunPower rooftop solar system also will be compatible with the C-MAX Energi plug-in hybrid electric vehicle Ford is rolling out in 2012.

This pre-configured solution makes solar charging easy for new customers.  Many of the first 50,000 U.S. buyers of electric cars have been early adopters of solar power and renewable energy. Music legend Jackson Browne lives off-gird and charges his Chevrolet Volt with his own wind and solar power.   Johnson and Johnson installed 1.1MW of SunPower solar covered parking structures that includes 5 Coulomb electric car chargers. The U.S. Marine Corp at Camp Pendleton showed me their solar powered parking structure that charges their 291 electric vehicles. Solar Parking Structures

The 2.5 kilowatt rooftop solar system is comprised of the SunPower® E18 Series solar panels that produce an average of 3,000 kilowatt hours of electricity annually. These high-efficiency solar panels generate approximately 50 percent more electricity than conventional panels and utilize a smaller footprint on the roof. The system was sized to accommodate an electric car owner who drives about 1,000 miles per month.

The complete SunPower solar system is offered at a base price of less than $10,000 after federal tax credits. Local and state rebates, along with other incentives, may drive the system cost down even more, depending on a customer’s location. Included in the purchase is a residential monitoring system, which includes the ability to track the performance of their solar system on the web or through an iPhone application. Affordable financing options for the solar system are available through SunPower.

When Ford customers order their Focus Electric or C-MAX Energi they will have the option of indicating an interest in the SunPower system. SunPower leads the industry with more than 400 dealers in the U.S., and can support the initial Focus Electric roll out in all 19 markets. A participating SunPower dealer who will visit their home to begin the installation process will contact interested Focus Electric customers. Ford also has an agreement with consumer electronics leader Best Buy to offer a 240-volt home charging station for the Focus Electric and future electric vehicle owners.

I was impressed with my test drives of early versions of the Ford Focus Electric, which will challenge the Nissan Leaf. In 2013, NISSAN opens its new Tennessee plant with the ultimate capacity of making 150,000 LEAFs each year. The Ford C-MAX Energi will challenge the Chevrolet Volt’s leadership of plug-in hybrids. Chevrolet will make 65,000 Volts and Opel Amperas next year.

Electrification is an important piece of Ford’s overall product sustainability strategy, which includes the launch of five electrified vehicles in North America by 2012 and in Europe by 2013. Ford launched the Transit Connect Electric small commercial van in 2010 and will launch the all-new Focus Electric later this year. In 2012, these models will be joined in North America by the new C-MAX Hybrid, a second next-generation lithium-ion battery hybrid and C-MAX Energi plug-in hybrid. This diverse range of electrified vehicles allows Ford to meet a variety of consumer driving needs.

Electric car critics and many oil industry executives claim that there will only be coal power charging electric vehicles. In my two years of interviewing electric car owners and fleet managers, I have yet to met someone who only uses coal to power their electric vehicles. Most use zero coal power. Many use 100 percent renewables. One oil giant who does not make the false coal claim is Total, which is buying the majority of SunPower stock. Total sees a billion dollar opportunity to charge cars with renewable energy.

The Winter of Nuclear Energy

On March 11, 2011, an earthquake then tsunami triggered escaping radiation from nuclear reactors near millions of people in Japan.

On Sunday, August 7, a group of the world’s greatest musicians performed an inspiring benefit concert to support disaster relief in Japan. Crosby, Stills & Nash, Jackson Browne, Bonnie Raitt, Jason Mraz, The Doobie Brothers, Tom Morello, John Hall, Kitaro, Jonathan Wilson,  and Sweet Honey in the Rock sang on behalf of  Musicians United for Safe Energy (MUSE). Music video links and breaking news are available at NukeFree.Org.

I was mesmerized by the music, the soaring harmonies of veteran cosmic rockers and new voices, and a dazzling performance powered with little grid energy. The Shoreline Amphitheatre concert stage was powered by an integrated system of SunPower solar PV in mobile SunPod modules, biodiesel gensets, mobile batteries, and WindTronics wind turbines. The energy-saving GRNLite LED lighting rig for the show has been donated by Bandit Lites, and Schubert Systems has donated the sound rig.

“The disaster in Fukushima is not only a disaster for Japan. It is a global disaster. We come together now across cultural boundaries, political and generational boundaries, to call for changes in the way we use energy, and in the ways we conduct the search for solutions to the problems facing humanity,” says Jackson Browne. “We join with the people of Japan, and people everywhere who believe in a non-nuclear future.”

It was shortly after the March 2011 earthquake and tsunami that triggered multiple meltdowns at the Fukushima Daiichi nuclear plant in Japan that the decision was made by MUSE to coordinate the benefit. We have all read the news about the radiation in Japanese drinking water, food, and children exposed in radiation contaminated schools (New York Times Article).  When these great artists meet press members including me before the concert, Bonnie Raitt said, “We all live downwind.”

These musicians are committed to making a difference. Graham Nash uses solar power. As a father of three he told me of his compassion for all of our children. Speaking of nuclear industry executives he asked, “How can they do this. They’ve got their own children.”

“This is another massive world energy disaster from which there will be long-term effects,” adds Jason Mraz. “I am thrilled to be a part of this amazing show that will not only help those in Japan, but that will also call attention to the urgent need to embrace safe, clean energy alternatives.” Jason lives only 20 miles downwind from the aging San Onofre reactors built on an earthquake fault. Jason uses solar power and even had a solar party to educate his neighbors including my 86-year old friend Vera who now uses solar.

For over 25 years, Jackson Browne has lived off-grid using solar and wind power. He even rides on sunlight, charging his Chevy Volt with his renewable energy.

Major Nations Phase Out Nuclear

Germany makes it the age of renewables and will be ending its use of nuclear power in 10 years. By 2022, the last German nuclear power plant will be closed down. After the disaster in Japan, Germany has already permanently closed 7 nuclear plants. Germany’s world leadership in energy efficiency, wind power, and solar power, make the end of nuclear by 2022 feasible.

Italy is also no nukes due to a referendum where 90 percent of Italian voters called for the end of nuclear power. Italy is also showing strong leadership in solar power.

Reuters reports: “Japan, the world’s third-biggest nuclear power user, has only 16 of its 54 reactors on line, supplying less than a third of the total commercial nuclear generating capacity of 48,960 megawatts. The share of nuclear power in Japan’s power supply tumbled to about 18 percent in June from about 30 percent before the disasters struck.” Upgrading buildings and homes in Japan to LED and other energy efficient lighting would eliminate the need for those 16 reactors.

Most problematic in Japan are nuclear plants that are over 30 years old. Such dangers should give us pause in the United States where over 100 plants were built pre-1977 with 40-year target lives. 59 of those plants have had their licenses extended to 60 years. The nuclear industry has campaigned to stretch these to 80-year licenses.  In almost all cases, like Japan, the spent rods are stored onsite in U.S. plants. Some U.S. reactors are located near major earthquake faults.

The new generation of reactors are designed to be safer. Unlike wind and solar, nuclear provides electricity 24/7. Contrary to a common perception, nuclear is not as clean as renewable energy. The nuclear industry admits that the lifecycle greenhouse emissions from a nuclear plant are roughly equal to a natural gas plant, due to building with cement, mining, and spent fuel management. Promising innovation is occurring in small nuclear reactors, waste processing and the perpetual dream of fusion. But the industry constantly fails to meet commitments of being safe and cost-effective without government subsidy. Perhaps the greatest obstacle to new nukes in the U.S. is that financing requires taxpayer guarantees, taxpayers to insure the plants, and taxpayers on the line for future disasters.

It is no wonder that many Europeans have insisted on the phase-out of nuclear power after Chernobyl radiation spread to Europe, contaminating food and water. The cancer deaths from radiation exposure haunt people, as do child birth defects.

From my childhood, I remember when the Cuban Missile Crisis brought the United States and Russia to the brink of nuclear war.  Students were drilled to duck under our desks in the event on an atomic bomb. Neighbors built bomb shelters. We lived in fear. The threat still exists today as we watch the tension between North and South Korea, between Pakistan and India, and the threat of Nuclear Terrorism. The mideast worries that Iran’s nuclear ambitions go beyond generating electricity. If they do, another defiicit-financed war in the mideast will be the least of our problems.

Coal is the Other Unsafe Fuel

It would be tragic, however, if the phase-out of nuclear power lead to an increase of coal power. More people die each year from coal-power related lung cancer, asthma, and heart attacks, than die from nuclear plant radiation. Coal power plants emit mercury, sulfur dioxide, nitrogen oxides, and carbon dioxide.

Even worse is the methane escape from blowing-up mountain tops to feed our hunger for coal. Basic chemistry informs us that methane and CO2 accumulate in our atmosphere trapping heat. Climate models show that increased heat is threatening our food, our water, and our future. My 87-year old mother has been evacuated twice in recent years from wildfires that followed record draughts.

Although many in the fossil fuel industry now work behind the scenes to shutdown the EPA, or at least reduce their budget to make them ineffective, we actually need the EPA to increase its vigilance in protecting our health and future.

Fortunately, when new power plants are built, coal is rarely cost-effective in comparison to efficient natural gas power plants. In some parts of the world, coal cannot compete with renewable energy such as hydropower and wind power.

Safe Energy Meets All of Our Energy Needs

The good news is that we are moving to an energy future that is brighter and safer. Nations are moving from last century’s model of energy waste and unused capacity to this century’s model of energy efficiency and renewable energy.

In the United States, only about 52 percent of our generation capacity is used on average. We have build an ancient power system designed for all the air conditioners to run on the hottest afternoon in August. Now that smart grid technology including smart meters are being installed by the millions, utilities can deliver the right price signals and charge more when energy demand strains the system, and less energy is plentiful. Using software based intelligent energy management, corporations can run processes at the most cost effective time and we can wash our clothes at times when we can save money.

Energy efficiency (EE) is also lowering our need for coal and nuclear power. LEED buildings use of fraction of the energy of our worst structures. The new LED lights that shine over me as I write to you use 5 times less energy than the incandescent bulbs I formerly used.

The cleanest solutions to global warming, air pollution and energy security are wind, water, and solar power (WWS).  As Dr. Mark Jacobson walks me through the numbers of his, Dr. Mark Delucchi, and their teams’ multi-year study, the renewable energy solution stands out as the clear winner. Dr. Jacobson is a Professor of Civil and Environmental Engineering at Stanford University and an advisor to the U.S. Department of Energy.

Wind power has been doubling in capacity about every three years. It’s now over 200 GW; in 3 years it will be over 400 GW. 36 U.S. states generate enough wind power to replace one or more coal or nuclear power plants.  U.S. wind grew 39 percent in recession year 2009. In a growing number of global locations from Hawaii to Denmark, wind is the least expensive way to generate power. Their WWS study includes both on-shore wind power, which is plentiful from Texas through the Dakotas, and offshore with enormous potential along our Pacific and Atlantic coasts and our Great Lakes.

Solar includes the photovoltaics that cover homes and the faster growing PV that covers commercial roofs. It also includes the grid-scale PV and concentrating solar power (CSP) that generates the equivalent power of a natural gas or coal plant. The water in WWS includes hydropower, our most widely used source of renewable energy, and geothermal power, which uses steam to drive turbines.  Water also includes emerging, wave and tidal power generation. Brilliant minds, breakthrough innovation, and billions of investment in companies that deliver more cost-effective renewables and energy efficiency.

WWS can meet all of our needs for electricity. WWS can also meet all of our need for heat and for transportation. VantagePoint Capital Partners provide venture capital and management guidance to innovative leaders in energy innovation and efficiency, such as BrightSource, Better Place, and Goldwind.  VantagePoint was the presenting sponsor of the MUSE Concert.

Safer Energy and Economic Growth

During the next ten years, we will see major nations make their people safer by shutting down their last nuclear power plant. Due to the innovation and progress in energy efficient lights and buildings and thanks to the high growth of renewable energy their nations will better meet all their power needs.

Within the next three decades, all the of our global energy demands can be achieved with zero coal and nuclear power as we replace massive waste with intelligent energy management, replace darkness with energy-efficient lighting, and replace mercury and nuclear poisoning of our children with the power of the sun and the wind.

Small Hydro Emerging as Viable Sector for Renewable Energy Development

by David Niebauer

With many states adopting renewables portfolio standards (RPS) and the prospect of a federal RPS somewhere on the horizon, more attention is being given to hydroelectric power generation.  Renewable resources such as sun, wind and water, are those that can be harvested in a sustainable manner to provide the electric power that our society depends on. Water (or gravity moving water) has received less attention from project developers than wind and solar.  But that may be changing.

Approximately 18% of the total world energy supply is hydroelectric. But of course, all hydro is not created equal.  The bulk is large hydro, which employs dams and weirs that disrupt the environment in unalterable ways.  Most hydroelectric facilities are not considered “renewable” – at least not by environmentalists.  Large man-made reservoirs change habitats forever and are often blights on the natural settings in which they are built.

Small hydro – facilities that generate up to 30 MW – can be developed without harming the environment.  So called run-of-river facilities are designed to take advantage of flowing water in rivers and streams in such a way as to have minimal impact on fish habitats and natural settings.  Also, many of the dams in the US are not powered. These facilities, where the environmental impact of the dams cannot be undone, are ripe for small hydro development.  In September 2009, U.S. Energy Secretary Steven Chu said the hydro industry could add 70,000 MW of capacity by installing more efficient turbines at existing dams, increasing the use of pumped-storage projects and encouraging the use of run-of-river turbines. That capacity is equivalent to 70 nuclear plants or 100 coal-fired plants.

Until recently, the major impediment to the development of small hydro has been regulatory.  There are two major federal agencies responsible for hydroelectric power development – Federal Energy Regulatory Commission (FERC) and the US Army Corp of Engineers – neither of which are known for their nimble, user-friendly ways.  While wind and solar projects can often avoid federal regulation, relying instead on individual state authority, FERC is responsible for licensing all non-federal government hydroelectric projects that touch navigable waterways or affect interstate commerce (i.e., if the system is to be connected to a regional electric transmission grid).  Horror stories abound of FERC applying the same licensing and fee structure to a 500kW run-of-river system as it would to a 500MW hydroelectric dam project.  This appears to be changing.

FERC has been investigating ways to simplify the process of obtaining small hydropower licenses and exemptions and, on August 31, 2010, unveiled its Small/Low Impact Hydropower Program Internet site, explaining how developers can quickly and efficiently win FERC approval to build and operate small hydro projects.  The website is part of a FERC plan to expedite small hydro projects.  Another important component is an initiative to enter into memoranda of understanding with state governments to advance FERC exemptions for small hydro projects in those states.  In August 2010, FERC announced a pilot program with the State of Colorado, and has entered into similar MOUs with the states of Washington, Oregon, California and Maine.

Developers appear to be rising to the challenge.  FERC issued 50 preliminary permits to study small sites in 2009, compared to 15 in 2007.  There is money available at both the state and federal level, mostly untapped, in the form of low interest loans, and investors appear to be warming to the sector. An Internet search uncovered at least one developer engaged in a strategy of rolling-up small hydro assets, and undoubtedly more will follow.  A logical approach for a developer would be to acquire a portfolio of revenue-generating assets as a way to demonstrate satisfactory investor returns.  From this base, a developer should be able to build profitable projects at existing unpowered dam sites, and to pursue run-of-river and pumped storage opportunities.

Much attention has been paid to wind turbines and solar PV as ways to harness nature’s abundant energy resources.  Hydroelectric power has often been overlooked due primarily to its scale and the high regulatory hurdles facing developers.  That may be changing in regard to small hydro.  The country has countless unpowered dams that are ripe for development.  This, combined with the prospect of streamlined permitting and exemption processes at FERC for run-of-river and pumped storage facilities, has developers exploring ways to advance small hydro in the service of the nation’s renewable energy goals.

David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on financing transactions, M&A and cleantech.



$100,000 Cleantech Shipping Grant Competition

WWL is one of the cleanest shipping companies and each year, offers a grant to the best new clean-tech innovation.

We are hoping to raise as much awareness of this scheme as possible to attract some really high quality entries – the grant has been upped this year to $100,000 and last year’s winner has seen his idea (a concept to rival SkySails) being trialled on ships at the moment.

With just over a month to go until its 2011 Orcelle Grants application period closes, global shipping and logistics provider Wallenius Wilhelmsen Logistics asked naval architects Per Brinchman and Per Tunell to share their insights into what makes a winning clean-tech idea.

This year, WWL has expanded the eligibility criteria for the Orcelle Grants to include alternative energy sources and energy-efficient technologies with applications for 1) commercial shipping and 2) terminal operations, reflecting WWL’s research and development into the E/SOrcelle, a zero emissions concept vessel, and the Castor Green Terminal, a zero-emissions terminal and cargo processing centre.

Applications are being welcomed from across the world from individual inventors, entrepreneurs and technology developers and are available at All applications must be submitted by Monday March 21, 2011. Winners will be announced in April 2011.

WWL head of environment, Melanie Moore, speaks to Per Brinchman and Per Tunell:

More about Wallenius Wilhelmsen Logistics

Wallenius Wilhelmsen Logistics ( delivers innovative and sustainable global shipping and logistics solutions for manufacturers of cars, trucks, heavy equipment and specialized cargo. WWL has approximately 3,300 employees worldwide, and deploys around 60 modern eco-adapted vessels. The company has a strong environmental focus and is an industry leader in developing innovative solutions to reduce its operational impacts on the environment.

Gas Chamber

Recently, the U.S. Chamber of Commerce released its prescription for U.S. energy policy.

“Facing Our Energy Realities:  A Plan to Fuel Our Recovery” is a more balanced document than what I might have expected.  Given the Chamber’s ardent undercutting of all efforts to deal with climate change in a thoughtful manner during the last Congress — see, for instance, this Washington Post article from late 2009 profiling how Apple (NASDAQ: AAPL) decided to leave the Chamber due to its strident positions — I was prepared to title this post “Chamber of Horrors”, expecting the Chamber to call for continued status quo on energy, only perhaps a little better.

The outline of their recommendations is as follows:

I.  Maximize America’s Own Energy Resources:  Promote Energy Efficiency.  Produce More Domestic Energy.  Improve Access to Federal Lands.  Allow Development of New Resources.

II.  Make New and Clean Energy Technologies More Affordable:  Commit to Innovation.  Demonstrate New Technologies. 

III.  Eliminate Regulatory Barriers Derailing Energy Projects:  Create A Predictable Regulatory Environment.  Streamline, Not Weaken, Environmental Reviews.  Prioritize Siting and Permitting of Interstate Transmission.

IV.  Do Not Put America’s Existing Energy Sources Out of Business:  Ensure Adequate Supplies of Energy for a Smooth Transition. 

V.  Encourage Free and Fair Trade of Energy Technologies and Resources Globally:  Promote Free Trade.  Eliminate Trade Barriers.  End Discriminatory Content and Trade Policies. 

To be sure, the primary message of the Chamber in this pamphlet is “more”:  especially, more production of fossil fuel based energy from domestic sources.  And, to be sure, this stance is being greatly enabled by the recent promise of a surge in natural gas available by producing from heretofore uneconomic shale plays due to advancements in new drilling/extraction technologies.

I have nothing against producing more natural gas domestically, particularly if it can be economically used to displace more environmentally-damaging coal-based energy or strategically-damaging petroleum-based energy.  However, we can’t put all our eggs in the natural gas basket — if for no other reason than we’ll end up painted in a corner someday from over-reliance on gas, just as we’re painted in a corner now from over-reliance on coal and oil. 

I’m glad to see that the Chamber has made some room and recognition available for energy efficiency and renewables (e.g., by supporting the suggestion of a Clean Energy Bank) in its public platforms, but the Chamber is clearly full of gas.

1,500 Reader Comments on Renewable Energy that will Really Work

Our Cleantech Linkedin Group, over 20,000 members strong, has had a seven month running discussion started by Robert Drummond entitled “Renewable Energy that will Really work”, asking for readers views on what’s practical in renewable energy.  Kind of crowd sourcing opinion and facts on the subject of renewable energy.  Robert’s discussion reached a staggering 1,500 comments this month.   It’s a real “cleantech democracy”, and a testament to the passion we all have for this sector, so I wanted to share it with you.  Throw your own comments in here or back on LinkedIn, but definitely participate!

Renewable Energy that will Really Work

By Robert Drummond

“I want to start a discussion about renewable and clean energy supply and distribution that will work in the forseeable future. I have read so much rubbish that I want to hear the views of people that know about each possibility and are not afraid to tell us all.

Since I have a lot of hang-ups and opinions that need to be checked I will fire-off first.

Renewable energy sources

Hydro. One of the best but not many places left in the world where it will make much of a difference. Some people hate dams so it isn’t universally loved.

Nuclear Fusion. This is the holy grail but seems too far away and even when it comes (if ever) it will be full of dangers and risks both real and political. The thought that it is just doing what the sun does appeals but I am not holding my breath.

Nuclear Fission. This is not really renewable and whether it is green or clean is equally debatable. Most major economies are renewing their commitment to it and it will play a bigger part in energy production in the future. The fear of mis-use of the technology and the huge capital investment and decommissioning costs will ensure that it never gets to become the big success that some would like.

Solar – Photovoltaic. This is the flavour of the year since everyone understands it and it seems to be as clean as you can get. Of course it does “pollute” the countryside and the materials used are not as benign as we would like but it works and is getting cheaper as the technology improves. This may be the first major alternative to pass the fully commercial test. However it is not portable and only works in the daytime. So we have to capture the electricity for use at night (or have alternative sources to match). Also it will not answer our prayers for a replacement to fossil fuels for transport until we have a better way of storing electricity efficiently with light weight devices.

Wind. I am told that the big problem with wind is that the off-shore farms (which everyone likes since they don’t want one in their own back-yard) suffer from three problems. Firstly the very large generators that are most efficient are extremely heavy and constructing them off-shore is mighty expensive. Secondly they are prone to damage and wear (particularly due to UV and salt and the problems of transmitting the rotary power to an effective generator). Thirdly the electricity is likely to be some way from the consumer which means loss in transit.
We also have the same problems about intermittant power generation and lack of portability of electricity.

Wave. Most of the technology is highly suspect and my friends say it wont work except in a limited local way with simple up and down pstons for pumping for uses such as desalination.

Tidal/Current. These seem quite hopeful but there are only limited places in the world with sufficient water flow to achieve anything worthwhile. Even if they succeed and do not foul-up or kill all the fish they will like hydro-electric soon run out of available good locations. They have the advantage of being hidden from view. Again the problems of intermittancy in most places and also they generate electricity.”

Join our Cleantech Linkedin group and view the 1,500+ comments here, or post in the Cleantech Blog comments below.

Hola, Tres Amigas!

by Richard T. Stuebi

Something grand is emerging on the vast dusty plains of West Texas and Eastern New Mexico.

Tres Amigas is an ambitious scheme to interconnect the three primary power grids in the U.S. — the Western grid known as WECC, the Eastern grid known as the Eastern Interconnection, and the Texas grid known as ERCOT.

As profiled in an article called “A Highway for the 21st Century” in the recent edition of Energy Biz magazine, Tres Amigas aims to incorporate high-voltage direct current (HVDC) and grid-scale energy storage technologies to enable synchronization and massive power transfer capability across the three grids — which are almost completely separated today.

Although it might seem straightforward to tie together three power grids, this is actually a very challenging technological problem.  AC to DC to AC converter stations are required at the interfaces, relying upon HVDC technologies that, while beginning to be more commonly employed, have never been deployed at the scale — 5 gigawatts initially, up to 30 gigawatts eventually — contemplated by Tres Amigas.  And, to absorb the large swings in generation provided by wind and solar projects in the Great Plains, Texas and the Desert Southwest, Tres Amigas aims to install utility-scale batteries, a still-developing area of technology.

Not surprisingly for a large and first-of-a-kind project, it’s not cheap.  Tres Amigas is forecasted to require up to $1 billion in capital.  The question will be whether the investors in Tres Amigas can make good returns. 

Presumably, the business model is based on a combination of wheeling charges (revenues from renewable energy project developers seeking to move power from source to load centers) and ancillary service fees (charges to the three grid operators to keep each of them more stable in the face of shifting supply and demand conditions).  A “merchant project” of this type and magnitude has never been tried.  No doubt, it’s a very risky bet. 

Not surprisingly, American Superconductor (NASDAQ:  AMSC), whose technologies are at the core of Tres Amigas and who would stand to benefit big-time from its success, is an investor sponsoring the development team.  It wouldn’t surprise me to see the battery supplier, when chosen, also joining the mix.

The upside of Tres Amigas to renewable energy interests is big.  If the project is completed, works well, and remains financially solvent, it will debottleneck many limits to adding further wind and solar projects in the Southwestern U.S.  There’s plenty of sun and wind out there, but the constraining factor in tapping it has been the ability of the power grid to cope with the inherent fluctuations in power output. 

With its energy storage capability and linkage across three grids, Tres Amigas would be big and bold enough to enable many heretofore thwarted renewable project developers West of the Mississippi to effectively reach a broader spectrum of potential customers from L.A. to Dallas to St. Louis, while mitigating the operational problems — such as those at the infamous congestion point near McCamey TX — that grid operators and other skeptics use as a basis for criticizing or objecting to renewable energy development.

In The Navy

by Richard T. Stuebi

At last week’s Clean Economy Summit in Washington, Navy Secretary Ray Mabus gave a stirring speech on how the Navy and Marines were committed to pushing ahead on new clean sources of energy to fuel their operations.  The energy goals of the Navy include the creation of a “Green Fleet” and the impressive target of 50% from domestic renewable energy supplies by 2020.

The goals are not just long-term, they are beginning to be implemented already.  Mabus told of the USS Makin Island that is using hybrid drive technology, employing battery power at low sailing speeds, that saved $2 million in fuel costs in its maiden voyage from its launch in Mississippi around South America to its base in San Diego.  “Over the lifetime of this ship,” Mabus continued, “we expect to save American taxpayers about a quarter-billion dollars.”

Mabus recited the daunting economic costs (estimated at $400/gallon all-in for gasoline at the frontline in Afghanistan) and personnel costs (extra security forces and casualties associated with fuel convoys of high value to the enemy) of hauling petroleum products to forward military theatres of operation.  Then, he switched from the factual to the philosophic by asking a compelling rhetorical question:  “We would never allow our ships, planes and tanks to be made somewhere other than the U.S., but we’re OK with powering them by fuels from foreign sources?”

Notably, Mabus spoke on the very same day that the New York Times reported on a new and highly-critical study issued by the RAND Corporation entitled “Alternative Fuels for Military Applications”.  Mabus flatly refuted the negative RAND assessment, stating bluntly that RAND “didn’t talk to us, and therefore didn’t see what we were already able to do, today, with alternative fuels.” 

Being on the vanguard is not a new role for the Navy:  Mabus noted that the Navy has historically been the leader in ushering in energy technologies into the mainstream, being an early adopter of coal in the mid-1800s, of oil in the early 1900s, and of nuclear in the mid-1900s.

There were probably doubters back then, too.

New 12 MW Solar Installation by EDF in Ontario

Toronto-based EDF Energies Nouvelles Canada (EDF) announced on January 4 that its 12 MW St. Isidore A solar installation successfully joined Ontario’s alternative energy industry when it began operations in late December. St. Isidore is a community of fewer than 1,000 people located in Prescott and Russell County, east of Ottawa, the nation’s capital. The project created jobs for two hundred builders and career solar workers.

Ontario is home to the Ontario Power Authority’s (OPA’s) feed-in tariff (FIT) program and its companion, the microFIT, which deals with projects smaller than 10 kW. The programs create clean air by paying owners of participating solar, wind, and biofuel projects high rates to feed renewable power into the grid. It also creates alternative energy career opportunities for graduates of solar installation training courses and other “green” educational programs in the province. St. Isidore A will participate in Ontario’s Renewable Energy Standard Offer Program – which the OPA has since replaced with the microFIT – as will its companion project, St. Isidore B, which the company expects to complete by the end of 2011. The projects are EDF’s fourth and fifth to take part in the region’s solar industry.

EDF has operated in Canada since 2007. Its parent company, EDF Energies Nouvelles, is headquartered in France and operates in thirteen European countries and “coast to coast in North America.” The companies offer an integrated approach that ranges from project development through to power generation. EDF Energies Nouvelles’ subsidiary, enXco Service Canada (enXco Canada), will operate and maintain St. Isidore A. EnXco Canada is the new Canadian wing of San Diego-based enXco, a solar, wind, and biogas developer with more than two decades of experience in the renewable energy industry.

“Today marks another notable achievement for EDF EN Canada,” says Tristan Grimbert, President and Chief Executive of EDF and EDF Energies Nouvelles’ other North American affiliates. “We are proud to extend the economic and environmental benefits of solar energy to the St. Isidore community and fulfill our ambition to build high-quality solar projects in Canada.” With its ongoing construction of St. Isidore B, EDF will continue to create clean air and alternative energy careers for graduates of Ontario’s photovoltaic courses.

“Cost Causer Pays” or Where is the Incentive for T&D Grid Upgrade?

by David Niebauer

In representing a utility-scale solar developer client recently, I was surprised to learn (naively, I now realize) that the general rule for transmission upgrades is  “cost causer pays”.  What that means for my developer client is that, regardless of how desirable the project, the developer will have to pay the full cost of upgrades to the grid network to bring the generation on line.  This is the case even though most of the positive effects of the upgrades will benefit the utility and the electricity consumers in general, and even competitors that will be able to piggyback on the investment.

This has led me to ask the question in the title of this article:  who has the incentive to invest in upgrades to the nation’s electricity transmission and distribution system?

It is common knowledge to anyone working in Cleantech that the transmission grid requires extensive upgrades.  These upgrades are required in order to allow more renewable resources to be brought online, and they are necessary for modernization and expansion.   The grid was built a long time ago and infrastructure investment in the area has lagged for decades.  The most recent (and reliable) estimate that I have seen anticipates that $165 billion will be deployed over the next 20 years upgrading and expanding the grid.

Deregulation has forced utilities to cede control of transmission assets to Regional and Independent System Operators in order to open the transmission grid to all participants.  Under the current regulations, RTOs and ISOs, being non-profit entities, have no incentive or ability to either acquire existing transmission assets or develop new ones.  Some observers believe that independent for-profit transmission companies will emerge, with regulatory and financial incentives that will permit a roll-up of transmission assets into stand-alone businesses. Should such a structure emerge, the right incentives for grid upgrade might exist, but this structure is only one of a number of solutions and only time will tell if it will emerge.  In the meantime, ISOs/RTOs are unlikely candidates to spend money on transmission upgrades.

Ultimately, or course, we will all pay through higher electric utility bills.  David J. Leeds of Greentech Media makes the case that utilities will drive investment in T&D upgrades.

“When you consider that the U.S. electric utility sector, with it’s annual revenues of roughly $300 billion, is 30 percent larger than the automobile industry and twice as large as the telecommunications industry, and then bring to mind the craze of dotcom investments and telecom M&A which occurred in the mid to late 1990s, a reasonable picture starts to emerge of what can be expected of in terms of Smart Grid investments and M&A in the next five to 10 years. Many of the senior level employees working for privately held companies in Smart Grid, have backgrounds working in either telecom or IT.”

From a macro perspective, I am sure this is true.  However, given the difficulty that utilities have in passing on costs to ratepayers, the build-out will almost certainly go slower than most observers would like.  The so-called “SmartGrid City” being built out by Xcel Energy in Boulder Colorado is a case in point.  Xcel has been allowed to pass on to ratepayers $45 million of the estimated $100 million cost of that project, and the good citizens of Boulder are not happy about it. No doubt this will be read as a cautionary tale for other utilities with plans to move forward on their own with T&D upgrades.

The Federal government will be able to stimulate some of the upgrades through grants and tax incentives, but its impact is both jurisdictionally and fiscally limited.  While the FERC regulates wholesale prices, it has no authority to mandate the construction of new transmission lines – these decisions are all made at the state level.  But the grid is a network of interconnected transmission lines which of necessity cross state and regional borders.  Without a central planning authority, development occurs in a piecemeal and halting fashion.

The American Recovery and Reinvestment Act of 2009 (ARRA) is providing about $4 billion in Smart Grid stimulus funding, but given the enormity of the required work, this is really a drop in the bucket.  Yes, we desperately need a national energy policy that would include construction and upgrade of regional transmission lines.  But given the legacy of the transmission grid and the desire of state and local governments to have control over energy costs, I have a hard time seeing how coordinated activity can occur.  Add on top of this the debacle of deregulation and you can begin to see the quagmire we are in.

State governments have big plans for bringing large amounts of renewable energy on-line.  The Texas CREZ (Competitive Renewable Energy Zone) is a $5B plan to move 18 GW of wind from west Texas and the panhandle to the major load centers in east Texas consisting of 2300 miles of new 345kV transmission.  Search “Intl_ROW_012710.pdf” for more information.   In California and the west, the Western Governor’s Association has developed the Western Renewable EnergyZones (WREZ) to bring wind, solar and geothermal into the western load centers. The WREZ initiative seeks to develop 30 GW of clean energy by 2015. This initiative calls for the construction of significant new interstate transmission lines.

The CREZ will be paid for by ratepayers, but the WREZ has no funding for its ambitious plans.

To highlight the problem, the WREZ initiative states:

“In order to plan and support the permitting and construction of new transmission lines, there must, at a minimum, be close coordination among resource planners, transmission providers, sub-regional and interconnection-wide transmission planners, transmission developers, federal land use agencies, renewable developers, state, provincial and federal regulators, and environmental organizations.”

With benefits to be derived by 11 US states, 2 Canadian provinces and some areas of Mexico, how do the costs get allocated?

The Brattle Group has done a study on the cost allocation and recovery approaches to transmission grid upgrades.  They explore a number of the methodologies being used and being developed.  They document the complexity of current cost allocation approaches.  While some single state approaches appear to be working, regional transmission upgrades, which are by far the most important to the national grid, are more difficult.  The final takeaway from the report:  “Despite years of effort, cost allocation remains the number one barrier for multi-state, multi-utility transmission projects.”

Obviously, “cost causer pays” is not going to get the job done.  We need a national energy policy with a strong transmission and distribution grid upgrade component.  The task is complicated by overlapping and sometimes competing federal and state objectives, but failing to act is simply not an option.  Both financial and policy incentives must be made clear for stakeholders so that the greenpower superhighway that many envision can become a reality.

David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies.

Renewable Energy Almost Equals Nuclear Energy in USA

According to the most recent issue of the “Monthly Energy Review” by the U.S. Energy Information Administration (EIA), “nuclear electric power accounted for 11% of primary energy production and renewable energy accounted for 11% of primary energy production” during the first nine months of 2010 (the most recent period for which data have been released).

More specifically, renewable energy sources (i.e., biomass/biofuels, geothermal, solar, water, and wind) accounted for 10.9% of domestic energy production and increased by 5.7% compared to the same period in 2009. Meanwhile, nuclear power accounted for 11.4% of domestic energy production but provided 0.5% less energy than a year earlier.

And according to EIA’s latest “Electric Power Monthly,” renewable energy sources accounted for 10.18% of U.S. electrical generation during the first three-quarters of 2010. Compared to the same period in 2009, renewables – including hydropower – grew by 2.2%. While conventional hydropower dropped by 5.2%, non-hydro renewable used in electrical generation expanded by 16.8% with geothermal growing by 4.9%, biomass by 5.5%, wind by 27.3%, and solar by 47.1%. Non-hydro renewables accounted for 3.9% of total electrical generation from January 1 – September 30, 2010 — up from 3.5% the year before.

Preliminary data also show that fossil fuels accounted for 78% of primary energy production. Overall, U.S. primary energy production rose by 2% compared with the first nine months of 2009. The report also showed that consumption of oil, including imported oil, has declined due to more fuel-efficient vehicles and because vehicle miles traveled peaked in the U.S. in 2005.

“Members of the incoming Congress are proposing to slash cost-effective funding for rapidly expanding renewable energy technologies while foolishly plowing ever-more federal dollars into the nuclear power black hole,” said Ken Bossong, Executive Director of the SUN DAY Campaign. The Southern Company was recently provided with $8.4 billion in federal loan guarantees to build two new nuclear reactors. The guarantees could cost taxpayers $8.4 billion should the project later be cancelled due to cost overruns. Congress is considering over $40 billion for new nuclear reactors.

Ontario FIT Program Draws Unwarranted Criticism

I have seen, with growing frustration, an increasing number of comments on blogs and news sites deriding Ontario’s feed-in tariff (FIT) program and similar government incentives that encourage the use of renewable energy and create green jobs in the province. Comments like this anonymous post continue to stand out in my mind, “…‘greens’ only want one thing – the “green” in our wallet. And, thanks to the average gullible/stupid environmentally-oriented Ontarian, it is happening at an alarming rate.”

Perhaps more subtly, but with equal acrimony, an opinion piece in the Financial Post uses loaded words to indicate to the reader that there is no value in Ontario’s efforts to protect the environment – “Witness the initiatives of recent years: the messianic closing of cost-effective coal plants and implementing of higher-cost wind and solar energy initiatives in the name of the environment….”

It took me only five minutes to find these two examples, but you can easily find more of the same in the comments section following just about any online news article covering green incentives, financial or otherwise. Some of the authors’ concerns are valid. It is true that electricity prices are on the rise, partially as a result of the high prices the FIT pays to producers of solar, wind, and biofuel energy projects. It is also true that photovoltaic and wind technologies generate fewer kilowatts per dollar than traditional coal, oil, and gas. Yes, change is scary. For that very reason, it took a lot of guts for the Ontario Liberals to commit to such a sweeping, costly, and potentially career-damaging program. But this is the face of progress. Someone has to do the job. Someone has to get his hands dirty, and hard work brings rewards.

Solar, Wind Energy Incentives Create Jobs, Training Programs, and Clean Air.  Even a cursory look at the foreseeable future shows that we are getting off lightly if our only worries regarding energy are increasing prices. Prices would go up, with or without the FIT – financial costs as well as other lifestyle costs. It is not uncommon to see global warming denials used as grounds for criticism, but this is a bit of a red herring.

Global warming is not required in order for Ontario’s progressive efforts to be of value. How many oil spills can the ocean sustain before they destroy our fisheries altogether, either directly or by fatally interrupting the balance of sea life? How many airborne toxins can our bodies, and those of our children and unborn future generations, inhale or soak into our skins before we, ourselves, shut down? How many rivers and estuaries can be polluted by oil sands run-off before our declining water supply becomes undrinkable? All of these eventualities carry far greater costs to us and our pocketbooks than the higher prices that emerge with the FIT.

To me and my family, the above-mentioned issues alone justify radical policies such as the Liberals’ FIT. However, the program carries with it its own financial benefits. In Ontario, where a rapid decline in the auto and other manufacturing sectors has left many without work, the program has created solar energy jobs and photovoltaic training programs. And the FIT’s requirements for Ontario-sourced content have inspired the creation of manufacturing plants and other new business ventures in the province.

Change can be tough, but given Canada’s growing and collective commitment to a greener tomorrow, change is inevitable. In the future, we will laugh (or perhaps cry) at the way we used to fuel our lives. In the meantime, those truly concerned about their rising electricity bills would be wise to invest in solar technology or photovoltaic training, as these are quickly becoming the surest ways of putting some “green” in your wallet.

California TREC Decision Side-steps Energy Infrastructure of the Future

By David Niebauer

Most of the discussions of tradable renewable energy credits (TRECs) in California revolve around the extent to which the State’s large utilities can use TRECs for compliance with the California renewables portfolio standard (RPS) program.  The utilities would like a free hand to use as many RECs as possible, derived from sources both in-State and out-of-State – presumably RECs will be easier and cheaper to acquire than new renewable generating facilities are to build.  The interests of the utilities are balanced by those of rate-payers as well as policy initiatives, such as AB 32.  These interests move sometimes in opposite directions, one toward less expensive retail energy and one toward more environmentally sustainable energy generation.

As the revised decision on TRECs winds its slow and tortuous way through the California Public Utilities Commission (CPUC), it is becoming clear that there will be a price cap ($50) and there will be a limit on use (30% likely) and that the cap and limit will expire at the end of 2013 “to give Energy Division sufficient time to develop [an] evaluative framework” to make sure the system works without snafu.  See procedural trail to CPUC Proceeding R06-02-012.

Lost in the shuffle, however, is what many believe will be the energy infrastructure of the future – distributed generation (DG).  The California Energy Commission (CEC) defines DG in the California Distributed Energy Resource Guide as “small-scale power generation technologies (typically in the range of 3 to 10,000 kW) located close to where electricity is used (e.g., a home or business) to provide an alternative to or an enhancement of the traditional electric power system.” The term “distributed” is borrowed from the computer industry where it has long been recognized that widely disbursed or “distributed” computing is more economic, more efficient and more secure than centralized systems.

In energy generation, “distributed” means fewer centralized generation facilities and little or no transmission.  Utilities don’t like it, naturally, because a fully implemented distributed generation infrastructure would obviate the need for a publicly subsidized electric utility monopoly – the institution feels justifiably threatened.  Whether DG will ever supply all of our energy needs is a question for the future.  In the meantime, policy makers should guard against steering the market away from its proper implementation.

Because there are a number of technologies and a variety of ways to implement DG, the California Public Utilities Commission (CPUC) and the CEC have defined DG as those technologies and implementations that generate electricity on the “customer side of the meter”.   See the CEC’s Renewables Portfolio Standard Eligibility Guidebook (3d ed., December 2007), at 17-19. These would include home installations of solar photovoltaics (PV) and would also include commercial PV such as rooftop and ground-based solar being implemented by large energy users (food processing, cold storage, manufacturing, etc.) and others.  For this purpose, DG does not include solar rooftop programs being sponsored by the large utilities that utilize commercial rooftop space in order to generate energy that is then sold into the grid.  It is energy used on-site that does not require a central transmission and distribution system.

To some extent, DG has been an afterthought in the TREC considerations and decisions.  This is because the market is currently quite small compared with utility-scale projects.  However, it seems likely that DG is the next frontier in renewable energy generation.  As PV continues to drop in price, and new technologies are developed, more and more commercial enterprises will come to realize that generating their own energy from the sun (or from fuel cells or other new technologies) is simple, safe, and less expensive than being beholden to large utility monopolies.
The CEC is concerned that TRECs for DG would provide an excessive subsidy in light of current programs in place for such projects.  The CEC’s current position is as follows:

“Facilities that receive funding under the Energy Commission’s New Solar Homes Partnership program, Emerging Renewables Program, or Pilot Performance‐Based Incentive Program, under the CPUC‐approved Self Generation Incentive Program or California Solar Initiative, or any similar ratepayer‐funded program, and facilities that benefit from net metering programs or tariffs approved by the CPUC or any POU, are considered distributed generation and may not be certified as RPS‐eligible at this time.”  RPS Eligibility Guidebook p. 25.

However, as argued persuasively by the Solar Alliance in its comments on the revised RPS Eligibility Guidebook:  “given the reality that, as the incentives under the California Solar Initiative [and other programs] decline, the sale of TRECs is likely to become a critical means for financing distributed solar generation.” To meet the state’s aggressive RPS goals, it only makes sense to allow TRECs for DG.  The CPUC anticipates this eventuality as it takes great pains in the revised proposed decision of Commissioner Peevey to “clarify the relationship of [the CPUC’s] discussion of TRECs from DG sources to the CEC’s authority…to determine what resources are RPS eligible.”

The CEC has also stated “[t]he Energy Commission will not certify distributed generation [DG] facilities as RPS-eligible unless the CPUC authorizes tradable RECs to be applied toward the RPS.”  This pronouncement, combined with the revised proposed decision on TRECs, which will permit tradable RECs to be applied toward the RPS, will presumably make customer-side DG eligible for the sale and trading of TRECs, notwithstanding the CEC’s concern over excessive rate-payer subsidies.

The numbers for DG are small at present.  As pointed out by the CPUC, the California Solar Initiative (CSI) will have provided incentives for approximately 1,100 GWh by 2011.  At $50 per TREC, this would amount to only about $50 million State-wide in additional financing for solar DG projects (1 TREC = 1,000 kW hrs of renewable generation).  However these numbers are anticipated to grow significantly.

It’s useful to look at TRECs for DG from a commercial application perspective.  A 250 kW solar PV system can be expected to generate at least 300,000 kWh per year in a relatively high solar radiation area, such as the LA basin.  Even at the $50 per TREC cap set by the CPUC, this is still $15,000 per year in new financing for a commercial system.  At $200 per TREC, it amounts to $40,000 per year.  Assuming the facility owner could forward-sell these TRECs, even discounted to present value, this is a significant amount of money that could be used to finance installation and maintenance of the system over its useful life – especially in the face of declining or vanishing solar incentives.

We agree with the Solar Alliance and others who urge the PUC and the CEC to coordinate their agency actions so as to accommodate TRECs for DG and to do it soon.  Other states are way ahead of California in allowing RECs to stimulate the renewable energy markets.  For example, New Jersey, which has a specific solar set-aside, has allowed RECs for RPS compliance for a number of years.  Solar RECs sold at auction in New Jersey were recently trading for as much as $600 per REC (see  California cannot afford to continue to ignore the energy infrastructure of the future.

David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies.