P&E US 8

www.nextgenpe.com • Q4 2009

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

Will the pressure of public opiniondissolve the Obama Administration’s

atomic plans? Page 32

PRACTICAL MATTERSMichael Morris tackles theissue of renewable energy

Page 40

SMART POLITICSMaking funding decisionsabout the intelligent grid

Page 44

RENEWED INTERESTThe transatlantic future ofalternative energy sources

Page 80

MeltdownNuclear

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

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With December’s UN Cli-mate Change Conference in Copenhagen looming, and as we grow ever more

aware of our eff ect on the environment, the pressure to develop new sources of renewable energy increases.

Th anks in part to this trend, nuclear power is currently undergoing a well-documented revival, both here in the US and abroad. Oft en billed as an environmentally friendly option because of its zero carbon emissions, nuclear has been hailed as the potential savior of coun-tries keen to cut back on CO2 while keeping their power-hungry populations happy.

Nuclear seems the obvious choice for a fl edgling government seeking popular support – which explains the positive spin put on it by President Obama, who even mentioned it in his presidential acceptance speech.

But nuclear comes with some not-so-hid-den downsides. Th ose with long memories will still be haunted by visions of Th ree Mile Island

and Chernobyl. And quite apart from the potential for a leak or ‘core damage incident’ – admittedly mitigated by improvements in technology and safety since the 1970s and ’80s – there is the problem of storing the radioactive waste produced by the nuclear fi ssion process.

Th ese issues are serious enough to make the reintroduction of nuclear power contro-versial in some quarters, resulting in a dilem-ma for Obama and his team: how to appease both sides? Th e apparent answer is to talk up the positive aspects of new nuclear while hold-ing back on handing out any actual cash for its development. As Associate Editor Natalie Brandweiner discovers in her in-depth look at the new administration’s nuclear policies, such a delicate juggling act can be a hard one to keep up.

Elsewhere in this issue, American Elec-tric Power CEO Michael Morris outlines his stance on renewable energy sources. In his view, our current generation and transmis-sion system must be restructured if we are to

FROM THE EDITOR

Climate crunch

reach our ultimate goal of becoming greener and less dependent on fossil fuels. He warns, however, that those who believe we can do this without spending any extra money are fooling themselves.

We also take a look at the latest news on the smart grid, oft en touted as an essential ele-ment in our drive toward increased energy ef-fi ciency. Will governmental wrangling thwart its development?

Unless we can work things out at a politi-cal level, all the eff ort we put into reducing our environmental impact will go to waste. Th at’s why events like Copenhagen are so important – without them, the future of our planet may hang in the balance.

Marie Shields, Editor

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

5

“Solar energy presents a little more complex picture than traditional renewable sources” Mike Taylor, Director of Research and Education, Solar Electric Power Association (p90)

“There is great promise in technologies around traditional pulverized coal”Chris Hobson, SVP and Chief Environmental Offi cer, Southern Company (p94)

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

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44

Keeping it realMichael Morris takesa pragmatic approachto renewable energy

80

32

38

Power playPolitics and the smart grid

Sustainable energyshowdownHow renewables are shaping up inthe US and Europe

CONTENTS9

Sleight of handIs the Obama Administration’s supportfor nuclear power merely an illusion?

CONTENTS_nov09 05/11/2009 15:01 Page 9

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SMART GRID50 Balancing the loadMark Case outlines BGE’s smart grid program

56 Rise of the machinesHow Southern California Edison is deployingcutting-edge technologies

76 Risk assessmentAnnabelle Lee on security within the smartgrid infrastructure

RENEWABLES84 Pushing the boundaries AEP uses technological innovation to diversifyits fuel mix

90 Saving up the sunHow do issues of storage affect solar energy’sviability?

94 The case for carbonWhy Chris Hobson supports clean coal

98 A perfect fitRhone Resch looks at solar’s place in theenergy puzzle

102 Tapping the sourceHow to get in on the flow of money for newprojects in renewable energy

104 Adding value to the gridBrad Roberts on the latest energy storagetechnologies

84

50

Pushing the boundaries Balancing the load

66Smart grid

CONTENTS11

G O L D S P O N S O R S

INDUSTRY INSIGHT

60 David Wilkinson, RAMMounting Systems78 Jeff Newman, Enfora

ASK THE EXPERT

48 Alex Brisbourne, Kore Telematics


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CONSTRUCTION117 Energizing the futureA round-up of current power plantconstruction projects

CUSTOMER OPERATIONS122 Saving money through energyefficiencyJoseph Forline explains how PSE&G is givingback to its customers

90

114

Saving up the sun

Looking for a new breed of CEO

A perfect fit

98

Green leader: Denmark

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

108 Renewable recoveryThe future is bright for green energy, saysMike Eckhart

110 Gridlock?What the Golden State is doing to overcomeits transmission infrastructure challenges

114 Looking for a new breed of CEOAnita Hoffmann examines the CEO talent inthe cleantech sector

IN THE BACK

CONTENTS13

ROUNDTABLE

66 Smart gridWith AT&T’s Kevin Jones, MalcolmUnsworth of Itron, Jim Hanson ofMotorola Inc., Andrew A. Bochman ofIBM’s Ounce Labs, Allan Breitmayerof Sierra Wireless and TELUS BusinessSolutions’ Roland Labuhn

EXECUTIVE INTERVIEW

88 Nancy Hartsoch, SolFocus97 Gregg Patterson, PVPowered, Inc.121 Alan Saunders, Autodesk


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UPFRONT16

Addressing the media on the fi nal day of the two-week long Bangkok talks on

climate change, Executive Secre-tary of the United Nations Frame-work Convention on Climate Change Yvo de Boer called the talks “constructive” and said he believed all the ingredients were there for a successful outcome for the Climate Change Conference in Copenhagen in December.

“Whatever the atmosphere at the moment, I think signifi cant advances have been made here to get us close to something which can serve as the basis for agree-ment in Copenhagen,” de Boer said at the conclusion of the talks.

However, he also pointed out that while countries’ negotiators have shown rapid progress on concrete ways to implement the

mandate, he believes they are still clinging to long-held diff erences. De Boer stressed the urgency of raising ambitions and bridging this divide.

“Th is session has been char-acterized by real advances and real work to put together impor-tant parts of the architecture of the Copenhagen agreement but you can only take good faith so far. . . . Th e stark reality out there is that unless we see an advance on those key political issues, it is very diffi cult for negotiators in this process to continue their work in good faith,” he said.

During the sessions in Bang-kok, negotiators resolved about half of the 2500 points of conten-tion in the 200-page negotiating text, including determining ways to help poor countries to adapt to the eff ects of climate change,

transfer cleaner technology and collect and distribute funds to assist the poorest nations.

However, rich and poor na-tions ended the week further apart on at least one issue. Th e European Union and the United States made it clear that they wanted to put a new treaty in place of the Kyoto Protocol, causing delegates from developing nations to walk out. Th ey accused the economically powerful countries of wanting to “kill off ” Kyoto, despite the em-phasis it places on encouraging development in poorer areas.

China, along with the major-ity of developing nations, insists that industrialized countries cut emissions by at least 40 percent of 1990 levels by 2020, the frame-

work of which was decided by the Kyoto Protocol in 1997.

Targets for emissions cuts by developed countries still fall short of their required levels, although they are creeping upwards, mostly

as the result of the introduc-tion of more ambitious

goals by Japan’s new government. Th e World Resources Institute calculates that the targets

amount to cuts of about 10 to 24 percent

below 1990 levels by 2020. By contrast, scientists have said that cuts of 25 to 40 percent are needed to have a real eff ect on global warming.

Oil-rich Norway provided the one bright spot in Bangkok by promising a 40 percent cut if agreement is reached in Copenha-gen. Observers saw this as a moral gesture more than a practical one,

THE BRIEF

Cuts of

are needed to have a real

effect on global warming

25% to 40%

BANGKOK CLIMATE CHANGE TALKS

United Nations climate chief Yvo de Boer

UPFRONT.indd 16UPFRONT.indd 16 5/11/09 16:37:465/11/09 16:37:46

UPFRONT17

because it would have little impact on total emissions from the indus-trialized world, given Norway’s small size.

Th ere was also no break-through on how much money to give to the world’s poorest coun-tries in order to help them prevent global warming, despite a proposal by British Prime Minister Gordon Brown this summer for an amount rising to $100 billion a year.

Th e Philippines’ Bernarditas Muller commented: “We are ex-tremely concerned by the lack of numbers and clear funding com-mitments by the developed world.” Su Wei, China’s chief negotiator, said, “We came here with hope and confi dence, but have to leave with disappointment and deep concern.”

Su, who is Director of the Cli-mate Change Policy Department of the Chinese National Development and Reform Commission, said some developed countries adopted a “passive attitude” in combating climate change during the talks. “Th ey neither off ered satisfactory plans on their own emissions cuts, capital and technological transfer to developing countries, nor re-sponded positively to developing nations’ suggestions on these as-pects,” he added.

“Th e talks involved a confl ict of interests, so they could not run smoothly,” Qi Jianguo, an eco-nomic and environmental policy researcher at the Chinese Academy of Social Sciences, told the Chinese news agency Xinhua.

Many eyes are now on Presi-dent Obama, in the hope that he will travel to Copenhagen in De-cember aft er receiving his Nobel Peace Prize in Oslo. His attendance would ensure a level of attention that could make all the diff erence to the talks’ success.

THE BRIEF

NEWS IN PICTURES

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

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

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

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

NEWS IN PICTURES


UPFRONT18 PROFILE

LISA JACKSON, ADMINISTRATOR, ENVIRONMENTAL PROTECTION AGENCY

Currently serving as the Administrator of the Environmental Protection Agency (EPA), Jackson is regarded as one of the most pow-erful women in US environmental politics. Offi cially nominated by President Obama in December 2008, she was confi rmed through unanimous consent of the US Senate in January 2009.

Beginning her career with the EPA in 1986, Jackson has always been at the forefront of environmental strategies. During her tenure at the EPA, she worked on the federal Super-fund program, developing hazardous waste clean-up regulations and overseeing proj-ects throughout New Jersey, later becoming Deputy Director and Acting Director of the region’s enforcement division.

Delving further into politics, Jackson joined the New Jersey Department of Environmental Protection (DEP) in 2002 as Assistant Com-

missioner of Compliance and Enforcement and headed numerous programs such as land use regulation, water supply and geological surveys. Most notable was the department’s creation of standards for the Highlands Water Protection and Planning Act.

Becoming Commissioner of Environmental Protection was the logical next step for Jack-son, and she led a team of 2990 professionals responsible for protecting New Jersey’s natural and historic resources. She actively aimed to aid those communities that had long been ne-glected, and led numerous compliance sweeps on areas heavily aff ected by pollution, such as Camden and Patterson. Opinion regarding strong enforcement was divided at that time, and she received much criticism from those working on toxic clean-ups at the local level.

She became Chief of Staff to the Governor of New Jersey, handling all state operations

and political liaisons for the governor, before being appointed to her federal posi-tion by the President. In her role at the EPA, she is currently attempting to push through the Clean Air Act. Th e act declares CO2 to be a public health threat and paves the way for the government to impose taxes on US businesses producing large amounts of CO2. It is expected to provide the basis for cap and trade.

The suppression of a report in June brought Jackson under question. It was alleged she was involved in withholding data written by Alan Carlin that was unsupportive of climate change. Senator John Barrosso of Wyomng has also accused her of taking de-cisions based “more on political calculations than scientifi c ones”. Combine that with damning reports from DEP employees, and her time in federal government is likely to be a colorful one.


UPFRONT19

FAST FACT

GOAL WITHIN REACH HITTING THE OCEAN FLOOR

Source:

Th e Obama Administration has not given up trying to get approval of its climate policy in the Senate before the UN Climate conference in Copenhagen in December. Carol Browner, White House Adviser on Energy and Environment, says that it is still possible to get a political mandate from the Senate in time.

“Th is administration from day one has been about taking action and we are still working very, very hard to get a bill out of the Senate,” she says.

She believes it is still possible for the Senate to pass energy and climate legisla-tion this year, even as a debate over the US healthcare system dominates the Congres-sional calendar.

“We haven’t given up trying. Th ere are still windows where time could come available…We feel very, very confi dent that we can work with the rest of the world to take signifi cant steps forward in Copen-hagen,” Browner said in an interview with Bloomberg News.

Maldives government offi cials literally took a dive in October to raise awareness about climate change. Members of the cabinet staged a meeting six meters under a lagoon to highlight the threat of global warming to the lowest-lying country in the world.

President Mohammed Nasheed and 13 others pulled on scuba gear and commu-nicated via hand signals while seated around a table in the lagoon on the island of Girifushi. Th e meeting aimed to draw attention to fears that rising sea levels caused by polar ice cap melt could swamp this Indian Ocean archipelago within the next 100 years. Th e islands are currently only an average of 2.1 meters above sea level.

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

rising to

“What we are trying to make people re-alize is that the Maldives is a frontline state. Th is is not merely an issue for the Maldives but for the world,” Nasheed said.

Against a backdrop of coral, the Presi-dent, Vice President, Cabinet Sec-

retary and 11 ministers signed a document calling on all

nations to cut their carbon dioxide emissions.

Nasheed had already announced plans for a

fund to buy a new home-land for his people if the 1192

low-lying coral islands are sub-merged. He has promised to make the

Maldives, with a population of 350,000, the world’s fi rst carbon-neutral nation within a decade.

President Obama’s visit to China in mid-November will not lead to an agreement on countering global warming, according to Todd Stern, the US special envoy for climate change. However, he says Obama will work with Chinese President Hu Jintao toward facilitating an agreement at the interna-tional meeting.

“It’s never been an eff ort on our side to work toward a separate deal, but we’re going

to be trying to make as much progress as possible,” Stern says. “We’re pushing them and they’re pushing us.”

“All of us have to take responsibility for our own countries and for the sake of all mankind. Th is is not a matter of saying, only if other countries take certain measures will we take certain measures. It is not that kind of future,” Xie Zhenhua, China’s top climate envoy, told reporters.

NO US-CHINA PACT

20% in 201130% in 2020

The islands are only an average of

above sea level2.1 meters


UPFRONT20

Th e Desertec Industrial Initiative, a $400 billion plan to provide Europe with solar power from the Sahara, has reached fur-ther development following the formation of 12 companies to carry out the work. Th e German-led, project brings together major players in the industry such as Siemens, E.ON and Deutsche Bank.

Th e initiative has set a target to provide 15 percent of Europe’s electricity by 2015, with solar power being generated as soon as 2015. Th e technology being used is not inno-vative, it is already being used in the deserts of California and Nevada, but it is receiving huge media attention for the scale of the proj-ect, which also has plans to connect North Africa to this European grid.

Th e French government is becoming doubt-ful as to the purchase of half of US nuclear energy company Constellation. State-con-trolled French operator EDF announced its bid for Constellation last December, but it has since emerged that the government is keen to continue its presence in Europe following its buyout of British Energy in late 2008. Th e Financial Times reported the government’s change in enthusiasm for the American takeover, stating that regulatory diffi culties in the US have delayed the $4.5 billion deal and quotes a senior offi cial questioning EDF’s progression with Constellation.

However, a French government offi cial who stated that a deal between the two has been authorized denied the report.

London’s mayor, Boris Johnson, is consider-ing a new project to save at least $147 million in refuse collection. Following a report by the London assembly, it emerged that the waste generated by Londoners could be used to gen-erate enough electricity to power up to two million homes and provide heat for 625,000 houses. Th e amount of money being spent on sending waste to landfi ll is increasing follow-ing rising taxes.

Currently, more than half of the capital’s waste ends up in landfi ll, with only 22 percent of it being recycled; non-recyclable rubbish, such as food, could be converted into energy. Creating gas from the rubbish could be used for heating or for generating electricity and could cut London’s CO2 emissions by 1.2 mil-lion tones.

INTERNATIONAL NEWS

SAHARA SOLAR NUCLEAR TAKEOVER RUBBISH RE-USE


UPFRONT21INTERNATIONAL NEWS

COAL GASIFICATION TOKYO MOTOR SHOW SOLAR FOCUS

In a bid to develop its clean coal technolo-gies, India is undertaking a collaborative eff ort with Coal India Ltd (CIL) and receiving support from its peers. CIL and GAIL (India) Ltd are working together to develop a surface coal gasifi cation project at Talcher coalfi eld in Orissa for the production of ammonium nitrate and urea.

GAIL had organized a study by Udhe India to examine the potential of the project. It was estimated that the project would con-sume 5000 tons of coal a day to produce 7.76 mscmd of synthesis gas (equivalent to 3000 tons a day of ammonia) to produce 3500 tons of urea a day.

CIL is also working with ONGC for un-derground coal gasifi cation projects.

Th e two are working on the development, operation and R&D activities. Th e pilot site at Vastan, Gujarat, has been obtained and its design has been fi rmed up, and the project is expected to commence production next year.

Th e 41st showcasing of innovative concepts and new production cars from the world’s major auto manufacturers took place in Tokyo between October 21-November 4. Th e eff ects of the recession were present, with only Lotus, Caterham and Alpina making the journey from Europe. Most notable was the innovative yet cautious approach to plug-in hybrid vehicles.

Toyota displayed its Plug-In Prius Hybrid, run on lithium-ion battery technol-ogy and emitting just 42g/km of CO2 or less. However, remaining cautious of public opin-ion, the vehicle is due to go on a limited trial next year.

Renault, also exhibiting at the show, has stated that 20 percent of its entire production will be battery electric vehicles by 2012.

Th e Japanese government has launched a new program to encourage the purchase of surplus solar electricity. Power companies will now be purchasing the surplus electric-ity produced by solar power generations in homes, schools and hospitals at a much higher rate.

Starting in April, the utility companies will collect a monthly sub-charge from every household and organization to cover the rise in costs. However, critics are doubtful about this move and believe it will only weaken cus-tomer sentiment.

Th is is the latest of Japan’s attempts to make photovoltaic generation, which pro-duces less carbon emissions than fossil fuels, is popular and demonstrates the country’s commitment to fi ghting global warming.


UPFRONT22

KEVIN MCCULLOUGH, CHIEF OPERATING OFFICER, RWE ENERGY

Being a very carbon-heavy industry and a very carbon-heavy player within the energy sector, arguably we needed to do something more fundamental around weaning ourselves away from the carbon-based technologies.

The winners going forward in any business sector are always those that can be innova-tive and move quickly, and because we were a little later than most of our competitors in getting into large volume renewables, we had to make some fairly bold moves fairly quickly.

We live in a world at the moment where we take poverty for granted and we have to do something about that. Th e vast majority only minimally change their lifestyles towards energy, and there is no real solution going for-ward that involves low carbon and low price, and that’s the reality.

Onshore wind is now beginning to find parity with gas turbine plants. Off shore wind

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

We see real strength as a portfolio as opposed to a single party player. I don’t believe that with the technology available today we will be 100 percent renewable. Th ere is certainly the potential, but probably only on a project by project basis.

You’re already seeing, on a larger scale, utili-ties using their carbon footprint or their sus-tainability impact very cleverly to competitive advantage. Th ere’s no reason that I can fore-see why that wouldn’t be just as practically

applied in a smaller environment, ultimately to a very small scale.

Nuclear was born out of the Cold War. It was built eff ectively for weapons grade plu-

tonium with heat as a huge byproduct that some clever people thought we can build energy from, and of course more clever uses of that nuclear technology became civil nuclear reactors.

Consumers need to be continually educated, but so do the utilities that serve them because our consumers are our absolute lifeblood, and you ignore your consumer at your peril. We’re living in an age now where consumers has never been as informed as they are today.

“Our consumers are our absolute lifeblood, and you ignore your consumer at your peril”


UPFRONT23

FROM THE VAULT

CLEAN VEHICLES

In the Q1 2009 issue of Power & Energy, Ralph Izzo, CEO of Public

Service Enterprise Group, examines the diffi cult state of the US utility

industry in relation to the heightened federal focus on reducing green-

house gas emissions and the recent global fi nancial crisis.

Go to www.nextgenpe.com, click on ‘Previous issues’ in the left column,

choose ‘Issue 6, February 2009’ and scroll down to ‘Cover stories’ to

read about PSEG Global’s strategic efforts to face the enormous chal-

lenges created by climate change.

BIOFUEL COULD HARM WATER

A new study by researchers at Rice University in Houston, Texas has found that expanded production of crops to produce biofuels could damage water resources. Th e research suggests that policy makers should take into account what they call the “water footprint” when encouraging biofuel development.

Th e study, called ‘Th e Water Footprint of Biofuels: A Drink or Drive Issue?’, suggests that by using too much water to produce fuel, we might end up with not enough water to drink or to grow food.

According to the lead author of the study, Pedro Alvarez, Rice University Professor of Civil and Environmental Engineering, the water footprint consists of two elements. “Water shortages caused by a signifi cant increase in fuel crop irrigation, and increased water pollution from related agro-chemical drainage and increased erosion and so on. Th e two impacts we refer to as the ‘water footprint,’” he says.

Alvarez says there are good reasons to continue programs to produce biofuels, such as reducing the need for imported oil and diversifying our sources of energy. But he says policymakers should provide incentives to producers to use crops that use less water and have less impact on the environment in the form of runoff of pesticides, fertilizers and other chemicals.

NEW SOLAR RESOURCES

Energy Secretary Steven Chu announced in early November that the Department of Energy is providing up to $5.5 million in funding from the American Recovery and Reinvestment Act to support the X PRIZE Foundation’s work to inspire a new genera-tion of energy effi cient vehicles.

As part of the Automotive X PRIZE competition, teams design innovative, commercially viable, high-effi ciency vehicles that will help break the dependence on oil and stem the eff ects of climate change. Th e funding will provide technical assistance and expand national education and outreach eff orts for the competition. Th e award also supports President Obama’s Strat-egy for American Innovation, which calls on federal agencies to increase their use of prizes as a tool for promoting technological advances.

To help utilities rise to the chal-lenge of adopting solar power at a large scale, the Solar Electric Power Association (SEPA) un-veiled a new web portal and da-tabase last week at Solar Power International. SEPA says that its new site lets utilities explore op-tions, fi nd resources and think strategically about how their utility peers across the country are moving forward.

Th e site aims to help utilities make business decisions about

solar power by providing “intel-ligent navigation” of industry reports, events, online tools and market data that can be fi ltered by technology, application and employee type, SEPA said. Highlights include the Solar Toolkit, a one-stop window into the site’s technical content.

Th e site also off ers data and maps on the largest solar projects, as well as streaming online webinars from past SEPA events.

Source: voanews.com

Source: renewableenergyworld.com


UPFRONT24

BACK TO THE LAB

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

PROJECT FOCUS

A SCIENCE, TECHNOLOGY AND ENERGY laboratory, the main focus of the National Energy Technology Lab is to advance the national, economic and energy security of the US, which it does through onsite and contracted research.

The laboratory develops technologies to resolve the constraints imposed on decreasing fossil fuels, and ensures responsible supplies of energy for the nation’s growing economy. It is the only lab devoted to research into fossil energy technology and incorporates a number of national goals, such as carbon sequestration and producing hydrogen fuel from coal. It currently employs more than 1200 people at each of the fi ve laboratory sites.

NATIONAL ENERGY TECHNOLOGY LAB

LOCATED IN LONG ISLAND, New York, Brookhaven was established in 1947 and originally owned by the Atomic Energy Commission. First operated as a nuclear research facility, Brookhaven’s activities have vastly expanded to include environmental and energy research, neurosciences and medical imaging, and structural biology.

The lab’s motto is ‘passion for discovery’, and it has six Nobel Prizes to back up its promise. Co-located within the laboratory is the uptown New York forecast offi ce of the National Weather Service.

BROOKHAVEN NATIONAL LAB


UPFRONT25PROJECT FOCUS

OFFICIALLY KNOWN as the Thomas Jefferson National Accelerator Facility, it was founded in 1984 and is operated by Jefferson Science Associates, LLC. The lab’s main research facility is the Continuous Electron Beam Accelerator Facility (CEBAF) accelerator, and the nuclear physics program is carried out at three end stations, with plans to introduce a fourth. There are plans to double the electron beam to 12 GeV.

The Jefferson Lab also boasts the world’s most powerful free electron laser, at more than 14 kW.

JEFFERSON NATIONAL ACCELERATOR LAB

SITUATED AT THE SAVANNAH River site near Aiken, South Carolina, the laboratory carries out research and development incorporating environmental remediation, technologies for the hydrogen economy, handling of hazardous materials, and technologies for the prevention of nuclear proliferation.

The labs focuses on, and has vast amount of experience in, the domain of nuclear waste and hydrogen storage, following its initial creation to support the production of tritium and plutonium during the Cold War.

SAVANNAH RIVER NATIONAL LAB

SPECIFIED FOR RESEARCH regarding plasma physics and nuclear fusion science, the lab is located in New Jersey. It originated out of the Cold War project Matterhorn, a project to control thermonuclear reactions, and was renamed the Princeton Plasma Physics Lab following the project’s declassifi cation in 1961.

Its primary goal is to develop fusion as an energy source and its current major research projects and experiments include a Tokamak Fusion Test Reactor and the National Spherical Torus Experiment.

PRINCETON PLASMA PHYSICS LAB


UPFRONT26

SMART GRID PROGRAM

OG&E has entered into agreements with General Electric Energy (GE) and Silver Spring Networks to handle key aspects of its Positive Energy Smart Grid Program to begin in Norman, Oklahoma next year.

As part of the Norman deployment, 2000 to 3000 customers will be recruited

to receive information in almost real time regarding the price of electricity by time of day and the amount being used.

Th e smart grid pro-gram will provide customers with more information to help manage their energy use and save money, without compromis-ing their lifestyles. It also will help OG&E maintain reasonable electricity rates and continue reliable delivery of electricity to its customers, the utility said.

GE will provide Norman with 42,000 smart meters that will measure electricity use in the home or business and transmit the information to OG&E for billing and service monitoring. Th e information will be communicated via Silver Spring Net-works’ Smart Energy Network, a secure, IP-based network.

FAST FACT

If

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

140 million

UTILITY BALANCE SHEETS STRAINED

US ENERGY CONSUMPTION (QUADRILLION BTU)

Share values among America’s utility, gas and power companies have outperformed the broader market since the fi nancial crisis began last year. Maintaining this perfor-mance, however, might become more dif-fi cult in the months ahead, according to a report published in the September issue of Public Utilities Fortnightly magazine.

Th e fi ft h-annual Fortnightly 40 study, sponsored by Accen-ture, ranked the four-year shareholder value perfor-mance of US investor-owned utilities (IOUs) and other companies active in electric power and gas industries. Th e C Th ree Group of Atlanta, which along with Public Utilities Fortnightly devel-oped the F40 fi nancial model, analyzed the annual reports of 85 companies to compare a series of shareholder-value metrics – such as profi t margin, dividend yield, return on equity (ROE), return on assets (ROA) and sustainable growth.

Companies leading the F40 ranking

this year included DPL, Energen and PPL. Ranked among the top 40 for the fi rst time was NRG (32), and returning to the rank-ing aft er a year’s absence were Mirant (21) and AES (37) – three companies with heavy exposure in wholesale power markets. Con-versely, Alliant and Northwest Natural Gas

slipped to the bottom of the F40 aft er ranking in the high 20s last

year.Th e F40 metrics – com-

bined with supplementary 2009 data – showed the in-dustry remains fi nancially

robust despite a substantial decline in stock prices. Cap-ex

spending among the Fortnightly 40 companies grew by nearly 30 percent in 2008, topping $49 billion, and the entire industry’s cap-ex increased 17 percent to nearly $94 billion. At the same time, equity returns among the top 40 companies de-clined only slightly, from 15.4 percent in FY2007 to 14.6 percent in 2008.

Source: www.fortnightly.com

ENERGY SOURCE 2008

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Cap-ex spending grew by nearly

in 200830%



TeamQuest.indd 1TeamQuest.indd 1 3/11/09 15:03:433/11/09 15:03:43

UPFRONT28

GLOBAL RENEWABLE ENERGY OUTLOOKHYDROPOWER RECEIVES $531 MILLION

Hydroelectric projects received about 24 percent of the $2.2 bil-lion in Clean Renewable Energy Bonds allocated recently to renewable energy developers, according to the National Hy-dropower Association.

“By providing more than $531 million in funding for hydropower projects, the federal government is supporting eff orts that will create jobs and add to the country’s domestic, aff ordable electricity generation re-sources,” said Jeff rey Leahey, NHA’s Senior Manager of Gov-Ernment and Legal aff airs.

Th e US Treasury Depart-ment allocated the bonds to more than 800 companies and

cooperatives nationwide. Th e funding was authorized by the Energy Improvement and Extension Act of 2008 and the American Recovery and Rein-vestment Act of 2009.

In the past, the federal bonds program oft en over-looked promising hydroelec-tric projects, Leahey said. Th e

latest allocation was based on a pro rata basis, a change the NHA had been pushing for.

“NHA salutes the legislators and policy-

makers who have improved the CREBs program, so that it recognizes the extraordinary energy, environmental and eco-nomic benefi ts that can come from hydropower,” said Leahey.

EIGHT GW OF WIND BY YEAR-END


According to a recent brief from Emerging Energy Research, the US wind energy market could reach 8 GW installed in 2009, (in-cluding project spill-over from 2008 and new wind build), despite initial fears of a major drop in megawatts resulting from the fi nan-cial crisis.

Th e fi rm said that 6.3 GW of wind have already been added in 2009, while more than 2 GW are under construction and scheduled for activation by year’s end.

“At face value it appears that the US market could witness its second-best growth year to date; however, if you remove spill-over build originally meant for completion in 2008, 2009 market acti-vations will probably be closer to half of 2008 levels,” said Senior Wind Analyst at EER Matthew Kaplan.

Still, 2009 build-out has surpassed industry expectations. In the fi rst quarter of this year, most market participants expected a signifi cant drop in 2009 activations to well less than 6 GW based on frozen fi nancial markets. However, a combination of projects planned for 2008 spilling over into 2009 and construction activity by developers eager to qualify for American Recovery and Reinvest-ment Act 2009 (ARRA) provisions, led to US market growth near-ing approximately 8 GW in 2009, according to Kaplan.

is

-

lat

leg



UPFRONT29


UPFRONT30

Heidrick & Struggles 114

Idaho National Laboratory 32

Itron 2, 66

Kore Telematics 48, 49

Land Agent Services LLC 101

meettheboss.com 125

Motorola 66, 72

MSE Power Systems 4, 116

National Energy Technology Laboratory 24

National Institute of Standards and

Technology 76

Nuclear Energy Institute 32

Oak Ridge National Laboratory 44

Oliver Wyman 44

Ounce Labs, an IBM company 66, 68, OBC

PowerMand 53

Princeton Plasma Physics Laboratory 24

PSE&G 122

PV Powered, Inc IFC, 97

RAM Mounting Systems 10, 60, 61

S&C Electric Company 104

Savannah River National Laboratory 24

Sensus 54

Sierra Wireless 66, 70

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

Alstom 38

American Council on

Renewable Energy 108

American Electric Power 32, 38, 84

American Wind Energy Association 80, 110

AT&T 6, 66

Autodesk 121

Baltimore Gas and Electric 50

BP Solar 8

Brookhaven National Laboratory 24

California Energy Commission 110

CH2M HILL 37, 119

Cinterion 64

Conergy 93

Current 31

Duff & Phelps 102

Electricity Storage Association 104

Energy Storage and Power LLC 107

Enfora 78, 79

European Photovoltaic Industry

Association 80

European Renewable Energy Council 80

Exelon 32

Get Wireless 59

Solar Electric Power Association 90

Solar Energy Industries

Association 98, 110

SolFocus 88, 89, IBC

Southern California Edison 56

Southern Company 94

SunGard 15

Teamquest 27

TELUS Business Solutions 12, 66, 75

Thomas Jefferson National

Accelerator Facility 24

University of Massachusetts 80

DOE AWARDS FUNDING FOR GEOTHERMAL ENERGY

Energy Secretary Steven Chu has an-nounced up to US $338 million in Re-covery Act funding for the exploration and development of new geothermal fi elds and research into advanced geo-thermal technologies.

Th ese grants will support 123 projects in 39 states, with recipients including private industry, academic institutions, tribal entities, local governments, and the DOE’s national laboratories. Th e grants will be matched more than one-for-one with an additional $353 million in private and non-federal cost-share funds.

Th e grants are for identifying and developing new geothermal fi elds and reducing the upfront risk associ-ated with geothermal development through innovative exploration and drilling projects and data development

and collection. In addition, the grants will support the deploy-ment and creative fi nancing approaches for ground source heat pump demonstration projects across the country.

“Th e United States is blessed with vast geothermal energy re-sources, which hold enormous potential to heat our homes and power our economy,” said Secretary Chu. “Th ese investments in America’s technological innovation will allow us to capture more of this clean, carbon free energy at a lower cost than ever before. We will create thousands of jobs, boost our economy and help to jumpstart the geothermal industry across the United States.”


CLIMATE SUPPORT

More than a dozen leading US corporations, includ-ing Public Service Enter-prise Group (PSEG), DB Climate Change Advisors (Deutsche Bank Group), Gap Inc. and National Grid, have announced the launch of a new initiative to support Congressional action on clean energy and climate change legislation.

Th e goal of the new group, called American Businesses for Clean Energy (ABCE), is to off er a platform for leading US businesses to express their support for meaningful and eff ective legislation that will drive clean tech-nology innovation, create jobs and address the threat of global climate change.

ABCE’s offi cial mes-sage is: “We are businesses from a broad cross-section of American industry that support Congressional action to enact clean energy and climate legislation that will signifi cantly reduce greenhouse gas emissions. Now is the time to act.”

Some of the fi rst signa-tories to the ABCE pledge of support include Aspen Skiing Company, Avista, Calpine Corporation, Con-servation Services Group, DB Climate Change Ad-visors (Deutsche Bank Group), FPL Group, Gap Inc., National Grid, New York Power Author-ity, PNM Resources, and Public Service Enterprise Group.


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Current.indd 1Current.indd 1 3/11/09 15:01:503/11/09 15:01:50

32 www.nextgenpe.com

COVER STORY

Now you see it...

Cover Story:4August 5/11/09 15:19 Page 32

www.nextgenpe.com 33

you don’tHe hails nuclear as the answer toAmerica’s carbon-emitting problemand the future of energy self-sufficiency, but without thelegislation to back up his rhetoric, arePresident Obama’s nuclear policiesnothing more than an act of illusion?

By Natalie Brandweiner

now

In recent years, nuclear has been dressed up and re-branded asthe savior of the global energy crisis. Governments are finallytaking notice of diminishing energy resources and beginning tofeel the power of lobbying efforts calling for a reduction in car-bon emissions. Public opinion is no longer as drowsy as it pre-viously has been – the average energy consumer is now wakingup to the effects of individual usage on global warming. Being‘green’ is the new scene.

The previous stigmas of safety and reliability have been washed over andnuclear has re-emerged as America’s answer to the fuel crisis. PresidentObama is carrying the torch for its revival and canvassing in its support, withEnergy Secretary Steven Chu in tow, but the accumulation of this into policynever seems to appear. There is still so much to see of Obama’s tenure, but sofar his legislation for nuclear’s dominance is nowhere to be seen. In fact, nu-clear features as a side note in many of his energy speeches. Promises of fund-ing and plant construction continue to be made, but it seems that the USgovernment is shying away from actual legislation.

Public opinionGlobal opinion has changed. The UN Climate Change Conference

scheduled for Copenhagen in December 2009 is set to reorganize the frame-work for climate change mitigation and millions across the globe will bewatching the outcome. The Nuclear Energy Institute (NEI) is regarded as thebiggest nuclear lobbying group in the US: according to its website it “developspolicy on key legislative and regulatory issues affecting the industry.” The NEIboard represents 27 nuclear utilities, plant designers and engineering firms inefforts to expand the nuclear industry, and for the entirety of 2007 spent $1.3million lobbying the US federal government. It has targeted this towards build-ing public support, running ads to highlight the nuclear benefits.



Bush and facing criticisms for favoring Texan companies and amounting tonothing more than a broad collection of subsidies for US energy companies,the legislation highlights nuclear as an “innovative technology” and autho-rizes cost-overrun support of up to $2 billion for six new power plants. Obamavoted ‘yes’ on the bill and carried through his support into his own presiden-cy, including nuclear as part of his energy policy. During his acceptancespeech he announced, “As President, I will tap our natural gas reserves, investin clean coal technology and find ways to safely harness nuclear power.”However, implementing his promises into policy is quite a different story.

The Obama Administration has ramped up the move towards renew-ables, but this alone cannot produce the energy that the country needs. A re-cent study by the Nature Conservancy, a conservation organization of morethan one million members, shows that new energy production, specificallybiofuels and wind power, is likely to consume a landmass larger thanNebraska. Nuclear sets itself apart as being a producer of low-carbon elec-tricity without excessivie intringement upon the country’s landscape, but thefederal policy to support engagement with nuclear never materializes.

The Office of Nuclear Energy offers two program goals for nuclear ad-vancement: the development of new nuclear generation technologies and the

“Nuclear energy is the largest provider of

clean, low-carbon electricity, almost eight

times larger than all renewable power

production combined”KERRY-BOXER BILL

Public opinion has not always leaned toward favouring climate changeand nuclear energy. The development of nuclear fission in the 1930s saw thefirst attempt to pave the way for nuclear to emerge as a primary energy source– Eisenhower’s ‘Atoms for Peace’ speech, which he delivered in 1953, kick-started the first waves of support for nuclear power, and the US Navy becameone of the first organizations to develop nuclear power for its propelling sub-marines and aircraft carriers. The US launched its nuclear power program in1954 and the SM-1 Nuclear Power Plant, at Fort Belvoir, Virginia, became thefirst reactor to deliver energy to the grid.

However, the work of the Manhattan Project resulted in the building oflarge reactors at the Hanford Site and the first nuclear weapons were createdusing plutonium that had been produced there. Rising costs during the 1970sand 80s and falling fossil fuel prices made nuclear power less attractive and 63nuclear units were cancelled in the US between 1975 and 1980. But it was lesseconomics than general opinion that slowed nuclear’s progress as a primaryenergy source. Fears began to grown about the safety of nuclear – how likelywere accidents, what were the chances of a radiation leak, and where exactlywas the nuclear waste being disposed of? The 1979 accident at Three MileIsland and the 1986 Chernobyl disaster answered all these questions and setpublic opinion firmly against the atomic option.

Nuclear power has had a very different history in Europe, however.Following the 1973 oil crisis, France had to move away from its dependenceon fossil fuels and invest in nuclear power. Today, nuclear is its main sourceof electricity and supplies approximately 80 percent of the country’s power.Elsewhere, developing countries such as China and India are showing a heavyinterest in nuclear. To cope with its rising population and developing econo-my, China plans to build more than 100 plants. In March 2009 ChinaGuangdong Nuclear Power Group, a major nuclear power corporation, setup the China Guangdong Nuclear Uranium Co. to be responsible for its ura-nium supply, ensuring that the country is self sufficient not only in powerplant capacity, but also in the production of fuel.

The Obama Administration has recognized the softening of public opinionon nuclear and talked up its return, yet after months of promises they still lack thecommitment to introduce any such legislation. Rather than the government, it isthe utility companies that are acting on their faith and carrying the baton for nu-clear implementation. Nuclear power is emerging as an economy-based supply-and-demand principle – utility companies across the US are reacting to the needfor viable sources of renewable energy and investing in its future.

Federal policySince the Energy Policy Act of 2005, nuclear has become accepted as a vi-

able form of renewable energy for the US. Despite being passed by George W.



maintenance, enhancement and safeguarding of America’s nuclear infra-structure. Its first goal, as stated on the Department of Energy’s website, is todevelop technologies that “foster the diversity of the domestic energy supplythrough public-private partnerships that are aimed in the near-term at the de-ployment of advanced, proliferation-resistant light water reactor and fuelcycle technologies and in the longer-term at the development and deploymentof next-generation advanced reactors and fuel cycles.”

On June 16 this year, Steven Chu followed up on the DOE’s emphasis of de-velopment, announcing funding of $9 million for nuclear energy university pro-gram awards. The Nuclear Energy Universities Program will provide scholarshipsand fellowships to 86 US nuclear science and engineering students. The fundingis being made available to support the country’s energy research infrastructure,but what about the powering of the infrastructure itself?

On September 18, Chu flew the flag for nuclear once again and an-nounced that $40 million in funding would be made available to support de-sign and planning for the Next Generation Nuclear Plant (NGNP): plantswhich will use high temperature, gas-cooled reactor technologies to integratemultiple industrial applications in one plant or facility, such as generatingelectricity while refining petroleum.

Kerry-Boxer BillClaimed by John Kerry to be a“pollution reduction bill”, the issueof cap and trade is avoided;instead the bill looks at nuclearworker training, federalprocurement of water-efficientproducts, green jobs, climatechange adaptation programs andflood control. The bill emphasizesthe need for the Secretary ofHealth and Human Services tocreate a strategic plan for healthissues caused by climate change– waterborne diseases, tropicaldiseases, pulmonary effects,cardiovascular effects, air pollutionhealth effects, hazardous algalblooms, mental and behavioralhealth impacts of climate change,the health of refugees, theimplications for communitiesvulnerable to climate change, andlocal and community-based healthinterventions.

“Support for new developments in nuclear technologies will be critical tomeeting our energy, climate and security goals for years to come,” says Chu.“Next Generation Nuclear Plants hold the promise of safe, cost-effective, zero-emissions energy for major US industries that are some of the largest energyconsumers in the country.”

The NGNP project is expected to be comprised of two phases, with theconstruction of a demonstration plant expected in 2012. Applications are to bemade to the DOE, with two awards being announced in February 2010 and bothsupporting a unique reactor concept. This follows an already long-standingagreement for the involvement of Idaho National Laboratory to build a full-scale,300MW prototype. However, before anticipation runs too high, is worth notingthat the construction of the plant is not planned to begin until 2016.

The Nuclear Regulatory Commission (NRC) published an NGNP li-censing strategy in 2009 laying out a process, but includes no actual details re-garding design for the reactors, and it is expected that it will be at least 2014before the NGNP is ready with a reactor design for the NRC review. TheObama Administration hails itself as bringing the next generation of nuclearpower, promising research funds and new developments, but when strippedback to the finer details, the likelihood of any progress being made during thecurrent president’s tenure seems exceptionally small.

It is not only the construction of nuclear power plants that the govern-ment is failing in its support. The catastrophic case of the Yucca MountainRepository was also a stop-start, before being completely rejected by theObama Administration. Proposed as a storage facility for nuclear fuel andother radioactive waste, it was approved in 2002 under the BushAdministration but all funding was stopped earlier this year. Chu stated thatit is “no longer an option for storing nuclear waste,” prompting concerns overplans for nuclear waste disposal.

Obama’s team do not want to lose face by ignoring public interest in nu-clear, but are reluctant to implement a potentially damaging policy. His nu-clear policy is proving to be nothing more than a brilliantly streamlined PRspin: extolling the benefits of nuclear but without feeling the effects shouldanything go wrong. Nuclear has certainly moved away from its previous stig-mas, but not completely. For many it still remains a controversial policy.

John Keeley at the NEI confirms this viewpoint. He believes that al-though there may be a lot happening behind the scenes, it is unlikely wewill see nuclear policy made into legislation any time soon. He notes thecurrent federal focus on healthcare reform and the need for the ObamaAdministration to heavily hone in on the criticisms they are currently fac-ing. “Healthcare is the driver now,” says Keeley. He also notes the Senateelections that are due next year – in times of electoral campaigns it is rareto see controversial legislation introduced for fear of political fallout.

Lack of supportKeeley also points to the shortfalls of support for nuclear energy in the

Kerry-Boxer bill. The only promise Barbara Boxer seems to have kept in an-nouncing new legislation on nuclear power is the announcement having ‘nu-clear’ in the title. The bill actually does very little to address nuclear policy, optingto include it as a side note on the end of stipulations for natural gas, coal and re-newable energy.

The report cites nuclear’s pivotal role, yet fails to make any serious com-mitments for the future: “Nuclear energy is the largest provider of clean, low-carbon electricity, almost eight times larger than all renewable power


production combined, excluding hydroelectric power.” The bill includes a gener-ic goal to expand the nuclear energy workforce and concentrate more researchinto nuclear safety and disposal, but none of this is partnered with a firm set ofallocated funds. Chu has sided with this argument and stated that in response hewill push for billions of dollars to secure funds to cut greenhouse gas emissions.

The response to the bill has been overwhelmingly critical. The bill cameabout as a result of the lobbying done by conservationist Lamar Alexander,who spoke on the importance of nuclear, not just for a greener future but alsoto secure more votes for the energy and climate bill. Fellow Republican JohnMcCain also staunchly spoke out against the bill, saying, “I’m not going to bepart of any agreement that I know is not going to succeed in reducing green-house gas emissions, and that means it has to be nuclear power. We need tobuild 100 nuclear power plants in the next 20 years. We have to, otherwisewe’re not going to reduce greenhouse gas emissions.”

The principle of outside looking in springs to mind, however. WouldRepublicans introduce such a controversial policy if they were in power?Obama’s Administration is quick to note the environmental benefits of nu-clear but slow to implement it because of the fear of failure. The politics of in-troducing nuclear as a primary energy source continue to get in the way – thecontroversy surrounding the safety of it, the problems with storage and a pos-sible electoral defeat should anything go wrong.

Facing increasing criticism for his lack of commitment, Obama may nowhave given up on glossing over the shortcomings of his nuclear legislation.During the UN climate summit on September 22 he failed to mention nuclearenergy even once, an omission that was made more apparent by the Chinesepresident’s discussion of nuclear as a primary energy source. HuJintao cited statistics and targets for his energy plan, committing tobuilding 132 GW of new nuclear plants.

Utility policyInstead of instigating nuclear legislation, the current adminis-

tration seems to be warming the waters for the utilities to dive inand make the first move, be it successful or not. Its vague pledgesfor government funding for nuclear programs have got the utili-ties fired up and competing for the prize, each attempting to be atthe cutting edge of nuclear technology.

One utility that has long established its support for nuclear technology isExelon. It has the largest nuclear fleet in the US with 17 generating units, whichproduced a record 132.3 million net megawatt-hours of electricity in 2007. Thecompany has done away with safety fears and gained public confidence in its op-erations with its unbeatable statistics – during the same year, as production in-creased, the fleet recorded its lowest industry safety accident rate.

In a previous interview with Power & Energy, Helen Howes, Exelon’s VPof Environment, Health and Safety, said she believed the growing public de-

mand to increase the supply of nuclear energy is proof enough thatconsumers no longer have the critical attitude towards nuclear thatthey once did.

“What we’re seeing now is an evolution of thinking regardingthe value of nuclear as a contributor to the solution,” she said.There are still a number of those who are anti-nuclear, that’s in-evitable, but the value of nuclear as a climate change strategy is

being more and more acknowledged. It’s certainly not done so as the only op-tion, but it’s raised its status to be one of a number of options on the table.”

American Electric Power (AEP) is another utility that is pushing nuclear.With a majority of its fleet being traditional coal-fired generation, the com-pany understands the need to expand its resource mix and create a balancedportfolio to suit both the climate and changing consumer needs. Nick Akins,EVP of Generation, explains that nuclear is a huge focus for AEP, who are ex-ploring other forms of base load technology. “It’s a priority for us to be ableto uprate our nuclear station: we have plans on uprating nuclear by 400- to500-megawatts and that is a relatively small cost, at least a lesser cost than anew coal-fired station,” he says.

However, Exelon and AEP are two of America’s largest utility companies,with reported revenues in 2008 of $18.9 million and $13.3 million respectively.The average cost of building a new nuclear power plant is approximately $7 bil-lion, which is virtually unachievable without the help of government funding;maintaining the plant also brings high costs.

The only recent nuclear funding other than Chu’s long-term applica-tions for $40 million has been for the Idaho National Laboratory.Republican Mike Simpson, whose district stretches across Idaho and in-cludes the lab, recently announced an increase of $33 million in fundingfor research, equipment purchases and the advanced test reactor’s oper-ation as a national scientific user facility.

President Obama’s energy policies contain promising nods to anAmerican future where nuclear plays an important role in a dramaticallyreduced carbon emissions rate, but none of this is backed up by legisla-tion. As the NEI’s John Keeley suggests, while there may be much goingon behind the scenes, nuclear’s future, right now, does not seem concreteor certain.

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


“We’re seeing an evolution of thinking

regarding the value of nuclear as a

contributor to the solution”HELEN HOWES

“Support for new developments in nucleartechnologies will be critical to meeting ourenergy, climate and security goals foryears to come” STEVEN CHU


CH2MHill_AD.indd 121CH2MHill_AD.indd 121 3/11/09 10:39:053/11/09 10:39:05


THE BIG INTERVIEW

Keeping it realMichael Morris, CEO of America’s largest electricity

generator, tells Natalie Brandweiner about his pragmatic approach to building our renewable energy future.

MORRIS ED P38-43.indd 38MORRIS ED P38-43.indd 38 5/11/09 15:58:375/11/09 15:58:37


He notes the current activities of Senator Jeff Bingaman and the work he is currently undertaking with one of the principal committees in the Senate as a move towards this, describing it as, “A pushback from the Republicans, oddly enough.

“It’s a states’ rights issue versus federal government intervention. It’s the cost allocation. Why would somebody in New Jersey want to pay for a transmission line built in North Dakota to bring wind to the Twin Cities? Th at’s no diff erent from asking why would someone in Columbus want to pay for a bridge spanning Tampa Bay in Florida? But that’s the way the federal policy has always worked.

“Governor Pataki has been helping us on this issue, and he’s got two great analogies that are absolutely irrefutable. At the turn of the 20th century, De Witt Clinton, the mayor of New York City, suggested that they fund the Erie Canal. He had no idea it would make New York the fi nancial capital of the world for decades, and it has.

“Dwight Eisenhower, when he was President, for diff erent reasons believed very strongly in putting together an interstate highway system. He had no idea it would make California the eighth largest economy in the world, but it did. So the point here is if we built the electric grid in the same way we built the interstate highway system, we would build out a technology-enhanced greener footprint that is a less carbon in-tensive, less costly undertaking for the country, which would allow us to continue to have technological advantages over all the countries that we compete against.”

Shareholder growthAddressing AEP growth at a recent shareholder meeting, Michael

Morris said that actions taken in late 2008 and early 2009 were aimed at assuring the company’s stability in these weak economic conditions and have it positioned to resume growth when the economy recovers. BP CEO Tony Hayward recently faced the task of publicly denying that the com-pany had turned its back on renewables, as it reported a loss of 53 percent in second quarter profi ts. Renewable energy is not a fast ensurer of ROI, and so how can Morris be so sure that his investments are sturdy?

“Well, there’s a lot of credit here to the fi nance committee of the board of directors as well as our Chief Financial Offi cer and those inside of the fi nance group that we were early to move to take down lines of credit that we had negotiated back in the 2005/2006 timeline,” he replies. “We were fearful. We are an A2P2 credit rated utility as it pertains to commercial paper. Companies like ours and other utilities around the United States depend substantially on commercial paper to fund the day-to-day opera-tions of a business for paycheck, to pay for coal as it’s delivered, to pay the transporters, their bills as they send them to us, the entire business.

According to recent forecasts, the US energy grid will be adding 20 percent more users in the next 10 years. With its 39,000 miles of territory, Ameri-can Electric Power will have a major role to play, and AEP CEO Michael Morris believes the grid to currently be in a state to handle these demands. He

notes the mistakes made by previous energy growth forecasts, and the likelihood that those being made now have just as much potential for inaccuracy. “Whether they’re wrong on the high side or wrong on the low side is important, but if they miss it by a small amount, the grid will be fi ne,” he says.

“Th ere are some very important subsets, though, to what we need to do. When we had the 2003 outage, a lot of people said we had a Th ird World grid. Th at just isn’t accurate. What we have is a very bifurcated grid. It was not built regionally, it was built very locally as each utility served their own needs, and ultimately over time we have knitted that together.

“Th e American Electric Power 765 backbone grid serves 10 percent of all the energy that fl ows through the Eastern Interconnect, which is everything east of the Rocky Mountain region. American Electric Power’s transmission grid also handles about 10 percent of all the electricity that fl ows across Texas, so we will be a major player, no matter how this unfolds. Th erefore, it’s very important to our customers, very important to the states we serve and very important to our shareholders because we see it as a real potential growth opportunity in an earning sense,” Morris explains.

However, the question as to whether the grid should be regulated at federal or state level is no longer the primary issue. During the 1930s the interstate gas companies were forced to abide by federal regulation while the electric companies, under the Federal Power Act, chose to be contin-ually regulated by the states. Th is was then hard to change because of the footprint already established within the utility industry, says Morris.

“Th e benefi t of an interstate electric transmission grid will be to the benefi t of everyone who lives in the country, so why shouldn’t you spread it across the entirety of the gigawatt hours that the system is able to handle? If you do that and you have federal control over it, you’ll see a tremendous amount of transmission capacity added to the system, which will bring renewables into play and also change the way that we build power production facilities.

“You take a region of the country where you think you may need four or fi ve stations to be built. If the grid were truly interconnected, you might only need to build two or three of those stations. Today a new clean coal plant or a new nuclear station may cost as much as $7 billion. Build three of them instead of fi ve and you’ve saved the US economy a tremendous amount of money. So, yes, it should be federally regulated.”

New infrastructureMorris fully endorses the restructuring of the current generation

and transmission system and advocates the benefi ts it can provide. Surely such an overhaul and those jobs created would also provide federal bene-fi ts, helping President Obama reach his self-set target of creating fi ve mil-lion new green collar jobs. “If we’re ultimately going to make the country greener and less dependent on fossil-based fuels, it’s essential. Federal legislative control and cost allocation authority will take down the barri-ers that are holding back the capital investment needed,” he adds.

“Almost everywhere where I bump into politicians, they always want

to sell happy dust, the whole notion that we can do this without any

pain. Wouldn’t you love to believe that? But you know it’s not true”



to that same conclusion. I received enough emails back from the folks in this company that led me to believe they understood that. Was anybody happy, me included? No, of course not. Everyone thinks every year you ought to make more money, but the truth is that saved us a tremendous amount of revenue going forward. Th e 2008 plan did pay off , and we were honest about it, and we calculated the incentive compensation that everyone earned and everyone got it.

“Th ere are 21,640 men and women who have dedicated their lives to keeping the lights on in the 11 states that we do business. Th ey're bright people. Th ey want to be told the truth, and that’s what we do,” he explains.

In the mix Morris was recently quoted as saying of the energy mix, “Th ere is an issue here that is larger than many of us think. Th ere are answers, but the cost of energy is going to go up. I hate it when I hear Democrats and Republicans saying we need wind, we need solar, we need nuclear, and costs will come down. Th e politicians think it is going to be free. It isn’t.” It’s not a comfortable message for these times of increased focus on the benefi ts of renewables.

“Th e American people are bright, and all you need to do is tell them the truth. Politicians on both sides of the aisle – at the local level, at the state level, at the federal level – almost everywhere I bump into politi-cians, they always want to sell happy dust, the whole notion that we can do this without any pain. It’s like the commercials on TV: ‘You can lose 30 pounds and eat all the chocolate cake you like.’ Wouldn’t you love to believe that? But you know it’s not true.”

He notes the Energy Information Administration and the data they release as being “typically wrong.” Statistics such as ‘Wind is 15 cents a kilowatt hour; biomass is 12 cents a kilowatt hour; a well-run fossil plant with all of the paraphernalia, even with carbon capture, is approxi-mately six or seven cents a kilowatt hour.’ As the expenses of functioning the way we have been continue to increase, Morris emphasizes that the

“Worried that that might not sustain through an ex-tended credit crunch if it came, we took down those lines of credit. And what was predicted to happen did. A2P2 com-mercial paper was unavailable toward the latter part of the fourth quarter of 2008 and totally unavailable in the fi rst half of Q1 2009. Th at’s beginning to ease some now, but that gave us some fi nancial fl exibility.

“We then moved quickly into the equity markets in Q1 2009 to take advantage of what we saw as an opportunity to put additional equity into the system, help to balance out the debt-equity ratio in our balance sheet and support more strongly the notion that our ratings from the three principal rating agencies are not only right but sustainable now and into the near-term future.

“As many people know from our earnings call and up-dates, we’ve cut our capital budget to $1.8 billion for 2010. If times were diff erent, we would have that capital investment up in the $2.5 billion to $3 billion range because that’s the kind of money that needs to be spent on the system to make sure that we continue to provide reliable, cost-eff ective power to our customers,” he asserts.

Morris admits there was an internal focus on cost savings, but not at the expense of compromising technological innovation. He gives as an example the Turk coal-fi red plant that the company is currently building in Arkansas, describing it as, “ultra super-critical, higher temperatures, higher pressures, less carbon footprint than any coal-fi red power plant in the United States, and in the entire Western Hemisphere – a technological breakthrough that no other utility here in the United States has done.”

He compares managing his Fortune-ranked 196 company and the organization of his staff through the current economic downturn to the running of a general household. “You all have an economy that you run. It’s called your household. Ours is no diff erent than your household. It’s just a few more zeros,” says Morris.

“I’m sure that every one of our employees has throttled back some vacation planning or new car purchases or some of those things, prob-ably saving more than they did historically. All of those things, paying down credit cards more rapidly than they did before, making sure their mortgage is in good shape, renegotiating it to lower the cost if they can. Th at honest conversation is essential. Th e trust and confi dence that I hope the men and women of this company have in me and the leadership team – and I get plenty of indication that it’s there – has a lot to do with us being honest and frank.

“In the latter part of the third quarter last year, early end of fourth quarter, we told everybody no salary increases in 2009, the fi rst utility to make that statement, and around 70 percent of corporate America came

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

The John E. Amos Plant, a coal-fi red plant in West Virginia, has a generating capacity of 2900 megawatts. Amos is AEP’s largest generating plant.



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

Carbon captureEver the technologist, Morris’ solution has been to embrace renew-

ables, but to do so with realistic and viable methods. Coal, one of AEP’s major energy sources, accounts for over 50 percent of this nation’s elec-tricity and over 32 percent of its carbon emissions.

To combat the problem of the utility’s emissions, AEP’s Mountaineer Carbon Capture and Storage Project, is built to remove between 100,000 and 300,000 tons of CO2, a signifi cant amount but still less than four percent of the plant’s total annual emissions. Morris will need all of his expertise to manage the transition period when the technology is almost there, but not quite.

“Th at’s the other side of the honest equation of, again, I want to lose weight, but I still want to eat my chocolate cake. Th e fact of the matter is we’re improving the technology. Th is is so diff erent from the Clean Air Act. In the 1980s and 1990s we all knew how to capture sulphur, we all knew how to capture nitrous oxides. We knew the technology was out there, but it hadn’t been tested.

“We all want to do this. I don’t think there’s a utility in the United States that doesn’t. Th e technology is just beginning to get laid out and beginning to be scaled up. Again, we think at AEP it’s essential for our customers and for our shareholders, because we’re the largest coal burner in the United States, that we push that technology, and we are.

The Pickens Plan

An alternative energy plan put forward by T. Boone Pickens, Founder and Chairman of BP Capital Management,

which calls for building new wind generation facilities that will produce 20 percent of our electricity while using our domestic natural gas supply as a transportation fuel as well as for power generation. It aims to:• Create millions of new jobs by building

out the capacity to generate up to 22 percent of our electricity from wind, with additional solar generation capacity.

• Build a 21st century backbone electrical transmission grid.

• Provide incentives for homeowners and the owners of commercial buildings to upgrade their insulation and other energy saving options.

• Use America’s natural gas to replace imported oil as a transportation fuel in addition to its other uses in power generation, chemicals, etc.

Source: www.pickensplan.com

“However, you wouldn’t want, nor would you expect, us to spend $1 billion, maybe even $1.2 billion, to retrofi t the entirety of the station to fi nd out aft er that we never did enough advancement of the technology. Th is is too big; it doesn’t work. So our plan is to do the small step this September and be in operation. Everything’s being built: the wells have been drilled, the pipes have been laid, and the capture technology is being constructed even as I sit here. We hope by 2011, 2012 we’ll upscale that to commercial size, 1300 megawatts, at Mountaineer. Th at means I need four of the commercially available technologies deployed at that station.

“We believe it’ll be shovel-ready, in today’s phraseology, in 2015 or so and deployable, not only for our system but other systems. And again, equally important, employable around the world. If we as a people don’t retrofi t the current stations that supply – China’s 70 percent coal, India’s 64 percent coal, Russia’s 60 percent coal – we need to retrofi t that existing fl eet or the lights are going to go out and the economy goes down all over the world. Believe me, today’s economic recession/depression is nothing compared to where we’d be if we didn’t have energy to fuel the massive productivity of the world,” he states.

Some environmental think tanks say that there is in fact no invest-ment to back up the carbon emission promises. Morris says that while that may be true of some companies, is is not true of AEP. Th e Moun-taineer Project has a price tag of approximately $100 million, which the company is deeply invested in, with its ultimate expansion being in the order of $400 million. “We’re working with our checkbook rather than with our mouth,” says Morris.

T. Boone Pickens



Realistic goalsDespite these technological advancements, utilities may be unable

to keep up with the demands imposed upon them by the federal carbon emissions targets. As public awareness of climate change continues to grow, it is expected that people and politicians will want instant change on carbon reduction; but do these perceptions need to be reset in terms of realistic timelines and procedures?

“Th e current plan is that we’ll begin to make some serious reduc-tions by 2020,” Morris says. “Right now the plan calls for reductions that technologically won’t be achievable. Th e latest work out of the house has us reducing by 17 percent by 2020 rather than the 20 percent, which was the original plan, so we’re making progress.”

Morris explains a more realistic number to be somewhere in the region of between 10 and 15 percent. “I’m a big believer in the men and women of AEP. When we said that we would begin the build-out of a lot of clean air things and have them done in three or four years, everyone said, ‘I don’t know how we’ll do that, Mike,’ but we did it, so I love vision-ary goals, but I like them to be realistic rather than just political phrases that get you a big buzz and then nothing happens.

“If you look at Kyoto, it’s a perfect example. Th e entire world suppos-edly signed on to Kyoto. As you know, we and Australia and a couple of other countries, for obvious reasons, said, ‘Wait a second. Th ere are only two or three nations out of the entire world that will hit their 2012 require-ment.’ So great political phrases are always tainted by political reality.

“California is a great example. In 2010 California was supposed to be free of internal combustion engines on laws that were passed back in the 1980s and 1990s. Last time I was there, there were a lot of internal com-bustion engines on those freeways. Far too many, as a matter of fact.”

AEP is also exploring the avenue of cleaner and more independent energy as a partner in Th e Pickens Plan – the alternative energy plan put forward by well-known businessman T. Boone Pickens, which includes the establishment of an extra high voltage transmission superhighway.

“Th ere’s nobody better to win the hearts and minds of the people of this country than Boone Pickens,” laughs Morris. “I’ve known him for a long, long time, and he truly is an iconic American. He’s a fi rm believer in the creativity of the men and women of this country, and he’s lived that life.

“He started out as a geologist and created Mesa Petroleum and turned it into a real juggernaut and then moved on to help restructure corporate America where he thought it was headed in the wrong direc-tion, particularly in the energy development business, He says it simply, ‘Either you’re with me or against me.’ If you're against him, that means you're for foreign oil, and if you’re with him, that means you're for do-mestic production of natural gas and oil.

“His theory is quite simply this: if we don’t do something about transportation fuel in a competitive sense, then we, as a nation, will continue to be an importer from countries that don’t think much of us; in fact, countries that would just as soon see many of us not around anymore if they had a chance to do that. His statement is very simply that. We’re out joining him everywhere that we can: we had a public forum recently where we had hundreds of people at a town hall meeting here, and we played off of each other and did well, and we continue to do that.

The greater goodA secure energy future is going to require some compromise. Understanding the grid and how to make it a more effi cient tool for both the utilities and their customers seems to be the missing link in terms of transmission and distribution. Morris notes that despite an abundance of wind in certain areas of the US, because very few people live in those areas, this resource is not used as effectively as it could be. The most logical conclusion in light of the current recession, and one reiterated across the industry, would be to rebuild the infrastructure – creating jobs and simultaneously reorganizing power transmission and distribution.

Morris says that this issue receives no federal oversight control or cost allocation decisions, and as a result is being swept under the administrative carpet. “We always use it as a poster child – and it’s a bit out of date only because it was in a different era, a different timeline – but the last line that our company built, which was about 100 miles long from West Virginia into Virginia, took 18 years from the time we originally developed the need and the time that we actually energized the line. It was 16 and a half years to get the permits and 18 months to build the line,” he says.

The NIMBY attitude adopted by so many Americans is an added challenge to those already mounting against renewable growth. “There is an attitude in the country of ‘nothing in my backyard’,” says Morris. “We all want energy. We want all of it that we can get. We want it cheap and we want it clean, and we want no opportunity to see where it came from. We hear, ‘I don’t want to see the plant, the transformers, the transmission or the substations. I just want it to appear magically.’

“That’s not the way it works. The wall socket is really an intriguing piece of equipment – behind it are trillions of dollars of equipment across the world that make it work, but people don’t want to see it. That’s part of the problem,” he says.

Solar

Wind

Coal

Nuclear

Oil

Geothermal

Natural gas

Hydro


work behind the scenes, leading up the future structural reform. “My timeline will be up in 2011, and that’s pretty sad because, quite

honestly, there’s no better time to be in this business. I’ve seen lots of ups and downs, lots of challenges, but we’re there. I had a chance to do what we call the University Listening Tour throughout much of 2008, and I went to campuses from MIT in the East, Stanford in the West and many in between. Th e young men and women who are being educated on campus today see this as a challenge. Th ey are technologically advanced compared to where my generation is, and they are up to the challenge. So I’m a fi rm believer in the creativity of the American way of doing business.

“Silicon Valley is working on solar power, which is great news. It’s currently working on retrofi tting existing transportation vehicles to make them plug-in viable or multi-fuel viable. You're seeing a tremen-dous amount of capital being invested in renewables and a lot of capital being invested in what to do with carbon when you capture it. Th e whole capture storage idea is logical, but it’s silly when you think of it. You ought to capture it; you ought to take the CO2. O2 is very viable and valuable; C is very viable and valuable. Let’s fi gure out the energy equation because today it’s more energy to split them than it is to capture them and store them, but that doesn’t mean it’ll be that way tomorrow. As I call them out of due respect, ‘the kids’ on campus will help solve these problems as we go forward, so it’s a great time to be in the business.

“I’ve had the enjoyment of four very unique, diff erent career stops along the way,” he says. “I had 12 years in the gas business. To this day, people will bump into colleagues and say, ‘Oh, I knew Mike back at American Natural Resources, and he was always a fair dealer and honest guy,’ and those kinds of things. And then three utilities: the biggest util-ity in Michigan, Consumers Energy; the biggest utility in New England, Northeast Utilities; and now the biggest utility in the United States. If along those ways I’ve touched some lives and made some diff erence, that’s plenty of legacy for me.” Michael G. Morris is Chairman, President and CEO of American Electric Power Co., Inc.

Morris points out that Pickens has put a lot of his personal money into an advertising campaign promoting the use of natural gas in big vehicles and putting plug-in electric hybrids in day-to-day travel busi-ness. “Next year Nissan will have a viable SUV in this country that you’ll be able to plug in. Colleagues of mine at Northeast Utilities are already working on building plug-in stations at diff erent locations throughout part of their service territory. We’ll start doing those kinds of things at American Electric Power as well.

“Since the fi rst embargo of 1973, this country has said we need to be energy-independent. If we don’t do something about transportation fuels, we’ll never be energy-independent other than going back to foot pedal and bicycle pedal and horse transportation, which clearly isn’t going to happen. So we’re big believers in it. Th e other piece of it that works for us is if you’re going to have plug-in electrics and you’re going to have an electric grid that’s able to handle that on a national basis, again, you go back to federal regulation and federal cost allocation.”

Legacy Michael Morris has been involved in the utilities industry since the

1970s and has held the position of CEO not only at AEP but also at North-east Utilities System and Consumers Energy, and has witnessed some of the industry’s most innovative moments, with the latest round of innova-tion emerging with Obama’s Plan for America. However, his involvement in the industry is coming to an end, and for many he will be known for his

“Today’s economic recession/depression is nothing compared to where we’d be if we didn’t have energy to fuel the massive productivity of the world”




FUNDING

How exactly the federal government will execute itsoverhaul of America’s energy infrastructure is a well-worn debate, and nothing less than controversial. Theambiguous ‘smart grid’ has become a symbol ofAmerica’s cleaner, greener future and the ObamaAdministration has made great strides with an early

announcement of funding for installation of both grid upgrades and advancedcustomer meter systems.

Yet, despite the incessant buzz, there is much uncertainty as to how thisshiny new technology will fit into the current infrastructure’s allegedly agingand broken system. More importantly, there is great speculation as to whether

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

Federal fundingThe American Recovery and Reinvestment Act (ARRA), passed in early

2009, paved the way for the development of a smart electricity grid, promis-ing an $11 billion fund. Following the historic blackout of August 2003, thegovernment was keen to revitalize its reliability and empower consumers, re-iterating its commitment during the GridWeek 2009 Conference.

Will the American public embrace smart grid technologies orwill they be a waste of millions of taxpayer dollars?

POWER POLICY

SMART GRID FUNDING_nov09 05/11/2009 15:05 Page 44


petitive playground; the entrants are multiple and, more importantly, in-volve a lot of big players. And it’s not just utilities competing for the prize;large solution providers, such as IBM, Accenture and General Electrichave also bid for funding, making the smart grid program three times

oversubscribed.So how will the funding be apportioned? The

Obama Administration announced 100 smart gridgrants on October 28, with an expected investmentof more than $3.4 billion into development of thegrid. The Department of Energy followed by statingthat grants between $400,000 to $200 million willsee the installation of more than 18 million ad-vanced digital meters, bringing the nation’s total to

approximately 40 million. Prior to the announcement, Steve Mitnick, a partner with Oliver

Wyman’s energy and utility consulting practice, predicted that the allocationof funding would be based on a combination of the innovation of the utilities’projects and politics. “You can’t leave the politics out of this, no matter howhard the DOE is endeavoring to,” he explained. “Naturally, the funding willbe spread among states, among different types of utilities, of different geo-graphies and different sizes.”

In a keynote speech at the conference on September 21, Energy SecretarySteven Chu provided some long-awaited details for the smart grid program.He announced a portion of the ARRA funding to be allocated to utilities forsmart grid: more than $144 million would be provided for the electric powersector, $44 million of which was to be awarded tostate public utility commissions and $100 millionfor smart grid workforce training programs.

“America cannot build a 21st century energyeconomy with a mid 20th century electricity system.This is why the Obama Administration is investingin projects that will lay the foundation for a mod-ernized, resilient electrical grid,” said Chu. “Byworking with industry leaders and the private sec-tor we can drive the evolution to a clean, smart, national electricity system thatwill create jobs, reduce energy use, expand renewable energy production andcut carbon pollution.”

Yet, how exactly this money was to be portioned, to whom and howmuch became a much talked about question. With almost every utilitywanting a slice of the pie and submitting proposals, the Department ofEnergy (DOE) became inundated with requests. Utilities across the US areexcited about the future of smart grid, and rightly so, but this is a com-

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

“We’re looking foroperational readinessand innovation”Matt Rogers


“If all you cared about was shovel readiness and ‘moving the needle’ thenyou would come up with one set of winners. If you throw politics into thatmix you come up with a different set; realistically it will be a little of both. Forexample, it’s not politically doable for the list of awards to come out and thereto be very few winners in Republican-leaning states,” says Mitnick.

The question arises as to where this leaves the smaller utilities. The prece-dent seems to have been set that the more capital raised, the more money willbe awarded. The DOE’s funding to Solyndra of $535 million was only given

after the company raised $198 million, with a similar request to A123Systems.Analyst Eileen O’Grady reports that a dozen large utilities, includingAmerican Electric Power, CenterPoint Energy and Consolidated Edison, areasking for more than $2.6 billion, which exceed the $2 billion set for ‘big’grants of $20- $200 million. Mitnick also notes that most large awards wentto large utilities, but several large utilities did come up empty. Smaller utilitiesdid receive funding too, but many lost to larger neighbors within their states.

The rolling out of funding has been a relatively short process, surprisingmany who believed it would be long and arduous for the DOE. Despite theDOE’s commitment to announce the funding in fall 2009, many believed it

would take longer because there was no precedent for a pro-gram of this scale. The DOE has never handled so many pro-posals or had so much money to be awarded at this pace insuch a short timeframe.

CriticismIt is less than a year since Obama’s inauguration and the

number of those waiting for him to trip up remains high,which he noted in his awareness of the presence of oppositionto the scheme: “The closer we get to this new energy future,the harder the opposition’s going to fight, the more we’regoing to hear from special interests and lobbyists inWashington whose interests are contrary to the interests ofthe American people,” he said.

The opponents of the stimulus package are watching to seewhat blunders will be made in handling such a huge task.Among them are Republicans but also the general public. TheRepublicans in Congress and the states have criticized the ad-ministration for various reasons – as Mitnick puts it, “they’relooking for red meat, for serious missteps.” The DOE is cer-tainly well aware of this. Moving fast whilst remaining cautiousis a very hard balance to strike.

Criticism of the program does not remain only within thewalls of Congress, however. The polls have shown that the pub-lic is becoming increasingly skeptical of the stimulus programs,not just within the energy sector but also in healthcare. A pollby Real Clear Politics taken in October 2009 showed that thenumber of average Americans who believe Obama is leading

He was right. Out of the 400 projects that applied for funding, 100 re-ceived awards, spread across 42 states – in a clear attempt to diplomaticallydistribute the funding. Electric systems distribution funding is generally scat-tered across the northern states and integrated and/or cross-cutting systemsfunding generally along the south; and those central and southern parts of thecountry not awarded funding for electric transmission systems are providedwith advanced metering infrastructure investment grants.

However, the development stage of the projects was also a major influ-ence in determining who required what. Matt Rogers, a colleague ofMitnick’s during their years at McKinsey & Co. and senior advisor to StevenChu, describes these innovative projects as being “shovel-ready”: projectsthat are up and ready to go, needing only funding to move forward.However, Rogers explains that in return for funding, it is also the compa-ny’s responsibility to raise a certain proportion of capital, depending uponthat company’s net profit and size.

“We’re looking for technological readiness. A number of folks have greatideas but don't have technologies that are ready to scale. We’re looking formarket acceptance,” says Rogers. “We’re looking for operational readinessand innovation.”

Returning to Mitnick’s discussion of political influence, it is not neces-sarily those companies that are shovel-ready that have been awarded the gov-ernment funding. In an attempt to keep the peace, the project awards appearto have been distributed on a geographic basis; but spreading the money toothinly may have a diluted effect on those breakthrough projects in need ofgreater funding and lessen technological progress.


“You can’t leave the politics out ofthis, no matter how hard the DOE isendeavoring to” Steve Mitnick

Expected federal investment intodevelopment of the smart grid

Number of smart grid grants announcedby Obama Administration on October 28

Number of advanced digital meters thatwill be installed under the scheme

Total projected number of smart metersin the US as a result of the funding

$3.4 billion

100 million

18 million

40 million

BIG NUMBERS


the country in the right direction has dramatically fallen to 38.6 percent. So isthe administration doing the right thing pushing this smart grid programthrough? The end result of providing the funds for the smart grid initiativesis, after all, the increasing of green consciousness in America’s homes andbusinesses, educating the country’s public in a bid to change how they con-sume power at different points of the day.

“We can go through with all this great technology at the distribution levelwith advanced meters and smart appliances, but if at the end of the day theend-users in households and businesses remain relatively indifferent, then allthat great information is not going to have much of an impact on consump-tion and peak demand,” explains Mitnick. “That’s the mega question. Thequestion is out and there’s reason for some cynicism and skepticism, althoughthere is going to be a lot of money spent trying to make this work.”

Green collarHaving the public visibly see the benefits of the stimulus program is

Obama’s golden ticket for approval. Tagged onto the end of the billion-dol-lar utility fund is the federal commitment to expand employment opportuni-ties, adding greater weight to the President’s plans for a greener America,whilst simultaneously fighting the unemployment rates caused by the reces-sion. During his unveiling of the ‘New Energy for America Plan’ in December2008, Obama pledged to ‘strategically invest’ $150 billion into creating fivemillion new green collar jobs.

Mitnick notes that the money for these projects will be available withindifferent sectors of the energy industry and for a number of years to come.The complete stimulus package funding will not be spent solely on smart grid.“Undoubtedly there are going to be a lot of people working in different partsof the value chain, and you are certainly creating jobs through the energy effi-ciency monies. There are over $5 billion from ARRA funds for energy effi-ciency, as well as some of the other project areas, which amounts to a numberof jobs,” he explains.

Tom King, Director of the Energy Efficiency, Renewables and Electricityprogram at the Oak Ridge National Laboratory, explains that a number of in-dividuals can be trained to install PV panels on commercial buildings or res-idential homes. King advises that Obama’s $150 budget for green collar jobswould best be spent on smart grid implementation: “If there were the initialfunding to look at smart grid operations and deploy these technologies, thenconsequently staff would have to be trained to install those. This would workhand in hand with an increase in manufacturing demand, so there would alsobe such companies having to produce the smart meters.”

But whether the creation of green jobs will ease the American public intoconsuming energy more efficiently remains to be seen. We will not know forquite a number of years if Obama’s Administration is revolutionizing thecountry’s energy infrastructure and changing the philosophy of how energyis perceived and used, or, to borrow a phrase used by Mitnick, whether theyare simply building bridges to nowhere. When the speeches have died out andthe policies have lost their novelty, only then will the value of all the moneythat has been spent be properly evaluated. What was the value of adding somuch intelligence and information at the distribution level available to cus-tomers about their energy consumption? Did customers make use of that in-formation and significantly change their energy usage habits?

“Those are the big questions,” explains Mitnick. “The price of natural gashas moderated in the US. Natural gas prices dictate the price of electricity to

a large extent, especially how the price of electricity varies from the peak ofthe day to the middle of the night. If you have moderate natural gas prices,then the price of electricity won’t really vary as much between the peak of theday and the middle of the night. Consumers will see this information, but willthat make them even more reticent to change their habits and moderate theirenergy use during the peak of the day?”

Obama’s smart grid policy is no longer the issue; it has been approved andwill be implemented soon enough. However, not everyone is convinced. Thejury is still out and only the American public themselves will decide whether ornot the program has been a waste of millions of their tax dollars. How well theprogram is implemented is also very much the responsibility of the state regu-lators who will deem whether or not the utilities can charge different prices forelectricity in the peak of the day versus at other times. So far, regulators havegenerally been reluctant to allow variation in electricity prices, and as Mitnicknotes, “You can have all the advanced meters you want, but if the price of elec-tricity doesn’t vary, the customer can do little with that meter information.”

How the smart grid stimulus program will fare is not an analysis or judg-ment that can successfully be made right now. Unfortunately theAdministration must implement in full its program before we can see if it isunderstood and accepted by the public. And during this time, it is not onlythe Republicans in Congress that will be watching to see if the ObamaAdministration is successful, but also the entirety of America and the rest ofthe world. n




premises. In practice, the AMI simultaneously provides a higher level of service and reduces many hard and soft operational costs required for service. Consumers can monitor electrical usage in real-time, while the utility can identify and correct service interruptions more quickly, and improve effi ciencies in the meter reading process, billing and customer-service opera-tions as a whole. Th e meter data is backhauled across the M2M wireless network within a secure IP VPN. As a result, the utility elimi-nates approximately 7200 truck rolls per month for every 100,000 meters deployed, yielding a substantial direct savings, customer satisfaction

improvement and carbon footprint reduction.

However, this barely scratches the surface of the potential for innova-tive networked applica-tions. Within a few years, hundreds of millions of wireless devices will be attached to digital cellular networks, quietly perform-ing the things we want them to do in our quest to be more cost effi cient, safer and more responsive to our customers. And it doesn’t stop there – regu-latory initiatives will drive adoption of wireless-based data gathering and remote

control applications in the environmental, energy and safety arenas. For all of these rea-sons, the M2M market grew signifi cantly over the course of the past two years, and is ideally positioned to continue this growth over the next fi ve years.

Going green is not just for tree-huggers anymore. Th e machine-to-machine (M2M) communications market, which

uses wireless networks to communicate in real-time with sensors embedded just about ev-erywhere, is enabling organizations worldwide to save energy, water and natural resources, create effi ciencies and boost revenues.

Exploring real world deployments of green M2M networking requires developing a better understanding of how wireless technology and sensor networks are making the world greener with innovative M2M applications that con-serve energy, save water, preserve resources and drive additional revenues.

Solution providers in a variety of indus-tries, such as resource management, utilities, the public sector and agriculture, are develop-ing and implementing profi table M2M green applications today. Wireless technology is a core component of green initiatives around the world. Real-world examples of companies becoming more energy and water-use effi cient and/or environmentally conscious with M2M applications include using M2M commu-nications for trash management. Instead of hauling trash, companies can better manage it by determining the best way to handle the waste and scrap coming out of their busi-nesses. With devices installed on or near a trash compactor control panel, companies can record and analyze compactor activity, energy use, safety door switches and pickup and return. From there, the collected data can be wirelessly relayed from any location, help-ing to reduce costs and the environmental impact of trash.

For example, American Trash Management implemented a wireless M2M solution that

ASK THEEXPERT

relies on remote sensors to monitor containers, send notifi cations and receive and process usage information. Th is data is uploaded to a central-ized business management system for highly eff ective and scalable waste management. With increased scheduling effi ciencies and optimized truck rolls for fuel and maintenance savings, this has yielded both cost savings and increased customer satisfaction.

Another example of companies becom-ing more energy and water-use effi cient and/or environmentally conscious is using M2M communications for water management. Ad-vanced wireless water management devices can monitor irrigation schedules and water usage like never before to pro-vide just the right amount of water to keep landscapes healthy. Such a system can calculate and control ir-rigation on a ‘just-in-time’ basis, using real-time data from weather forecasts and just-passed weather events, water evaporation, plant transpiration and sub-soil leakage. Many organiza-tions, including the State of California, better regu-late their water usage levels and irrigation schedules using M2M.

Using M2M for smart grid monitoring is another example. A large electric utility in Arizona is at the forefront of a growing national trend toward smart metering. Th eir automated metering infrastructure (AMI) deployment consists of M2M data communica-tions to and from electric meters at customer

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

Alex Brisbourne is President and COO of Kore Telematics. He has over 20 years’ experience in the telecommunications industry and was personally involved in launching the fi rst 2.5G GPRS network in North America. He sits on the Advisory Board of several technology companies in the USA and Canada.

Going green

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Balancing the loadMark Case of Baltimore Gas and Electric tells Power & Energy why the company plans to use its smart grid program to cope with rising energy demand.

TECHNOLOGY

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

EducationCase explains how BGE enrolled its resi-

dential customers through a random selection process in order to produce statistically valid results of the pilot; this is important because if customers were able to self-select their in-terest in the programs, then bias could occur within the data. All demographics were taken

into account – income, age, location and so on – and once the customers were enrolled, BGE produced an informative package explaining how the pricing structure worked, how customers could take advan-tage of the real-time pricing options and how they could earn rebates during these peak periods. “It could be things like making sure lights or electronics that are not in use during those hours are shut off ,” says Case.

He notes that many of the company’s cus-tomers tended to reduce their air condition-ing load. By notifying customers the evening before a peak event, via a phone call, text or email, customers would receive the price signal and reduce their load manually. He adds that come customers only got the price signal, whereas others also had a switch on their air conditioning unit that allowed BGE to cycle the air conditioning pressure on and off during the peak periods in order to reduce the load.

“We found that for customers that had the price signal and no additional technology, their typical reductions range from 22 to 27 percent. Customers that had the price signal and the incentive along with a switch on their air conditioning unit, would save up to 37 per-cent, so much higher numbers.

In 2008, Constellation Energy’s sub-sidiary, Baltimore Gas and Electric (BGE), conducted two related pilots, the fi rst being a deployment of 5000 smart gas and electric meters to test performance functionality – analyz-

ing their communications and ability to inter-face with the company’s outage management systems. Th e fi rst was hugely successful; the technologies used produced the outcome that was intended, allowing BGE to hit their per-formance targets of a minimum of 99.5 percent hourly reads for the advanced meters, and set them in good standing to begin the process of implementation of their smart grid system.

Mark Case, the company’s SVP for Strat-egy and Regulatory Aff air, outlines a related piece of the pilot that tested dynamic pricing for 1300 BGE residential customers. “We were measuring customers’ willingness to reduce usage during peak periods in exchange for the opportunity to earn rebates on their bill,” he explains.

“We tried out three dif-ferent pricing structures: one that was called critical peak pricing, which provided a very high price for power during the peak hours and then a discounted price for power during the non-peak hours. Typically, we were looking at the window of 2:00 p.m. to 7:00 p.m. on the 12 hottest, highest demand days last summer.

“Th e other two pricing structures we tried were both rebate-based. Th e low rebate level was $1.16 per kilowatt-hour, and the high rebate level was $1.75 per kilowatt-hour. We used smart meters to measure how much would customers reduce their usage during those 12 hottest, peak-demand days, between 2:00 p.m. to 7:00 p.m. How much would they reduce their usage below their otherwise baseline level? How much would they reduce in exchange for the op-portunity to earn those rebates?

“We found that customers were very enthused about the program. We had an average saving per customer of better than $100. More than 95 percent of the customers did take action to reduce their usage on at least a few of those peak days, and the overall

“A 25 percent reduction in overall peak

demand equals a lot of new

power plants we don’t need to build”


tions: the meter data management system that will capture the hourly data for two million of the company’s customers and feed it back into the billing system. Case adds that this phase will also involve integration with outage man-agement systems.

“One of the benefi ts of smart metering and smart grid is that the meters will send a signal back to BGE letting us know if a customer loses power, so we’ll be working on those integra-tions,” he says. “We’ll start a pre-deployment mode of the meters in the second half of 2010. We will probably have somewhere close to 15,000 meters deployed next year and then begin the very intense installation process in 2011 through to 2013.

“We have projected that the combination of our smart grid and what we call smart energy pricing, which is another word for dynamic pricing, along with our demand response and energy effi ciency programs, will reduce peak demand by more than 1700 MW. For BGE, that’s around a 25 percent reduction in overall peak demand, which equals a lot of new power plants we don’t need to build in order to meet growing demand. It also improved overall reli-ability because with the same level of resources

and a reduced demand, this is a region that has been worried about the potential for reliability problems in the next three to fi ve years. By taking advantage of lower cost ways to reduce demand, we improve reliability signifi cantly.

“Secondly, at a more local level, by virtue of the advanced meters notifying BGE’s outage management system when an outage occurs, it allows us to quickly capture the scope of how large the outage is, diagnose what the probable cause is and then dispatch the right amount of crews. We no longer have to rely on a phone call from a customer to let us know that they’ve lost power at their home; we will be able to di-agnose the extent of an outage and cause much

“We also had a third group of customers who had an in-home display device, a product called the ambient orb. It is a little frosted glass ball around the size of a soft ball that was plugged in and sat on the kitchen counter. We then sent a radio signal to that to indicate when a peak period was occurring. Normally the orb would be glowing green, and then as we ap-proached a peak event it would begin to pulse in color, and then as we got to the peak event, we would light it up red to provide an addi-tional indication that we were in a peak period. We found that the combination of pricing information and incentives, and in some cases the additional technology, was very eff ective in reinforcing behavior,” Case explains.

He cites the challenges that residential customers have faced in light of the economic recession that have contributed to the success of the pilot program. Customer participation was high and interest was robust. Th e rise in energy prices in Maryland over the last few years has also had an eff ect on the behavior of BGE customers. Th e focus of the state on better managing and controlling energy costs has refl ected on to the customers, and more than 95 percent of the customers took action, not necessary on all 12 days of the pilot, but on enough for them to earn a rebate.

“Aft er each event we would send them a report letting them know how much they saved or in a few cases didn’t save. Th en as the next event would come along a week or two later, that tended to reinforce that positive behavior. Maybe on the fi rst event the average savings was about $7 on that day per customer, but by the time we got to the second and third, that number had gone north of $10 to $12 per event. Th ere was really a lot of interest in it. Tougher economic times and higher energy prices en-courage this sort of program even more.”

Project actualizationFollowing the success of the pilot, BGE

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

faster, and therefore restore service faster,” explains Case.

He, as well as the leadership of BGE, un-derstand the direction the industry is taking regarding smart grid – the Obama Administra-tion’s stimulus package will provide up to $5.5 billion in federal grants to help stimulate smart grid projects, such as the one BGE is hoping will be approved. Th e company has recently submitted its application to the Department of Energy for a $200 million grant for smart grid deployment, and if successful this is sure to accelerate the pace of the project. “Th ere’s a lot of economic development in job creation that goes along with smart grid. It will allow us to bring the benefi ts of smart grid to our custom-ers even faster,” Case says.

“Ultimately it lowers the cost of the proj-ect. BGE’s project is estimated to be about $500 million, so a $200 million grant from the federal government would help to signifi cantly lower the cost to customers of implementing smart grid. I believe it’s going to be successful and BGE’s customers are going to benefi t in a number of ways.

“In total, we have estimated the savings from smart grid at $2.6 billion over the life of

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


“Tougher economic times and higher energy prices just encourage

this sort of program even more”


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TECHNOLOGY

Federal and state policymakers may only just be recognizing the need for an advanced, more robust electricity infrastructure, but Southern California Edison is already ahead of schedule. Th rough a system of integrated high-tech digital devices across

transmission, substation and distribution systems, Southern California Edison is positioning itself as the solution of future energy needs. As the company’s VP of Advanced Technology, Paul De Martini is using all of his expertise to optimize the company’s electric services as well as em-powering its customers to make informed decisions.

His previous role at ICF International makes him more than ade-quately equipped for the role – at the energy and environmental consulting fi rm, De Martini was responsible for assessing emerging energy demand and response and other grid-based technologies, and working alongside government offi cials, regulators and utilities to actualize their adoption. He was also responsible for helping companies develop business models in emerging markets and creating market opportunities for utilities to deploy these technologies.

President Obama’s economic stimulus package is infl uencing the in-dustry at its core. Th e target to create fi ve million green collar jobs and the pressure it is placing on utilities to adopt this strategy is infi ltrating almost every business model, making it essential for a good model to now incor-porate environmentally conscious strategies. De Martini explains that this shift in focus is what was driving his work at ICF. “Th at’s one of the strengths of ICF International,” explains De Martini. “Th e environmental dimension was a big component.

“At the time, they were the principal manager for the EPA’s Energy Star Program, so there was a lot of focus on the environmental dimension and how that was evolving into the marketplace in terms of adoption of these technologies to achieve a better outcome. As translated into Southern California Edison, the work that I was doing fi rst on the smart metering program was an extension of that, because the smart meter program was driven by a need to reduce overall peak demand on our system.

“Some of the work I had done previously was looking at smart meter technologies and in understanding how to look at the utility marketplace, but the smart meter program examined how we benefi t as a utility in terms of building a robust business case. It addressed how we maximize the value of a smart meter technology and work with the vendor community in the

OF THE MACHINESRISE

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

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

Customer programsSouthern California Edison’s smart metering program, Smart

Connect, is what De Martini describes as a fairly broad program: it incorporates the deployment of fi ve million meters to the company’s small commercial and residential customers and operates to enable dynamic pricing and energy information for said customers to take advantage of, choosing how and when to use energy. He also notes the energy conservation benefi ts, which are derived from operational ef-fi ciency from the utilities and are already more than substantial.

“Th e benefi ts are utility operational effi ciencies, with other benefi ts related to peak demand reduction, through load control programs, vol-untary smart thermostat programs and dynamic pricing options for our customers,” says De Martini. “Energy conservation benefi ts from our cus-tomers also play a part: them having the information and understanding and changing their behavior in terms of how much energy they use.

“We have around 375 thousand customers signed up on a program that gives us real benefi t in the summer when we have the peak on our system to reduce their usage. We realize, though, that we need to take this further, and part of that eff ort is to think a little diff erently about this and bringing some additional insights.

“We engaged IDEO who do a lot of product and service design in the consumer marketplace and they helped us think about how we have an opportunity with changing these meters. For the fi rst time in a very short period, we’ll have an opportunity to reset our relationship with our customers and communicate with each of them individually on a proactive basis, which will be fi ve million customers in 10 years’ time. So we have an opportunity to start a new journey with them on how they can manage all the choices they’ll have in terms of managing their energy use, which will allow them to save money, ultimately, and create a positive diff erence for the environment,” he explains.

Southern California Edison has been working behind the scenes getting the back offi ce systems ready so that when the meters are de-ployed they are fully function and can support the customer. “Th e fi rst step was getting the soft ware systems in place, then vetting the meters to through the testing process and then starting the mass deployment,” says De Martini.

“Th is phase of the program is well under way. Th e meters are the most visible part, but there’s been a lot behind the scenes in terms of getting everything in place. It’s a big logistical challenge to deploy fi ve million meters in three years, including building up the team to go out and swap the meters out in the fi eld.”

ImplementationIn order to successfully implement the new metering system, the com-

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



what the technology is – soft ware, meters, the program designs themselves – and how we propose the diff erent rate structures for the dynamic pricing options and the demand response programs that we’re going to be off ering, and the technologies in the home.

“We’ve been working with a lot of consumer products companies to help them understand how they can take advantage of the infor-mation that will be available to customers in order to off er competi-tive products directly. We see this as a broader ecosystem that we’ve been trying to be part of, recognizing that this is an enabling platform and the means to the end, and how we work with others to do that. So right from the beginning and all the way until today, we have been working with companies like Microsoft and Google, with the sort of products that they’ve in-troduced this year to take advantage of this information and enable our customers to achieve their objectives. Th e end objective being, of course, reducing energy use and also reducing our overall peak,” he says.

Southern California Edison began implementing the beginning phases of smart grid long before it became a popular topic in the industry, but how will the recent federal focus and its smart grid investment funds benefi t the utility? De Martini notes that the company has par-ticipated in the two areas of funding available – investment grants and research and development.

Th e company has partnered with other utilities in the western United States regarding a technology called sychropha-sor measurement, which will allow the group of partners to manage the transmission grid more eff ectively. It will provide fast information during a short time period, and will allow utilities to monitor what is happening on the grid in near to real time. Utilities can then make more

eff ective decisions based on the results, reducing the likelihood of large, wide-scale blackouts, as well as integrating intermittent resources, such as wind, more eff ectively.

“On the demonstration side for research and development we’re pur-suing two proposals, one regarding battery storage for wind integration and managing the transmission grid and system, and the other looking at a regional demonstration where we can link, for the fi rst time, all these various concepts that we talk about in the industry, from plug-in electric vehicles, energy smart appliances, net-zero energy homes, distributed energy storage devices and now self-handling distribution networks.

“Th is large list of opportunities are pretty exciting, and they may come in 10 years’ time or more in terms of being the standard way of doing busi-ness. We see the opportunity now to do a demonstration to understand what it takes to integrate those various components into a single system, and what that is going to take in developing reference design for how this might be then deployed more broadly over time.”

Battery storageBattery storage, another arena connected to the grid, is also fast gain-

ing popularity, and as car manufacturers have begun ramping up the level of hybrid designs, new partnerships are arising between the two. De Martini explains that lithium ion battery technology is the most promis-ing “If we can get the manufacturing cost economies over time, it has the performance potential to be used very broadly in a number of diff erent applications that could be benefi cial from a grid management perspective.

“Th at’s why we’re putting a lot of focus into that area. It has a nice link in that the basic technology, the chemistry, and even the modules in come cases, are exactly the same as what will be in the electric vehicles. Th ere’s a nice synergy between the two so that we can drive down the cost of the technology, which will make it even more eff ective on the grid. We’ve been doing a lot of work at our electric vehicle technology center, where we’ve been conducting battery technology testing for quite some time. Th is is a center that President Obama visited back in the spring. So

we’re quite proud of that.“In terms of plug-in electric vehicles, we’re

spending time on the partnerships that we have with Ford and looking at how we integrate the ve-hicles eff ectively into the grid, and at the same time preparing for what we expect to be the launch of this next generation of electric vehicles in 2011.”

He notes that the adoption of these new tech-nologies must generate signifi cant consumer inter-est, and it is the responsibility of utilities to ensure that they are prepared and ready for the time when customers readily buy plug-in vehicles and use them within the grid.

Th e futuristic approach that Southern California Edison is adopting is to ensure the customer remains

pivotal. Th is is a signifi cant change in how the electric system is being ad-dressed and the company is in the process of building this future, not only in its smart meter program, but through its other capital investments. De Martini describes the progression as, “Th e next generation of investments towards building a smarter grid.”

Paul De Martini is VP of Advanced Technology at Southern California Edison.

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


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Utilizing strategically positioned perfora-tions on the side plates of the RAM Angled Console, the box can be easily resized to ac-commodate the exact needs of each specifi c vehicle. Using a standard set of tools, modifi -cations can be made onsite to reduce installa-tion times and keep costs down. Beyond being able to change the length, these consoles also

off er openings for cool-ing fans, accommodate 12-volt power panels for wiring accessories, and have a variety of mounting hole patterns around the perimeter for mounting addition-al items such as GPS or cell phones.

In addition, the Angled Console is de-livered in pieces rather than as a large, bulky product. Th is equates to less shipping costs and inventory space which all equates to saving money and time. Al-though these changes may seem almost insig-

nifi cant, every penny saved is money that can go to paying salaries, advancing technologies and keeping Americans employed. Now more than ever it is important to consider these facts and assure that decisions are made in the best interest of the organization from an economic and operational standpoint.

RAM Mounting Systems has set out to change the everyday approach to design. Off ering a truly revo-lutionary product line, RAM ad-

dresses the obvious and not so obvious needs of fl eet vehicles and the mobile professionals that use them. Th e creation of a mobile work-station in vehicles has been commonplace for years and is essential to the daily activities of fl eets across America. RAM has dedicated signifi cant resources to creating a truly unique solution for a common need.

RAM Mounting Systems, a company known worldwide for electronics mounting solutions, has introduced the RAM Tough-Box line of vehicle products. Th e evolution of a common fl eet vehicle product has fi nally taken a huge leap forward. Up to 30 percent lighter than similar products on the market, the RAM Tough-Box vehicle console is functional and durable but without the unnecessary weight and bulk of comparable systems. Constructed of high strength composite, steel and aluminum materials, the RAM Tough-Box system has dra-matically improved and increased the options when selecting a console system. Outstanding performance and a long product life are just a few of the initial benefi ts when choosing a RAM Tough-Box console system.

Another key feature is the incorporation of molded parts, which create tight seams and eliminate sharp corners and edges. Th is helps to avoid contamination of sensitive electron-ics mounted in the console and assures that occupants aren’t injured in an accident by sharp edges and corners. Keeping in mind the

INDUSTRYINSIGHT

safety of the vehicle occupants, as well as ease of use and installation, these consoles were craft ed to meet and exceed expectations from an operational and safety standpoint.

In terms of dramatic change, an all-in-one solution can be a space saver but will likely force the user to sacrifi ce quality and performance. Changing that perception is the goal of the new RAM Angled Consoles, which are part of the Tough-Box line of products. Th e Angled Console is truly one of a kind. You will not fi nd anything else like it on the market today. Th is new design is easily modifi ed by the installer to use across a wide range of applications. With a single part number or SKU, customers have a product that is almost univer-sal for a variety of fl eet vehicles. Quite oft en console systems are manufactured so the user needs to order the exact size to suit their needs. Factors which aff ect the size of the console box include the number of devices that need to be mounted, any optional accessories required such as cup holders, arm rest or printer mounts, as well as whether a computer or mobile data terminal needs to be mounted. Th is can equate to a logistical nightmare for fl eet managers or installers since there are times when they will not know what equipment needs to be mounted in the vehicle until the installa-tion process begins.

David Wilkinson is part of the marketing and design team of RAM Mounting Systems in Seattle, Washington. With a background in science and technical writing, his job is to assist in product design and advertising. Finding new markets and attracting new customers is Wilkinson’s focus for 2009.

Mobile workstationsDavid Wilkinson looks at the benefi ts of electronics mounting solutions.

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INFOGRAPHICSMART GRID62

It is currently difficult for consumers to see how much electricity they are using. Smart griddevices are being developed to help consumers monitor and cut back their electricity usage,allowing them to cut down their energy bills and pinpoint off-peak hours in which to runtheir energy-intensive machines.

THE DEVELOPMENT OF THE SMART GRID

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What is your definition of smart grid?Kevin Jones. Smart grid is more than AMI or a self-healing electricity deliverysystem. It is a true transformation of how our utilities operate, support andtouch their customers. The smart grid will require sophisticated enterprise-widedigital communications to enable the rapid transfer of data between smart me-ters, in-home gateways and utility back office systems where critical decisionswill be made. Building a smarter grid could be equated to the effort requiredwhen telecommunication providers overhauled their systems to move from ananalogue to a digital voice and data network. It will provide a new and betterway to generate, deliver and manage our energy. It is possible that no one cantruly comprehend the future benefits or capabilities of a smart grid.

Jim Hanson. Within a smart grid, business critical information flows seam-lessly among a utility’s wired and wireless networks to connect grid infra-structure, work teams, business processes and customers. The smart grid willuse high speed communications to enable multiple smart grid data applica-tions, including sophisticated energy management and control of transmis-sion and distribution equipment, power quality, line and outage monitoring,and to support various load control and demand response programs at thecustomer level. This will provide real and near real-time connectivity through-out the utility enterprise to improve service delivery, overall productivity andenergy conservation and will help to promote the increased use of renewableenergy, resulting in a greener environment.

While smart grid is machine-to-machine data-centric, it will also enablethe utility to connect information about infrastructure outage, restoration con-ditions and problem areas requiring maintenance to its mobile workforce andcustomers, and in the process increase grid efficiency and improve customerservice levels, resulting in an even smarter, connected utility enterprise.

Andrew A. Bochman. As we say on our blog, the smart grid is a growing dig-ital information network and modernized power generation, transmission,distribution and consumption system. Construction of the smart grid hasbegun, as it builds on the antiquated electric system that exists today. To this,utilities and others are adding modern computer and networking technolo-gies that will give us a system in which power and information flows to andfrom all stakeholders. Essentially, the smart grid is made out of software.Functionality and applications we can’t even imagine will soon spring up asthe data networks are established. And all this is being done in an effort togreatly enhance its reliability, efficiency, manageability and flexibility.

Allan Breitmayer. Smart grids deliver electricity from suppliers to residen-tial and commercial customers by leveraging the latest advancements inhardware, software and wireless communications. Wireless connectivity en-

ables smart metering applications to measure, collect and analyze energyusage, from advanced devices such as electricity meters, gas and water me-ters on request or on a pre-defined schedule. This infrastructure includeshardware, software, communications, customer associated systems andmeter data management (MDM) software. Meter data management and ad-vanced metering infrastructures (AMI) are two critical components intoday’s smart grid technology.

Roland Labuhn. A smart grid is an electrical infrastructure that is overlaidwith communications technologies, applications and services, and that sup-ports efficiency, reliability, security, conservation and sustainability of ourelectrical system. The smart grid is the digitization of the entire power in-dustry, transforming an electro-mechanical infrastructure to a system withwidely distributed and integrated digital solutions. There are many differ-ent applications and services that help accomplish this transformation, andall those efforts are part of the smart grid. At the front of all this change isnetwork technology. This transformation is similar to what public carriernetworks experienced during deregulation of the telecommunications in-dustry – our carrier networks are now very much aware, they are IP-basedand extend into homes.

Malcolm Unsworth. At Itron, we tend to agree with the seven characteris-tics of a smart grid as defined by the Department of Energy’s Smart GridTask Force. These characteristics are: enabling active participation by con-sumers; accommodating all generation and storage options; enabling newproducts, services and markets; providing power quality for the range ofneeds in a digital economy; optimizing asset utilization and operating effi-ciency; anticipating and responding to system disturbances in a self-healingmanner; and operating resiliently against physical and cyber attacks andnatural disasters.

Itron’s smart grid technology enables several of these characteristics, andplays some role in all of them. For this reason, we’re proud to say we’re offer-ing technology that is foundational to the nation’s burgeoning grid.

With major funding coming from Washington for smart grid initiatives,how do you see the grid developing in the near future?

Seamless integration into the grid


Power & Energy talks to a panel of experts about the future of smart grid. With AT&T’sKevin Jones, Malcolm Unsworth of Itron, Jim Hanson of Motorola Inc., Andrew A.

Bochman of IBM’s Ounce Labs, Allan Breitmayer of Sierra Wireless and TELUSBusiness Solutions’ Roland Labuhn.

ROUNDTABLE

“The challenge in developing androlling out a smart grid is successfulconsumer adoption of theseapplications” Allan Breitmayer

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RL. We need to understand that we are in the early days of what will be amulti-decade smart grid journey. Digital solutions have existed in SCADAnetworks for many years, but we are now expanding the pervasiveness anddepth of these services.

In the short term, funding is driving a wide range of technologies thatsupport several project themes: automated meter installations, IT securityand network planning. These are critical, however. The challenge with theseinitiatives is that they can be treated as isolated events within and amongstutilities.

In order to integrate this rapidly expanding universe of solutions, utili-ties are taking a step back and assessing how to manage them all. This includesexamining the broader network, application and IT security strategies. In ad-dition, the broader challenge of interconnecting utilities requires industry-wide IT standards. The new NIST standards are promising and ZigBee hasgained a lot of traction, but we’re not there yet.

Finally, the pace of change in smart grid is forcing utilities to considernew creative partnerships. This includes working together with telcos and in-tegrating public carrier networks into the smart grid.

MU. The smart grid is about more than just communications, technology andenergy systems allowing us to secure our future. It’s about a cultural trans-formation for the utility industry and all consumers of energy.

Imagine the change from rotary phones to 3G cellular phones, from pen-sions to 401(k) plans, from three analog television stations to hundreds of dig-ital channels, all rolled into one.

The ‘how’ of this transformation is overwhelming. Gathering and integrat-ing real-time information about renewables, generation, transmission, consumeruse and more goes beyond any challenge the industry has ever had to face.

Applying what Itron has learned from working on the leading edge ofutility innovation for the past 30 years has never been more important. We’reusing our knowledge and perspective to help make utilities successful in asmart grid world.

AAB. I see the grid developing sporadically. With the early closing out of theSmart Grid Investment Grant Program, the future build-out looks lesssmooth and certain than initially thought. What was intended to be a three-phase investment program in new approaches to energy and grid manage-


“Utilities should benefit from real,measurable visibility into how, whereand when energy is being consumed”Kevin Jones


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ment has become a two-phase program, and likely a single shot of stimulusfunds. Billions of dollars of federal stimulus kick-started the process, but insome ways may cause trouble as systems are developed and deployed beforethe early smart grid standards have time to firm up. As the benefits of the earlypilots begin to accrue and the value proposition comes into focus, stimuluseffects will recede and good old investment will return.

JH. With funding from the American Recovery and Reinvestment Act, manyutilities will be able to accelerate their smart grid initiatives with the deploy-ment of smart metering infrastructure, demand response technologies and al-ternative energy sources. To support these applications, utilities will requirea robust and flexible communications backbone. A data communications net-work that provides reliable and secure two-way monitoring and control ofdata across a diverse geographic service territory and with a range of data la-tency and bandwidth requirements will be important to the success of the ini-tial phases of development but will be absolutely critical to the future successof any large scale adoption. Utilities will not be able to rely on public networksexclusively and as a result they will look to deploying private smart grid com-munications networks to meet their service territory coverage, and opera-tional, reliability and ROI requirements.

With the deployment of additional monitoring and control applications,the grid will become increasingly integrated throughout the enterprise, fromgeneration, transmission and distribution to the commercial and industrialbusinesses and the consumer home. As a result, the utility enterprise will needto develop an enterprise-wide smart grid communication network plan thatprovides the coverage, capacity, capabilities, bandwidth and security requiredto ensure a truly reliable smart grid.

AB. The grid is already seeing a strong trend appear in the development of re-newable energy and energy reduction programs, being pursued through alarge ecosystem of technology partners. The stimulus funding is fostering ad-vancements in clean and efficient energy applications, and spawning the de-velopment of new partnerships between energy minded corporations.

This stimulus is funding the co-development of smart grid applicationsin energy management algorithms, demand response appliances and ad-vanced load control strategies.

The challenge in developing and rolling out a smart grid is successfulconsumer adoption of these applications. Utility companies and their suppli-ers are going to great lengths to demonstrate to the public that these applica-tions will help utilities better manage load and forecast demand, resulting intrue cost savings to consumers.

A fundamental goal within the framework of smart grid initiatives is thepromotion and adoption of standards, which drive device interoperability.Those failing to recognize or adopt the evolving standards are going to be leftbehind with yesterday’s technology.

KJ. One of the primary initiatives is the increased interest in smart meteringand some of that is taking place without federal funding; however, federalfunds are likely to accelerate smart meter deployments. Since smart metersalone are probably not going to provide the consumer with actionable infor-mation or capabilities, the federal funds may enable demonstration projectsthat will help the industry to formulate, test and validate new theories andideas, which will lead to breakthroughs in the generation, storage, delivery andespecially the consumer management of energy.

What benefits will a smart grid provide for utilities and for consumers?AB. Smart grid and smart metering solutions enable utility companies to col-lect data on energy consumption and allow consumers to make smart choic-es about their energy use.

Sierra Wireless works with companies to offer high-speed wireless tech-nology that can enable applications, including power infrastructure manage-

ment, meter data management, back-haul transmission, and distributionmeasurement and control.

Other benefits include decreased costs to transfer and collect data, fastand secure information transfer, and improved distribution system planningby utilizing real usage data.

JH. Smart grids will enable utilities to better manage their transmission anddistribution infrastructure to more efficiently deliver energy and minimizeoutages, while providing the tools to consumers to monitor and understandtheir energy consumption patterns so that they can better manage their ownpersonal energy footprint. The smart grid will create a much closer energypartnership between utilities and their consumers that will enable them tojointly manage both energy delivery and consumption, resulting in more effi-cient use of our valuable energy resources leading to increased energy inde-pendence and to a greener society.


Kevin Jones is an industry solutionspractice manager with AT&T, wherehe supports smart energy initiativesacross electricity, water and gas. Hehas over 20 years of experience inthe IT, telecommunications andutility industries. Currently, he isfocused on the communications anddata analytic technologies requiredto support the next generation ofutility ecosystems.``

Allan Breitmayer is Senior Manager,Marketing Americas at SierraWireless. An established veteran inthe wireless industry, he has over 25years of experience, commencingwith Motorola’s Land Mobile Radiodivision serving the public safety andutility mobile data markets. Prior tojoining Sierra Wireless, Breitmayerdirected the distribution channels forAirbiquity, AT&T and @Road in theLBS/transportation verticals.

“To support these applications,utilities will require a robust andflexible communications backbone”Jim Hanson


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RL. At a macro level, the benefits to utilities from smart grid are widelyknown and discussed. Utilities achieve cost savings from flattening peakloads and demand response, supply-side benefits from conservation andenergy efficiency, and renewable supply with distributed generation ofgreen power.

Consumer benefits are much more difficult to assess and depend upon thepricing, technologies, billing and marketing programs that consumers experi-ence. Utilities need more data on customer segments and what solutions con-sumers desire. In the telecommunications business, deregulation forced us to

deeply understand customer segments and the value/benefit consumers derivefrom various offerings. For example, the new millennials will likely want en-ergy solutions that align with their current preferences, such as an iPhone, andolder customers may not tolerate complex technology solutions. Utilities can-not offer the same solution to everyone and expect the same customer satis-faction. Maximizing consumer benefits requires creative discussions andpartnerships between service providers, including telecommunications andpower companies.

MU. Too many discussions about the smart grid are being framed with onlythe world’s largest utilities in mind. The key players, of course, have a big stakein the grid’s future, but all utilities need to be able to access the grid and use itin ways that meet their unique objectives.

We understand that there are common challenges all utilities face. Wealso understand that smaller utilities – like those owned by municipalities orco-ops – need smart grid benefits for themselves and their customers. Thispoint hasn’t been discussed enough, but if we don’t meet all utilities’ needs,the smart grid won’t succeed. For consumers, the smart grid is creating newways to understand energy use and behaviors. With this comes the develop-ment of new roles.

We have moved from a one-way process to a two-way conversation. Nolonger will utilities send out energy and then collect data back to be usedsolely for issuing a bill. The smart grid allows us to deliver not just energy,but also pricing information, load data and knowledge to help consumersmake smart, informed decisions. Utilities will gather not only billing infor-mation but also data about patterns of use, consumer preferences and muchmore. The information and data being delivered today are moving the nee-dle towards changing behavior and ultimately shifting the way we thinkabout and use energy.


A highly respected executive bothdomestically and internationally, withbroad experience throughout theutility industry, Malcolm Unsworthwas named Chief Executive Officer ofItron in March 2009. Prior to takingup his post as CEO, he was Itron’sPresident and Chief Operating Officer.

Jim Hanson is Energy and UtilityIndustry Director for Motorola’sEnterprise Mobility Solutionsbusiness. He has been in the energyand utility smart grid/AMI andmobility systems and solutions fieldfor over 20 years, having held seniormanagement positions in operations,sales and business development.

“Utilities cannot offerthe same solution toeveryone and expectthe same customersatisfaction”Roland Labuhn


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KJ. Utilities should benefit from real, measurable visibility into how, whereand when energy is being consumed. Improved monitoring and communi-cation with the various aspects of the transmission and distribution grid willlikely assist in ensuring that vital energy services are available to consumersin a reliable manner. The conservation and demand-based pricing benefitshave been well covered in a variety of publications, but utilities could alsoleverage insight from analytics and emerging forms of real-time customer in-teraction to build closer relationships with their customers.

Consumers will likely benefit from the natural ecosystem of informationservices that will spawn from the availability of energy information. We’llprobably see rolling phases of technology introduction followed by culturaladoption. For example, previously expensive home automation platforms arelikely to reach new price points that trigger mass adoption. This may transpirebecause the smart grid roadmap is likely to promote, through lower entry bar-riers, motivated individuals and groups to participate. The rate of innovationcan be directly influenced by the cost to innovate.

AAB. For the utilities, smart grid is all about business optimization via theinfusion of new types of previously unavailable knowledge on their cus-tomers’ usage patterns, on the parts of the transmission and distribution sys-tem that affect them and on their own systems. Where once utilities viewedtheir roles as relatively static, they will now achieve performance and busi-ness improvements by being proactive – an entirely different mindset. Forcustomers of all sizes, from small households to international enterprises,the benefits are several, but mainly revolve around the fact that they nolonger have to be completely passive. Most household customers don’t evenknow their electrical utility provider’s name. This will change when someof them begin generating their own electricity and via net metering, startselling it back to the utility.

What types of technologies and solutions can utility companies use toensure the seamless integration of smart grid into their operations?AAB. There is no way to ensure integration with a system that’s still in its in-fancy, whose business models are still forming and for which most of the stan-dards have yet to be formulated. What a utility can do at this point is watch,listen and learn. Watch the pilots and the standards committees’ drafts andearly standards, listen to what their customers are saying, learn from every-one, and possibly build on existing systems and keep their options open.

The smart grid won’t work if organizations view it as something com-pletely new, a project that they can adopt wholesale, which will somehow notbe intimately connected to their existing infrastructure. Evaluate any newsmart grid project or investment with a sensitivity to the way in which theyoperate now, so that new projects will enhance, not endanger, the core busi-nesses of managing or delivering power.

In a market where development is in its infancy, it’s impossible to pro-ject the detailed direction of new technologies. It is the nature of something

so new to be extremely dynamic and volatile. As such, the best plan is one thatstarts with what is stable and known. Then evaluate and adopt new compo-nents in ways that can be understood and partitioned, until they themselvesbecome more mature and mainstream.

JH. Increased use of standards-based smart meters and intelligent electronicdevices (IED) in the transmission and distribution system coupled with stan-dards-based wireless wideband and broadband communications technolo-gies will foster the migration to new smart grid solutions that will still need tobe interoperable and compatible with legacy grid equipment and back officemanagement systems. At the same time, these technologies will help to pro-vide a stable platform to support the growth of future smart grid devices likesmart thermostats, distributed generation, PHEVs and alternative energysources like solar and wind power.

MU. Hardware, software and standards must work together. Clunky, ‘patch-work quilt’ solutions will fail. Sometimes patches can be a good thing: a mend-ed hole in a garment; a band-aid that helps a wound heal. By definition, apatch is a temporary fix, a short-term solution. But imagine an energy gridwhere functions along the network were patched together and incompatible.Itron has seen firsthand what happens when incompatible hardware, softwareand communications are shoved together. It doesn’t work, and we can’t af-ford to make that mistake: the stakes for the smart grid are too high. We needsolutions – hardware, software and communications – that work in concertto deliver reliable energy at the lowest possible cost.

KJ. In the past, utilities often owned most of their communications systems.Field service was handled through proprietary wireless systems. Often thesesystems in their current form are obsolete and upgrading them is difficult, ex-pensive or not an option. Furthermore, due to their proprietary nature, in-teroperability is at risk.


Andrew A. Bochman is an energysecurity lead at IBM and contributor togovernment and industry workinggroups on energy and cyber-securityissues. He is the founder of the SmartGrid Security (http://smartgridsecurity.blogspot.com) and DOD Energy Blogsand is an active member of the MITEnergy Club. Bochman was formerlyCustomer Advocate at Ounce Labs, anIBM company.

Roland Labuhn is the Vice President ofTELUS Business Solutions’ energysector, serving the oil and gas, andutilities markets. He joined TELUSfrom Quorum Business Solutionswhere he was President of Quorum’sCanadian operations and has 10 yearsof experience in the energy practiceat Deloitte, delivering strategy andoperations leadership.

“The smart grid is about a culturaltransformation for the utilityindustry and all consumers of energy”Malcolm Unsworth


Examples of Sierra Wireless’ integrated smart grid technology includesmart metering or advanced metering infrastructure (AMI) applicationswhere partners use embedded products to provide two-way communicationat either the meter head itself (under glass) or in a private RF mesh networkusing wireless concentrators backhauling data over the public network.Demand response is another example: embedded modules and M2M solu-tions are used in large retail and wholesale customers to monitor and controltheir system loads within the smart grid network. In times of peak demand,air conditioners and other high energy consuming equipment controlledunder the DRM host would receive a wireless message requesting them to cur-tail or reduce their consumption.

These solutions provide valuable options for utilities with diverse meter-ing data collection requirements that can vary by cost, coverage, urban den-sity or other unique deployment challenges.

RL. Effective integration requires defining long-term IT strategies that con-sider all solutions as part of that plan: network standards, applications im-pacts, gap assessments and IT security strategies. There is much debate todayin the power industry regarding network standards. Is the future IP/MPLSbased? What role will legacy networks, such as Sonet, play? Our experienceover the last decade is that IP/MPLS is where we have brought our networksand it is where utility networks must go to enable a truly smart and aware grid.However, migrating towards this future vision requires a pragmatic approach,and accepting a realistic time frame to transition to this future state.

Achieving seamless integration of the smart grid is a journey that requiresthe setting of ‘big bet’ IT strategies now. Our belief is that widely acceptedstandards, such as IP, will be a critical element of any long-term plan toachieve seamless integration. n

As the deployment of smart meters and other monitoring devices onthe smart grid becomes more widespread, they will have to be controlledand managed. Bandwidth and latency factors will also have to be carefullyconsidered, especially if a utility intends to use private networks with a lim-ited amount of frequency spectrum. A paradigm shift toward national andinternational communications interoperability already has occurred – oneexample is with the GSM standard on which the AT&T network is based.GSM is a global communications technology that is deployed in over 200countries and has over three billion users worldwide. The good news is thatthis enabling technology already exists to help utilities communicatethroughout their enterprise and service area. With the availability and scaleof public networks like AT&T’s, it is no longer practical for utilities to cob-ble together proprietary communications systems with varying standardsor different functional purposes.

AB. Wireless technology for smart grid deployments should include ruggedi-zed devices compliant with industrial environment specifications, cellular IPconnectivity, RF integration expertise, open platforms and remote devicemanagement capabilities.

Sierra Wireless offers a diverse product portfolio of high speed embed-ded modules and wireless gateways enabling the collection and distributionof information to customers, suppliers and utility companies, allowing busi-nesses to either participate in, or provide, demand response solutions, prod-ucts and services. Providing information to customers, the system advocatesa change in energy usage from their normal consumption patterns, either inresponse to changes in price or as incentives designed to encourage lower en-ergy usage at times of peak-demand periods or higher wholesale prices or dur-ing periods of low operational systems reliability.


“Where once utilitiesviewed their roles asrelatively static, theywill now achieveperformance andbusinessimprovements bybeing proactive”Andrew A. Bochman


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SECURITY

RISK ASSESSMENTAnnabelle Lee of the National Institute of Standards and Technology explains the organization’s role in creating a safe and reliable telecommunications infrastructure.

As utilities countrywide begin implementing the early phases of their programs on to the grid, security of information is becoming increasingly important. Fol-lowing the Energy Independence and Security Act of 2007, it is the responsibility of the National Institute

of Standards and Technology (NIST) to develop the framework of information for the interoperability of a smart grid system, and with the support of the Obama Administration’s American Recovery and Reinvestment Act, the institute has been assigned $10 million to ensure successful implementation. Security of information is essential to safe-guarding against natural disasters or hackers and ensuring seamless operability of the system.

Security focusAs Senior Cyber Security Strategist, Annabelle Lee has the respon-

sibility for organizing a team to develop the grid’s safety. Her team was fi rst formed following the 2007 legislation, during a time when NIST had no real focus on security. She established the Cyber Security Coordina-tion Task Group, which only had its fi rst teleconference in March this year. Lee explains that her fi rst task was laying out a strategy defi ning a set of security requirements for the overall grid, which was done using a high-level risk assessment framework, looking at threats, vulnerabilities and impacts.

“I put a call out to all of the people here at NIST to request participa-tion in this task group from anybody who is interested in cyber security. Th e current participation list is unbelievable – around 240 people. It is from all three sectors: the electric sector, IT and telecommunications and


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all levels up to chief technologies and chief security offi cers. We also have representatives from federal agencies, from state regulatory agencies and from academia; so it covers all people who are interested in this area. Our schedule, like all of the NIST work, was with our new administration and the signifi cant push on the smart grid.”

Th e group is a collection of individuals committed to the develop-ment of smart grid security – everyone volunteers and there is no additional salary involved. It published its fi rst draft document in September which involved the creation of an overall strategy. As security is an area involving multiple cost re-sources, the report is a risk assessment justifying the requirements and explaining the importance of these.

“Th ere’s one section that looks at vulnerabili-ties, and we utilized a lot of the work from the IT and telecommunications sectors,” says Lee. “We looked at a lot of the material that’s available from NIST, other federal agencies and other standards bodies, and came up with a set of vulnerability categories that we will use when we put together our requirements to make sure we’ve addressed them. We want individuals who are implement-ing their systems within the smart grid to be able to use that material.”

Th e big issue in implementing the report is the overlaying of these new requirements and countermeasures on top of the existing electric infrastructure – certain pieces of equipment are almost 40 years old. “Th ey have limited or no security, so we need to fi gure out how to include security without requiring the diff erent organiza-tions to go out and replace all of their equipment, which would be incredibly expensive.

“Th e time frame for some of these large trans-formers is a couple of years. You can’t just go out and get it tomorrow, so we are going to be looking at some potentially compensating controls or a way you can address this, recognizing that some of this old equipment doesn’t have security in it. Th at will be interesting and we’ll have to wait and see how that works out.”

She continues by explaining the report’s responsibility for educat-ing those who will be following its guidelines – a bottom up group is in charge of looking at very specifi c issues starting from the very low level. “Th ey’ve put together another excellent list that will be used in assessing the requirements but that can also be used by individuals implementing systems. So those two sections are unique, as we will use them in our document but we also want to make them available to individuals who actually have to implement security in the smart grid.

“In the document itself we have an overall risk framework and then we have a section on privacy – if there is more capability and more intel-ligent devices in individuals’ homes, then there’s going to be data that

will be provided to utilities and other third-party organizations. How do you protect that information?”

Each of the various groups working on the report has a weekly tele-conference. When they believe their developments have reached a cer-tain level of quality, they then distribute them to the entire task group. Th e groups also work alongside affi liations to provide more accurate

requirements.“On the logical interfaces, there were previ-

ous NIST workshops for the smart grid; the Fed-eral Energy Regulatory Commission identifi ed four areas that they believed should be empha-sized fi rst under NIST’s work. So we took those four areas and there were two additional ones: the advanced metering infrastructure and distribu-tion grid management. Th e working groups at the workshops put together diagrams, identifi ed all of the interfaces and did a couple more reviews of them and then put the interfaces in categories.

“We have to identify requirements at the inter-face level, so if we took every interface individually we’d have to come up with 200 or 300 sets of re-quirements. Th at’s not realistic. We can group those interfaces into categories, and we have just had our fi rst teleconference to look at these categories. We have 15 or 16 now, but the number will probably go up and down as we work a little further. We will identify the security requirements for interface cat-egories, which will make it a lot easier,” says Lee.

One group that Lee’s team worked very close-ly with was the Advanced Security Acceleration Project smart grid, initiative partially funded by DOE as well as by several private sector utilities. Th ey’re focusing on the AMI as many of their members participate in NIST’s task group, and as a result many of their requirements have been included in Lee’s document.

For its starting point NIST is using a document that was produced by Homeland Security, ‘Special Publication 853’, and was tailored for control sys-tems that slightly diff er from a typical IT system. As well as this, NIST is also collaborating with the

North American Electric Reliability Corporation (NERC) and the Criti-cal Infrastructure Protection (CIPS), looking at documents and standards that are already published and implementing requirements from these.

Th e combination of this selective information has been carefully processed into the first draft of NIST’s document, which was placed on the website for a 60-day review, with the intention to have another on the next draft. The first draft is a functional architecture, to be followed by a security architecture in the December second draft. The schedule for the finalized version of the document is due to be released in March, and with such a short time frame Lee’s team are working hard to keep up with the pace at which smart grid technology is moving, to ensure that security is included in its deployment.

“We need to fi gure out how to include

security without requiring the diff erent

organizations to replace all of their

equipment”


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ServicesGateway

oft en referred to as a services gateway, which provides connection and network management as well as back-end enterprise application sup-port, becomes a critical element of your system deployment. Th e best services gateways include capabilities that accelerate system integration by taking care of issues such as device applica-tion programming interfaces (APIs) that have a steep learning curve. Th ese capabilities make it possible for the utility to focus on the ‘busi-ness logic’ that must be programmed into their soft ware rather than learning how to commu-nicate with devices and manage them. Simpli-fi ed device confi guration and/or provisioning is also a key element to look for in creating a fl exible, long-lived solution. Incorporating the capabilities such as provisioning groups of de-vices at one time, utilizing built-in reporting, confi guration profi les and network manage-ment in a user-friendly GUI can help ease the typical pain points of deployments.

Once the system has been designed, built and deployed, ongoing maintenance comes into play. As needs change, it is sometimes necessary to update or reconfi gure these devices. Th is becomes feasible with capabilities that make it easy to deliver fi rmware updates, soft ware upgrades and other necessary device changes.

Perhaps it’s just changing the re-porting and/or business logics for triggering specifi c events, but it’s being able to do so in a mouse click versus complex programming. Th e service gateway manages and maintains complicated session and device management logic for how devices are utilized.

Th e second part, and perhaps more importantly, is getting the information securely from these wireless devices back to enter-prise applications and databases for real-time decision-making. A good service gateway will auto-matically organize and parse the device information for transfer directly into the application,

using standard data formats. All of this serves the broader vision: pro-

vide decision-makers with valuable, real-time information needed to make more profi table decisions in the most effi cient and cost eff ec-tive manner.

With billions in stimulus dollars committed by the US government, as well as governments across the

globe, the energy grid is fi nally getting the long overdue attention to update and modern-ize the infrastructure. Whether supplying or consuming energy, bringing more real-time information to everyone arguably improves decision-making, thus leading to operational effi ciency and customer satisfaction.

Many utilities are incorporating wireless communications both at the meter and at points throughout the network to remotely do meter reads, monitor sensors/sites, as well as set triggers to improve information fl ow and visibility. However, managing a multitude of connections from multiple technologies – PLC, cellular, RFID and others to name a few – cre-ates a challenge unto itself. Th e ultimate goal is being able to manage large-scale wireless deployments in a consistent manner regardless of technology. It comes back to getting access to the information to manage your business without technology creating a barrier.

Th ere is always a balance of implement-ing new technologies while bringing together older disparate systems. Th e immense growth in the internet has brought the opportunity to

INDUSTRYINSIGHT

standardize on a stable technology and retain backward compatibility throughout the multi-year deployment of systems. Utilizing the internet backbone and internet protocol (IP) to standardize how systems communicate has enabled signifi cant reductions in maintenance and deploy-ment time.

In the wireless world, there are many nuances with the various net-works. Standardizing on packet-based connectivity can provide the bridge to bring together new and older systems in a cohesive manner. However, in an IP world, you fi re and forget. Your application shouldn’t have to keep track of whether or not your de-vices are physically con-nected to the network, a frequent occurrence for wireless. Nor should the application need to understand the idiosyncrasies of the various wireless networks. Th e application should be truly network and connection agnostic.

To solve the problem, system middleware,

Jeff Newman explains the importance of implementing wireless technology into the energy grid.

Managing information in a wireless environment

Jeff Newman joined Enfora in June 2001 as Vice President of Business Development and recently added the role of Chief Strategy Offi cer. As CSO he is responsible for setting corporate strategy and identifying, developing and managing new business opportunities for Enfora’s next-generation wireless products.

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Europe and the United States: both Western, developed economic powerhouses, and by extension, voracious consumers of energy. Both also chasing ambitious targets for generating a portion of this energy from renewable sources: in the US, 10 percent by 2012, rising to 25 percent

by 2025; and in Europe, 12 percent by 2010 and 20 percent by 2020. What are the diff erences that lie under these surface similarities?

Below, we take a look at the unique challenges faced by each region in its quest to safeguard our energy future.

Current statusKnown primarily as Kyoto foot-draggers under the Bush Admin-

istration, the US government is once again a friend of the environment

thanks to the election of President Obama last year. Th e Bush govern-ment gave $72 billion in subsidies to fossil fuels between 2002 and 2008, with renewables receiving $29 billion in the same period. Obama and his team must now try to redress this imbalance, starting with the $6 billion earmarked for renewable energy and electric transmission technologies loan guarantees in the American Recovery and Reinvest-ment Act.

Th e countries of the European Union, regarded by many as the global leaders in renewable energy development, have a longer track record of environmental consciousness. As long ago as 1997, the EU set a target of working toward 12 percent of energy from renewables by 2010.

David Levy, Director of the Center for Sustainable Enterprise and Regional Competitiveness at the University of Massachusetts, Boston,

SPECIAL FEATURE

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


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and author of the blog Climate Inc., points out that while renewables have traditionally been lower on the radar in the US, Americans are also very good at pushing ahead with an idea once they latch on to it. “I think it’s true that there is some catching up going on,” he says. “Th ere’s a huge amount of wind power that is now being installed in Texas; and California is leading in terms of really large grid scale solar thermal installations.

“It’s been hard to get fi nancing. Renewables haven’t had the kind of sustained, predictable subsidies here in the US that Europe has had, and we lacked a mandatory cap-and-trade system. Th e European Trading System for carbon and national targets provided a clear signal for busi-ness to take renewables seriously. It has been slower here in the US.”

Despite its slower start, the US appears to have already moved ahead of the EU in terms of renewable energy consumption. Accord-ing to the Energy Information Administration, renewable energy accounted for around 11.1 percent of energy produced in the United States in the fi rst half of 2009. In Europe, meanwhile, fi gures from Eu-rope’s Energy Portal indicate that 9.2 percent of Europe’s fi nal energy

consumption came from renewable sources in 2006, the last year for which confi rmed data are available.

It should be noted, however, that 7.4 percent of the US total came from conventional hydroelectric power, with only 4.7 percent coming from ‘new’ sources such as biomass, geothermal, solar and wind.

As things stand, the EU may not succeed in reaching its original target 12 percent in 2010. In an attempt to address this situation, in 2008 the European Commission released its Renewable Energy Framework Directive, with an even more ambitious target of achieving 20 percent of generation from renewables by 2020.

Christine Lins, Secretary General of the European Renewable Energy Council, believes that Europe can meet the 2020 goal: “We are on track, but we must see some further impetus that this development will really happen. Progress so far has been made by fi ve or six EU member states. Th e challenge we have ahead of us is to make sure that all 27 member states are being serious about renewables and developing them to their full potential.”




which put installed wind power capacity at the end of the third quarter of 2009 at over 31,000 MW, generating enough electricity to power the equivalent of nearly nine million homes.

Th e state posting the fastest growth was Arizona, which in-stalled its fi rst utility-scale project. Pennsylvania ranked second in growth with 29 percent, followed by Illinois with 22 percent, Wyoming with 21 percent and New Mexico with 20 percent. Texas remains fi rmly at the head of the pack overall, however, with 8797 MW of operating capacity.

“Wind power installations are up, and that is good news for America’s economy, environment and energy security,” said AWEA CEO Denise Bode in a statement. “But manufacturing, which has the potential to employ many more Americans in good, clean energy jobs, remains uncertain. A fi rm, long-term national commitment to renewable energy is still needed for the US to become a wind turbine manufacturing powerhouse.”

AWEA says that since the early July announcement of rules to implement the American Recovery and Reinvestment Act, the wind industry has seen more than 1600 MW of completed projects, and more than 1700 MW of construction starts, which equates to about $6.5 billion in new investment. AWEA does not expect the fourth quarter of 2009 to be as strong as the fourth quarter of 2008, since the 5000 MW now under construction is nearly 38 percent lower than the 8000 MW under construction at this time last year.

In Europe, a report by the European Environment Agency confi rmed that wind power has the potential to meet and even exceed the continent’s energy needs. Th e report, entitled ‘Europe’s Onshore and Off shore Wind Energy Potential’, states that in 2020 the amount of electricity that could be generated from wind power could be as much as three times greater than demand.

Germany, Denmark, Spain, Portugal and Ireland have par-ticularly strong bases in wind power. Figures from the German

Wind Energy Association show that 19,460 wind turbines, with a total capacity of 22,247 MW, were installed in country by the end of 2007, and that 39.5 TW of wind electricity were generated during that year, equal-ling more than seven percent of Germany’s electricity consumption. As of 2009, its installed capacity is 25 GW. Denmark has been vying with Germany for the top spot, with 19.7 percent of electricity production and 24.1 percent of capacity in 2007.

Th e European Wind Energy Information Network puts the annual median growth of the European wind power market at 35 percent, with EU member countries contributing about 75 percent of the world’s wind power. Th e wind power market is estimated to have helped create 25,000 jobs within the EU.

Sunny days“Th e US solar energy industry grew to new heights in 2008.” So

proclaims the Solar Energy Industries Association’s report ‘2008 Year in Review’. Th e report points out that capacity grew by 1265 MW in 2008, up from 1159 MW installed in 2007. “Th is brings the total in-stalled capacity up by 16 percent to 9183 MW,” it goes on to say. “Ca-pacity in both photovoltaic (PV) and solar water heating systems grew

Lins’s point is that the overall fi gures mask a large variation between individual countries. Sweden topped the list of renewable-friendly countries at 41.3 percent according to 2006 fi gures, with Latvia at 31.4 percent, Finland at 28.9 percent, Austria at 25.1 percent and Portugal at 21.5 percent. At the bottom of the list, Malta generated none of its energy from renewables in 2006, with Luxembourg and the UK not doing much better, at 1 percent and 1.5 percent respectively.

Lins says: “At the moment, development as far as renewables are concerned is coming from certain countries. However, there is a lot of potential in all the other member states. One of the major outlines in the renewables directive is that countries by June next year have to come up with national renewable energy action plans, outlining how they foresee reaching their binding national renewable energy targets. Th e hope is that these action plans will eff ectively provide the stability and frame-work for making sure that the objectives are achieved.”

Blown awayWind and solar are two main areas of focus for renewables on both

sides of the Atlantic. Wind energy is starting to take off in the US, accord-ing to fi gures from the American Wind Energy Association (AWEA),

The top fi ve states in total operating wind capacity are:

1. Texas 8797 MW

2. Iowa 3053 MW

3. California 2787 MW

4. Minnesota 1805 MW

5. Oregon 1659 MW

US WIND POWER



in California. Th e company failed in the early 1990s aft er drastic cuts in federal tax credits to the solar thermal industry.

“In Arizona and the Southwest, we’re seeing much bigger solar thermal installations,” Levy continues, “whereas with solar PV, com-panies are losing money because of the cut-throat competition. PV is selling below cost, and even so, power generation is still too expensive for grid scale production.”

Further evidence of solar thermal’s resurgence may be exemplifi ed by the re-emergence of Luz as Luz II, now called BrightSource Industries. Th e new company claims to have advanced solar thermal technology by developing a proprietary design that increases solar-to-thermal conver-sion effi ciency from about 36 percent (for the older parabolic trough technology) to above 40 percent.

Future directionsTh e US and Europe may both be moving

full steam ahead with wind and solar power, but there are other areas in which they remain quite far apart. Th e US, for example, with its long history of coal-fi red power generation, will not easily give up its dependence on carbon. Th is may explain why it is investing so much time and eff ort into developing new carbon sequestration technologies, despite widespread disapproval from environmental groups.

In Europe, where the coal lobby is not as strong, carbon capture has a much weaker focus. David Levy also mentions geothermal as a high area of interest in the US, less so in Europe. By contrast, Europe is far more ad-vanced in the development of wave power.

In the end, though, it doesn’t really matter what the diff erences or similarities are, or who achieves their target fi rst – the US with its can-do attitude under the new administration, or Europe, with its stronger historical ground-work. What matters is that we get there, some-how. Th e future of our planet depends on it.

at record levels. And while no new concentrating solar power plants were completed in 2008, projects totalling more than 6000 MW are in the pipeline, most with signed purchase power agreements. Solar pool heating capacity grew at a slower rate than in 2007, refl ecting condi-tions in the residential real estate market.”

Th e growth rate was found to be highest for grid-connected PV electric systems, with an increase of 58 percent, to a total of 792 MW. Domestic PV manufacturing capacity also increased by 65 percent, with preliminary estimates putting the total PV manufacturing capac-ity at 685 MW per year as of the end of 2008.

Photovoltaic solar power also has a strong base in Europe, at least according to the European Photovoltaic Industry Association (EPIA). Th e association recently commissioned a study on PV power in Europe, ‘SET For 2020’, from the management consultancy AT Kearney. Th e study concludes that PV power can supply as much as 12 percent of Europe’s electricity needs by 2020, assuming appropriate policy-driven support and evolution in the set-up and functioning of the electricity distribution system.

“Th e fundamentals of the PV industry are and remain strong,” said Secretary General of the EPIA Adel El Gammal at the sixth European Photovoltaic Industry Forum held in September in Hamburg. “It needs an ambitious policy support for the next three to nine years, until photo-voltaic power is able to compete with conventional electricity on price.”

Solar thermal power is also growing in the US. Th e largest solar thermal generating installation in the world – the Solar Energy Gener-ating Systems (SEGS), a group of nine solar thermal power plants – is located in California’s Mojave Desert. Th e plants use parabolic trough solar technology along with natural gas and have a combined generat-ing capacity of 354 MW.

On the European side, the European Solar Th ermal Industry Federation conducted a study “to provide the European Union and its member states with substantiated information on the contribution solar thermal can make to the 20 percent renewable energy target set by the RES Directive.” Market statistics released by the ESTIF show that the solar thermal market in the EU and Switzerland grew by more than 60 percent to 3.3 GW of new capacity.

Despite the positive messages put out by both sides of the solar energy sector, UMass’s David Levy believes the focus is shift ing from PV to thermal. He points out that the eco-nomic crisis has prompted several countries, including Germany and Spain, to cut back on subsidies to consumers for the installation of PV panels – although he also underlines the cyclical nature of such interest: “Solar thermal was doing well a few years ago, but then when Luz went bankrupt, many people said, ‘We can’t do solar thermal.’”

Israel-based Luz Partners were the origi-nal builders of the SEGS solar thermal plants

Renewables in EuropeEU countries with the highest share of renewable consumption to gross fi nal energy consumption

Sweden 41.3 %

Latvia 31.4%

Finland 28.9%

Austria 25.1%

Portugal 21.5%

Denmark 17.2%

Romania 17%

Estonia 16.6%

Slovenia 15.5%

Lithuania 14.6%

Source: www.energy.eu

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



GENERATION

Pushingtheclimate

boundarieschangeccccccccof

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

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Much of American Electric Power’s (AEP) fl eet is coal-fi red generation, making cli-mate change the foremost important issue in the company’s agenda right now. As EVP of Generation, Nick Akins spends the majority of his time focused on the develop-

ment of technology, understanding the changing role of coal and how it is used and perceived.

AEP is also focused on developing a balanced portfolio, including renewable sources such as wind power, natural gas and solar, as well as nuclear. Th e company is also experimenting in other forms, such as sodium sulfi de battery storage technologies.

“We are focusing on what we need to do in the future to meet cus-tomer demand,” says Akins. “As EVP of Generation, I have the fossil and nuclear generation fl eets, our capital construction program that includes environmental and new generation, our barge lines and our commercial operations part of the business, as well as our fuel procurement. As one of the largest utilities in the US, it’s a very signifi cant operation. We purchase from 75 to 80 million tons of coal a year, which is the largest in this coun-try. We follow the legislative activities associated with climate change; we are involved with several activities in that regard.”

Akins points out that AEP has taken an active part in developing federal legislation related to climate change, and was involved with the American Clean Energy and Security Act of 2009, also known as the Waxman-Markey Bill. Akins cites AEP’s main motivation for this involvement as the opportunity to match up the technology needed to meet the reduction targets set forth by the American Recovery and Re-investment Act. Understanding how credits will be allocated is vital to AEP’s future plan, ensuring it has the technology to match the stipula-tions so its customers don’t have to.

“We’re intimately involved with the legislative side because we are doing things that give us the credibility of talking about the technology advancement to match up with, in a realistic fashion, reduction targets that Congress may come up with.

“We have a lot of coal-fi red generation; our customers need those credits that are allocated to us, so we can use those allowances to pay for construction to improve our fl eet from an environmental perfor-mance standpoint, relative to CO2. We also wanted to see international provisions placed on how the rest of the world will move forward. We still have some work to do on those, but we’ve been very focused on that legislation as it moves through Congress.

“We are at the forefront of development of carbon capture and storage technology. In September we installed the fi rst fully integrated capture and storage program at one of our power plants in West Vir-ginia, which will take a small, 20-megawatt electric slipstream, capture the fl ue gas, convert the CO2 and then store it approximately two miles below the surface of the ground. It is a signifi cant step toward commer-cialization of capture and storage technologies,” he explains.

Th is is by no means AEP’s only power plant pushing the technologi-cal boundaries. Th e John Turk Power Plant is the fi rst ultra-supercritical coal unit in the US – a much more effi cient form of combustion coal

technology. Ultra-supercritical plants operate at very high levels of effi -ciency, with very high steam temperatures, which supports combustion at higher temperatures. Th e amount of coal used is signifi cantly less and there are lower emissions as a result.

“Th e effi ciency on today’s ultra-supercritical versus supercritical is around three percent,” he says, “which although it may seem small, in the long-term when you talk about year in/year out operations, it’s a pretty signifi cant reduction in the amount of coal that you would have to use. It’s at least 10 percent better than the existing coal facilities that were built in the late 1970s and early 1980s, so it’s a huge improvement.

“It is absolutely critical for renewables, particularly wind, to be transported to the load centers”

“Th e ultra-supercritical coal technology is a step up from super-critical. It will run at temperatures exceeding 1100 degrees Fahren-heit, which improves the overall effi ciency of the generation itself. It’s driven by metallurgical diff erences, because the piping associated with the boiler has to be able to support those ultra-high temperatures, and whenever you have the metallurgical aspects support higher steam temperatures that improves the effi ciency. Th e metallurgical aspects enable you to use higher steam temperatures and improve the effi -ciency,” reiterates Akins.

Climate legislationHe believes that climate legislation will undoubtedly become man-

datory, but knowing when it will happen is the question. As early a date as 2010, with it becoming eff ective in 2015, is possible. Akins points to the company’s integrated gasifi cation combine cycle technology that it proposed in West Virginia and Ohio, and its failure to be approved in Virginia because carbon capture and storage had not yet been proven from a commercial standpoint.

“It’s important for us to advance those technologies,” he continues. “From a portfolio management standpoint, we are heavy on coal in a carbon neutral environment; we have to be focused on other base load forms of technology, which includes nuclear. We believe nuclear and coal are the two base load opportunities we have, but you have a lot of load that you serve in an intermediate and peaking type standpoint. It’s become a priority for wind energy to be brought in, because the energy cost is less.

“Overall, the cost is more, but when you account for CO2 coal costs will go up as a result and that means it’s important to have wind power. It’s also a priority for us to be able to uprate our nuclear station: we have plans on uprating nuclear by 400 to 500 megawatts and that is a rela-tively small cost; at least a lesser cost than a new coal-fi red station.

“We are also looking at natural gas facilities, and have several fa-cilities that are coming online. Here in the US there is a lot of fractur-ing of the new supplies of natural gas and prices are pretty tempered, so that is likely to be one of the ways where we manage that transfor-



mation. Natural gas, new coal-fi red generation, nuclear and solar from a rooft op standpoint are a priority for us. We’re also looking at sodium sulfi de batteries to inject in certain parts of our system.”

Akins’ singling out of wind energy is a pointer to the pivotal role it will play in AEP’s fuel mix, as the company has begun expanding its activities and capacities in this area. Th e company owns some of its own wind farms, but the majority of its resources are purchased from the output of other farms. Akins explains that this is done because of the capital situation being driven by the economy.

AEP has trimmed its capital budget back from $3.75 billion to $1.8 billion, a signifi cant drop, and is now fi nding itself in a position where priorities must be made. Although the company is able to order a substan-tial amount of environmental retrofi tting, it knows the areas in which to create economic effi ciency. AEP continues to develop the construction of its own wind power projects, but its sole focus for wind is purchasing power arrangements.

Akins does not shy away from noting the eff ect of the economic recession on integrating more renewables into the company’s energy mix. He adds that capital projects included transmission projects; en-vironmental retrofi t projects for scrubbers to remove sulfur dioxide, nitrogen dioxide and mercury; as well as other projects where reha-bilitation of the system in general have been deferred as a result of the economy. Th e US has lost nearly 20 percent of its industrial load, and the loss of capital projects as a result was a natural occurrence.

Down the lineTransmission is an essential component to the renewables energy

mix. “As far as transmission is concerned, it is absolutely critical for renewables, particularly wind, to be transported to the load centers,” says Akins. “Typically in the US, wind power is generated in areas of the country that are very sparsely populated from a load perspective, so transmission is critical in order to move that renewable energy.

“We at AEP have the largest transmission system in the US and the highest voltage, 765 KB transmission, and we’ve proposed several trans-mission projects around the country to move these renewable resources to the load centers. It remains to be seen how that’s going to progress, but to fur-ther optimize and make sure that our entire gen-eration portfolio, including renewables and base load generation, is operating in the most effi cient fashion will require substantial investment in new transmissions.

“Th ere’s a lot of discussion of the eff ect of in-cluding renewables within the transmission system as the actual operations of the power system change as a result. A lot of studies are being done in that regard, and we’re participating in those stud-ies to make sure that when we do add substantial amounts of renewables we can respond from a system stability stand-point to ensure that we can continue to allow those renewables to be injected into the system.”

Th e US federal government’s stimulus funding is attracting almost every utility in the industry, and AEP is no exception. Th e company is

currently evaluating the areas in which it can take advantage of the funding and is working alongside the state authorities – a large portion of the money is handed from federal to state jurisdictions for evaluation. AEP is looking for funding assistance in its carbon capture and storage projects: “We’ve asked for the next phase of our carbon capture and storage project to go to 235 megawatts, which is the fi rst commercial scale we’re asking for stimu-lus funding associated with. We’re also looking at support for our gridSMART technologies for advanced metering for other forms of renewable projects as well,” explains Akins.

AEP’s effi ciency aims are also based on a local level with its smart grid initiative ‘gridSMART’. Th e system analyzes what the customer does on his side of the meter to determine when he uses electricity, installing effi ciency at the customer usage through to the generator activity. “Th rough the advancement of our gridSMART technologies,

we’re looking at effi ciency gains that could be made all along the path from generation to the customer to make wise decisions from a cus-tomer standpoint.”

Nick Akins is Executive Vice President of Generation for American Electric Power.

JOHN W. TURK, JR. POWER PLANT

Estimated completion date is summer 2012.

The cost of the plant is approximately $1.6 billion.

Plant construction will create over 1000 jobs at the heightof construction.

Annual payroll is projected to be $9 million.

The plant will bring an estimated 110 permanent jobs to the area.

SWEPCO’s investment will be 73 percent, around $1.2 billion.



TechnologyIn order to incorporate renewables into its generation and successfully

transmit that energy across its service area territory, technological innova-tion is AEP’s key to continuing its success into the future. Akins exempli-fi es the company’s coal generation – currently it can generate off a single coal unity approximately 2.5 cents per kilowatt hour; and its comparison to wind power, which is approximately 10 cents a kilowatt hour. Solar is around 25 cents a kilowatt-hour; so the advancements of these technolo-gies is critical.

“Solar continues to make effi ciency gains from a production stand-point, and the same applies to wind power, so we continue to see ad-vances there. Th ese technologies will have to continue to improve from a cost standpoint to make sense to our customers,” he explains.

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

AEP’s Renewable Portfolio

SolarAEP’s activities in solar energy have focused primarily on education and outreach. More than 125 schools participate in AEP’s ‘Learning From Light’ and ‘Watts on Schools’ programs.

WindAEP owns 310.5 MW of wind generation capacity in Texas and also has agreements to purchase 742 MW from several wind power facilities in Illinois, Indiana, Oklahoma and Texas. Both of its farms, Trent Mesa Wind Farm and Desert Sky Wind Farm, sell the energy that is produced to wholesale energy supply contracts.

In addition to owning and operating its own facilities, AEP also is a major purchaser of wind power from wind projects, such as FPL Energy’s Southwest Mesa and Weatherford Wind Energy Center.

HydroelectricAEP’s 17 hydroelectric facilities in Virginia, West Virginia, Ohio, Indiana and Michigan generate more than 800 MW of electricity. Smith Mountain Hydro Project, on the Roanoke River southeast of Roanoke, Virginia, was the nation’s fi rst major development combining run-of-the-river hydro with pumped storage generation.

BiomassUntil the company sold the Fiddler’s Ferry and Ferry Bridge power plants in 2004, AEP co-fi red biomass in 4000 MW of coal-based power generation in the UK. AEP also has conducted biomass co-fi ring tests and analyzes at several of its power plants in the US.


EXECUTIVEINTERVIEW

Despite the fact that solar power has beenaround for several decades, it still hasn’t madea major impact as a renewable energy source.Is this changing?Nancy Hartsoch. Over the past two decadesprogress has been made in solar technology, mov-ing it forward as a large-scale energy source.However, the historical low efficiency of solar pan-els combined with the relatively high cost of solarmaterial has made it difficult for the economics towork on a large scale without incentives. Currently,the industry standard is crystalline silicon-based

technology, which uses the semiconductor materi-als of the microchip industry to convert sunlightinto electricity. Though proven and reliable, tradi-tional PV technology suffers from the cost of sys-tems compared with the amount of energygenerated. As a result, solar technologies that re-duce the amount of expensive PV material arequickly coming to market. Thin films have been amajor step forward, bringing new milestones to thesolar landscape. The latest advancement has beenconcentrator PV (CPV) technology, which uses op-tical concentrators to boost the output of small,highly efficient PV cells. All of these approacheshave inherent advantages and disadvantages in

terms of cost, performance and scalability; howev-er, CPV has begun to prove its ability to achievehigh conversion efficiencies, and thus drive downthe cost of solar energy.

Historically, new technolo-gies have taken as much as adecade for the innovation toreach a reasonable marketpresence. Will this be thecase for CPV?NH.We believe that CPV willbe able to move from initial testdeployments, which took placeover the past two years, intolarge scale deployment muchfaster than other technologiessuch as silicon PV and thin filmtechnologies. There are two pri-mary reasons for this. First, CPVhas its roots in existing tech-nologies. It is a photovoltaictechnology, so implementationof CPV technology in the field issimilar to traditional flat platePV. It is also a concentratingtechnology, similar to reflectivemirror-based concentratingsolar plants, which have beenproducing utility scale energy at scale for manyyears. Also worth noting is that the ability to rampmanufacturing is much faster with CPV than

other technologies. With our technology, the costof capital for building a factory is just $0.15 perwatt, and the time to stand up each additional 50MW line is less than six months. At SolFocus, wehave already ramped our manufacturing capabil-ity for CPV systems to a 50 MW run rate, just 18months after deployment of our first large-scaletest project.

Does concentrator PV provide a better solu-tion than traditional PV or CSP for utilityscale solar plants?NH.The right solar technology depends on whereit is being deployed and the objectives of the pro-ject. Compared to other PV technologies, in re-gions where the direct solar resource is high, CPVbrings a number of advantages not available fromtraditional PV technologies. CPV solutions havethe highest conversion efficiency of any PV tech-nology – at SolFocus, we are converting sunlightto electricity at over 25 percent efficiency withheadroom to advance these levels rapidly. CPVsystems also integrate the panels onto dual-axistrackers, which allow CPV technology to providea broad energy production profile throughout the

day, providing energy produc-tion late in the day to provide abetter match to utility demandcurves than other PV tech-nologies. Also, since CPV sys-tems don’t suffer performancedegradation at high tempera-tures as do other PV technolo-gies, panel performanceremains high. In combination,the high panel efficiency,broad energy curve and per-formance at temperature pro-vide the highest energy yield inhigh sun regions.

CSP systems, sometimescalled solar thermal solutions,also are targeted to the highsolar resource regions. If thereis a limited supply of water inthe region (CSP consumes upto 1000 gallons of water permegawatt hour), environmen-tal constraints around land useor protection of existing

ecosystems, or the desire to deploy smaller plantsfrom 1-50+ MW, then CPV provides significantadvantages compared with CSP. �

Innovations in solar technologyNancy Hartsoch tells Power & Energy why concentrator PVhas the power to revolutionize our energy system.


Nancy Hartsoch is Vice Presidentof Marketing and Sales forSolFocus, with responsibility forglobal marketing and salesactivities in North America andthe Rest of World territories.Prior to joining SolFocus, she wasCEO of Pacific Technology Group,which she co-founded inpartnership with Taiwan-basedAcer Labs Inc. (ALi). She has anMBA and a BA from San JoseState University.

“We are convertingsunlight to electricity at

over 25% efficiency”

Sol Focus ed:4August 5/11/09 15:30 Page 88

SOLFOCUS_AD.indd 89SOLFOCUS_AD.indd 89 4/11/09 09:05:104/11/09 09:05:10

Solar energy, in common with other renewable energy sources, hasbeen enjoying a surge in popular support, both here in the US andinternationally. But questions remain, primarily around reliabili-ty and ease of transmission. Mike Taylor, Director of Research andEducation for the Solar Electric Power Association, points out that

solar energy is more complicated than most people think. “Solar energy presents a more complex picture than traditional renew-

able or centralized generating sources,” he says. “There’s a market for dis-tributed solar as well as centralized solar. With centralized solar projects,

there are a large number of announcements out there, a few thousandmegawatts; at that scale, these projects will be able to fit into the existingtransmission system.

“But as the industry scales up even further, we will start to see transmis-sion issues, similar to the wind industry, as being a limiting factor within thecentralized project growth. They may diversify away from corridors wherewind energy is; solar and wind areas of development aren’t necessarily goingto overlap, so they’ll potentially be separated from one another. Solar is notgoing to necessarily align with the existing wind projects.”

Taylor does concede that the general issue of transmission is similar tothat of the wind industry, with both sectors experiencing rapid growth. “Thesesolar projects need to find ways and transmission paths to get into the gridand find their way to load, and there are a number of groups and studies outthere that are working diligently on this. The problem for the wind industryis here and now, whereas with the solar industry, the centralized projects are

SEPA’s Mike Taylor brings Power & Energyup to date on the storage andtransmission issues that affect solar’sviability as a renewable energy source.

RENEWABLEENERGY

SAVING UPTHE SUN

TAYLOR_nov09 05/11/2009 15:08 Page 90

largely still in the announcement phase, so we haven’t run up against anypractical, tangible limitations based on installed projects at this point.

“You can certainly forecast that that would happen, but I think we’re stilla few years away from seeing that as being the driving force in the industry. Alot of these announced projects have financing and permits to get; they havea number of issues to work their way through.”

Taylor points out that by contrast, the other half of the solar industry, dis-tributed solar, is a unique niche in which residential, commercial and utilityprojects are being done on a localized level. He explains that this is being ac-complished, in some cases, through random disbursement, when a home-owner or commercial business decides to utilize solar. “A lot of the utilityannouncements have been for large aggregated projects that are individuallyone to two megawatts,” he adds. “They sit well within the distribution system,but they’re announcing them in chunks, anywhere from five megawatts up to500 megawatts.

“So you’re seeing these distributed projects being proposed and movingforward at a scale that matters. I call them ‘distributed power plants.’ The util-ity puts in one to two megawatt projects at 100 different locations around theirterritory, so they can fit within the urban grid on the distribution system. Theycan be strategically located so they’re not overburdening one distribution line.We’re starting to see this model being explored, especially by the Californiautilities Duke Energy in North Carolina and PSE&G in New Jersey are alsostepping up with this model.”

According to Taylor, the growth of distributed solar changes the natureof the issue: instead of it being a transmission problem or a problem on thedistribution line, those installing distributed solar must work with local citybuilding and permitting offices, signing leases with large big-box warehous-es or big-box office stores. He believes this is an innovative diversification thatis unique to the solar industry.

Storage issuesOne of the major issues related to solar energy, and renewables in gener-

al, is the question of storage. Taylor says that at the distribution level, storageis not as critical because it is integrated into the system. It’s associated withload in a lot of cases, and the relative amount of solar to the load is not so greatthat it causes a huge problem. However, as penetration levels increase on anyparticular localized area, isolated issues do start to occur.

From an operational standpoint, Taylor says that having these individualsolar systems with a small amount of storage – on the order of 15 minutes to anhour – could assist in the coordination of the variability that a utility might ex-perience. “As we get higher and higher penetrations on the distribution level, asmall amount of storage can go a long way to helping 75 percent of the problem.

“You have two factors that are reducing the risk of that variability. Oneis geography: you’ve got all of these solar systems spread out over a 50 to 100mile area. Not all of them are going to be increasing in power at the same time,so you’ve got geographic risk mitigation. You could also see, as utilities moveforward with smart grid initiatives, smart meter initiatives and a small amountof storage integrated into these systems, that it becomes a much more pow-erful way to deploy this distributed resource.

“It’s no longer about passively reacting to the sun and injecting the powerinto the grid, it could become a very usable and tangible resource that utilitiescan deploy. But that’s still in the near future, when these do need a smallamount of storage. You do need smart grid capabilities and better communi-cation capabilities. So that’s a near to medium-term ideal.

“On a centralized system side, you have to again bifurcate it by tech-nology, whether it’s concentrating solar power and using thermal storage,or whether it’s photovoltaics. At this point, there are no large-scale solar

storage announcements for photovoltaics. There are no ready solutions forhaving a large amount of storage for centralized photovoltaic projects.There are for projects having 100-megawatts of storage that can deploy foran hour or two hours, but for larger projects it’s not technically or eco-nomically feasible.”

The storage picture is looking better for thermal storage on the concen-trating solar power side. Taylor cites as an example of this, projects in Spainthat have integrated solar thermal storage, and research being done in the US,including the announcement for a project with fixed hours of storage inArizona called Solana, for which Arizona Public Service will be purchasingthe power from Abengoa Solar.

Thermal projects generally have slower ramp rates than PV and wind, asTaylor explains: “They can adjust the flow rates of the fluids inside and, evenwithout storage, manage them in a way that’s a little more friendly to the grid.There’s a better buffer in the way they operate, because thermal fluids have an


History of SEPAThe Solar Electric Power Association is a non-profit,business-to-business organization that works primarilywith electric utilities across the United States. Its aim is tobridge the gap between the solar industry and electricutilities, helping to facilitate the use and integration ofsolar power.

The Association aims to help the electric utilities withtheir understanding of markets and technology and tohelp create dialogue between other electric utilities, sothey can learn from each other, as well as with the solarindustry. SEPA has more than 700 members, 110 of whomare electric utilities. Most of the major utilities across theUnited States are members of SEPA, and there are also alarge number of solar industry members interested inlearning about the utility market and utility issues so theycan understand how we can facilitate the market throughand with utilities, rather than against and opposed tofacilities.

“As the industry scales up evenfurther, we will start to see

transmission issues as being alimiting factor within the centralized

project growth”

TAYLOR_nov09 05/11/2009 15:08 Page 91

do to try to help feedback programs for, in our case, utilities, and in SEIA’scase, for the solar industry. We’re taking the proceeds from this event and dri-ving them back into the respective membership and industries to help facili-tate the marketing even further.

“What always surprises me is that the conference holds 4000 or 5000 peo-ple. The other 15,000 to 20,000 people are coming to go to the expo to net-work and to learn about technology and to have meetings with each other.They’re not there to sit in conference rooms and watch presentations. They’rethere to do business.” n

inertia that you can manage. For example, if you know that you see cloudscoming across the horizon, you can manage that.

“But pairing it with three to six hours of storage does allow you to deploythis resource in a way that can benefit the utility grid and the project, in thesense that the better your project can perform and correlate with peak, pro-viding a firm capacity backup, the better the economics of the project shouldbe. You should be compensated for that benefit you’re providing to the grid.”

Coming eventsAt the time of our interview, SEPA was busy with preparations for the

annual Solar Power International conference in Anaheim. The conference,organized jointly with the Solar Energy Industries Association, attracts morethan 22,000 attendees from both electric utilities and the solar industry.

“It’s in the top two in the world, in terms of the size of the conference,”Taylor says. “It’s an expo and a conference, with more than 45 sessions thatattendees can go to. We also have a large exhibit hall that has more than 800exhibitors in a few hundred thousand square feet of space.

“Anyone who is anyone in solar in North America and the western hemi-sphere, and increasingly, internationally, comes to this event to understandand meet with electric utilities. That’s where SEPA’s niche is, in coordinatingevents and sessions and workshops for electric utilities – networking eventsso people can meet each other and get to know the solar industry. The solarindustry is there. The finance people are there. The installers are there. Prettymuch anyone who is into the solar market goes to this conference.

“There are a lot of solar and renewable events occurring: they’ve in-creased precipitously in the last two years. Because our event is organized bythe two solar non-profits in the United States, we like to think we’re neutralto the profit motive. Revenues from this drive the work that SEIA and SEPA


Solar Power InternationalSolar Power International (SPI),previously called Solar PowerConference and Expo, wascreated in 2004 when the SolarElectric Power Association (SEPA)and the Solar Energy IndustriesAssociation (SEIA) joined together in partnership to createa business-to-business solar conference and expo.

With an industry growth rate of more than 40 percentper year, the two associations felt there was a need for asingle event in which the industry could come togetherwith potential customers, policymakers, investors, andother parties necessary for continued rapid growth.

The event, held annually at the end of October, hasgrown from 1100 attendees to more than 22,500 in five years.

Mike Taylor is Director of Research and Education for the Solar Electric Power Association.

There are no readysolutions for having a

large amount ofstorage for centralizedphotovoltaic projects.For larger projects it’s

not technically oreconomically feasible

TAYLOR_nov09 05/11/2009 15:08 Page 92

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Why Southern Company’s Chris Hobson

believes clean coal should be part of our future energy mix.

One of the more contentious issues cur-rently under examination in the renew-ables sector is the concept of clean coal and carbon sequestration. Th ere are those who view clean coal with suspi-cion, but Southern Company’s Chris Hobson believes it is an essential area to pursue. To this end, the company

has been working with the DOE for 15 years to develop an integrated gasifi cation combined cycle power plant for coal, which Hobson says is one of the three or four most signifi cant technology steps the industry can take.

“Th ere is great promise in technologies around traditional pulver-ized coal because of advancements that are being made in materials of

construction – effi ciencies that are being built into the process now – so I don’t want to discount those, but clearly from our perspective we see the gasifi cation of coal as the most important technology advancement on clean coal that can be made.”

Hobson, who is Southern Company’s Senior Vice President for Research and Environmental Aff airs, points out that ‘clean coal’ is a phrase that’s been around for a decade or more and has meant diff erent things at diff erent times. For instance, when the Clean Air Amendment Act was passed in 1990, the focus was on traditional pollutants such as SO2 and NO2 and mercury. Back then the industry used the term to talk about the technologies that would be used to comply with that act.

“Since then,” Hobson says, “the meaning of clean coal has been broadened to include technology advancements on the traditional pol-lutants, and also carbon dioxide. So clean coal to me is all about reduc-ing the environmental footprint of coal to the extent that you can, and the next step for that is the technologies that are around carbon captur-ing ssequestration. Th is integrated gasifi cation combined cycle is a huge technology step towards clean coal, as are the technology advances we are seeing in the capture of carbon dioxide. We are the leader in the


RENEWABLE ENERGY

Hobson.indd Sec1:94Hobson.indd Sec1:94 5/11/09 15:47:505/11/09 15:47:50


United States in the electric utility industry in both IGCC technology advancement and in carbon capture sequestration advancement.”

Environmental groups oft en accuse big utility companies of being all talk and no action on clean coal, adding that in any case the money would be better spent on developing renewable energy sources. Hobson, like many in the industry, insists that we need both, and that it is naïve to believe otherwise. He pours scorn on those who insist we can meet our future energy needs solely from sources like sun, wind and hydro.

“To take that position indicates to me that they really don’t under-stand the role of renewables in the energy infrastructure in the United States, or worldwide,” he asserts. “Of course, there will be huge technology advance-ments made in renewables too, so what is true today might not be true 20 years down the road.

“But right now the whole electricity energy infrastructure is built on base load generation – the generation that people expect to be operating 24 hours a day, 365 days a year. Th en you build an infrastruc-ture around that base load, which will take care of those periods of time when you are seeing increased loads. So we go from base load generation to the intermediate plants. Th ey might not run 24/7, but they run as needed.

“Th en you move to that class of units called the peaking units, which operate in the highest demand periods. Renewables today cannot pierce even that intermediate level and certainly not the base load generation. Th e availability is not good, the cost is not good. You can’t dispatch those units because you don’t know when the wind is going to blow. You don’t know when the sun is going to shine.

“So while renewables will be valuable to us and will have a role to play, to say that we should not be investing in clean coal in order to be investing in renewables is to misunderstand the role of coal and the role of renewables. We should be working on those things together. I can’t stop investing in coal research and in coal power plants simply to divert my capital funds over to renewables. we won’t have an energy infrastructure that works if we do that.”

Government roleTh e idea of renewable energy is so much in the spotlight these days

that it has become hard to ignore. Th e Obama Administration has played a big role in this popularity explosion, with political attention and stimu-lus bill money helping to whip up interest across the country. But should it be up to federal policymakers to decide our energy future?

Southern Company’s Chris Hobson believes the government does have a role to play, within certain limits. “It is their responsibility to set some trajectories both around technology and around environmental standards,” he says. “When those come together sometimes there are confl icts, but that is a legitimate role for the federal government. As long as you are dealing with technologies that are well understood and can be deployed throughout the country, having those trajectories set by the government is a good thing.”

However, he does not believe this applies in the case of renewable energy. “Renewable energy,” he says, “unlike coal and natural gas and nuclear, has a lot of technical issues associated with it, and one of the most important of those is that not every region of the country has the resources to deploy renewables in the same manner.

“For instance, to state the obvious, the southwestern part of the United States has a lot of desert and many days of sunshine, which is a good environment in which to develop solar technologies. Th e midwest and the upper midwest have terrifi c wind resources. Th e southeast has none of those, and the midwest does not necessarily have real solar op-

tions either, so to try to set a one-size-fi ts-all renewable energy strategy without regard for regional diff erences in resources is not the right thing to do. While it might be appropriate for the federal government to set a trajectory for the use of renewables in the future, they need to then leave it up to each region of the country or each state to determine what is the best mix and what is the best level of penetration for them.”

Hobson’s team deals with issues relating to environmental policy, as well as legislative and regulatory challenges on a national level, and he also oversees a research organization that scours the universe of technology devel-

opers to fi nd those technologies that will have some applicability to the company’s business.

“Sometimes we have to go fi nd those and sometimes they come and fi nd us,” he says. “When we do fi nd something that has promise we work with the developer to put their technology into real world applications through pilot projects at our power plant, and help them take that tech-nology to the next level so that it can be commercialized. We don’t do that for profi t. We do that so we can better understand the applicability of technology to our business.”

Th e second section within the research organization is focused on two things, the fi rst of which is the next generation of fossil technology. “We have developed our own integrated gasifi cation combined cycle technol-ogy and we are deploying it now,” Hobson continues. “We’ve done that in conjunction with the DOE and other industrial partners.

“Because we are ready to go with the commercialization of technology, in conjunction with the DOE we are converting that to be the Department of Energy’s National Carbon Capture Center. A lot of carbon capture work is being done in laboratories, at universities and in other companies or in the national labs that the DOE operates. By contrast, what we’re trying to do is provide a real-world operating environment to which we can bring those technologies and demonstrate whether or not they have promise.”

Cleaning upAccording to Hobson, Southern Company is deploying more environ-

mentally friendly power generation methods across the board. “We have under way two advanced nuclear units that we are working through the process on,” he explains. “We have begun site work and we have received certifi cation from the Public Service Commission in the state of Georgia. Th e Public Service Commission is the fi nancial regulatory arm of the

“Renewables today cannot pierce even that intermediate level. You

can’t dispatch those units because you don’t know

when the wind is going to blow or when the sun is

going to shine”



the world’s appetite for energy will likely continue to rise. What role does Hobson think the government should take in providing incen-tives for companies to develop technology to meet this future demand?

“In the situation we are in now, the government has to be a partner in this R&D work,” he says. “Clearly one of the most important things they do is provide funding for research projects, and the DOE has a very good and a very robust research and development program around energy issue with companies across the country taking advantage of those fi nancial resources, but the DOE is also an important partner in that they bring a great deal of expertise to the issue. Th ey have national labs around the country. Th ey have the National Energy Technology lab in Pittsburgh, where they have highly trained experts who understand these technology issues as we do.

“Th e DOE and the federal government can provide, but the DOE is also a valuable partner on the technology knowledge side. Th ey need to continue to provide incentives for the development of this technol-ogy. What we saw in the Waxman-Markey bill were incentives for early deployment of some of these technologies, which is a natural next step. You helped incentivize the research and now let’s help incentivize the de-ployment of this technology. Th ere is a very important role for the federal government and I think they understand that role and are fulfi lling it.”

Another crucial question revolves around how utilities can be regulated to protect consumer energy costs if a cap and trade system is introduced. Hobson says government incentives will help defray costs for the most expensive power plan technologies, which will help protect consumers. “One of the key things they could do is to allow the market to work in reducing CO2,” he continues. “Th ere has been a lot of talk about this being a cap-and-trade system and a market-based approach, and the truth is they put this defi nition out there around the market, but then the legislation constrains it so badly that if it were implemented, it would not allow the market to work freely.

“We found out from our experience with the 1990 Clean Air Amendment Act that the market will work, and so the best thing they can do to help protect consumers is to, one, allow the market to dictate the price of carbon and then drive the technologies that get developed and deployed; and then secondly, continue to provide incentives for early movers to help with that push and pull of technology.

“One of the things that is critical from the legislation that’s been out there so far is that we are not yet appropriately connecting the dots be-tween the targets and the timetables we are setting and the availability of technology. Th e federal government in setting climate policy must keep in mind and must have a clear vision of what technology can do and what it can’t do.

“Th en maybe over time, we could have that process of evaluating technologies and how that might aff ect targets and timetables; have that be a robust, iterative process, so that maybe every fi ve years you have a reassessment of technology and then a new set of targets and timetables for deploying that technology, and then you can set targets for CO2 based on that. But if we go out and set targets and timetables and don’t have the availability of technology in our minds, we will make some horribly ineffi cient and uneconomical choices.”

Chris Hobson is Senior Vice President, Research and Environmental Affairs and Chief Environmental Offi cer for Southern Company.

state government; they approve our integrated resource planning process, which is where we take a look at the need and come to an agreement with the Public Service Commission on what that need will be like over time.

“We then agree on what technologies best fi t that, and we have received approval from the state of Georgia to proceed with those nuclear units. Th at means ultimately you would be able to recover the cost of them, so we’re excited about that. We have a certifi cation for an integrated gasifi ca-tion combined cycle (IGCC) power plant in front of the Mississippi Public Service Commission that will use Mississippi lignite and will capture 65 percent of the carbon dioxide. It will be the most advanced coal-fi red power plant, maybe in the whole world but certainly in the United States, because of its advanced coal technology plus its unique environmental footprint. No power plant of this kind will be capturing that much CO2.

“We are also converting one of our coal-fi red power plants in Geor-gia to be operated on 100 percent biomass. Biomass is probably our best renewable opportunity, and this will be the largest biomass-fi red power plant in the United States when we have it converted and operating. Th en we have been deploying natural gas combined cycles over the last decade, and so we have been touching all the diff erent supply side technology.”

Even with current eff orts to cut back and increase effi ciency,



Do you believe that the solar inverter will be the intelligent interface between distributed generation resources and the smart grid?GP. Th e inverter truly is the intelligent node of a distributed solar PV system. Th e sophisticated power electronics in a solar inverter are the

logical and most cost eff ective platform to overlay the two-way command and control infrastructure required to remotely manage distributed solar power within a utility portfolio paradigm. With the ability to monitor and control their distributed solar resources, utilities can then begin to develop strategies to use advanced features including low-voltage ride-through, VAR and frequency support, and a variety of addi-tional ancillary services to maintain or improve power quality and reliability. Th e inverter provides the scal-ability and standardization that the industry needs for distributed solar power to grow from an unknown and potentially destabilizing factor on the grid to a signifi -cant component of our renewable energy portfolio.

Can you tell us more about PV Powered?GP. Th e team we have assembled at PV Powered has been relentlessly focused on designing and building the most reliable solar inverters in the industry. We took out a clean sheet of paper and designed a com-mercial inverter platform that will deliver 20-30 years of reliable operation. Our industry-leading innova-tions have brought new materials, reliability modeling

and design rules from industries where uptime is a business requirement. We have validated these products through accelerated life testing and in the fi eld with an installed base of more than 15,000 inverters. We were the fi rst inverter company to provide our customers with a 20-year war-ranty and will be introducing a 30-year warranty on our products for the utility industry. Our new 260kW inverter with 97 percent effi ciency is the building bloc for our new MW platform that is an ideal platform for the larger commercial and utility scale distributed solar installations that our customers are designing today.

EXECUTIVEINTERVIEW

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

Can you tells us more of the SEGIS program’s signifi cant promise for accelerating the penetration and smooth integration of distributed generation (solar) onto the utility grid?Gregg Patterson. SEGIS addresses the challenges of signifi cant distrib-uted PV deployment onto the US electric grid. It is a great example of government working hand-in-hand with the industry to drive innovation and support the growth in clean energy. Th e program was a competitive process that started with proposals from more than 20 companies and resulted in the selection of fi ve. We are honored that the PV Powered-led team was selected for the largest award.

Can you tell us about the company’s team and its efforts?GP. We assembled a team of experienced leaders from the utility industry including Portland General Elec-tric, Schweitzer Engineering Laboratories and Sensus. As the level of distributed solar increases, there will be a need for PV systems to provide their host utili-ties with much greater awareness and control. PV systems currently installed in commercial rooft op applications must disconnect from the grid at the fi rst hint of instability, but as PV system penetration increases this is not an eff ective solution for the host utility or the system owner. In 2010 we will be dem-onstrating the application of AMI infrastructure and synchrophasor measurements to enable intelligent control over how PV systems respond to grid instability. Additionally, the PV Powered team is developing mitigation techniques that will smooth the ramp rates of PV systems, which are caused by passing clouds and have achieved initial success in forecasting PV system energy production for one-hour and six-hour time frames. Wind forecasting played a signifi cant role in enabling large-scale wind power penetration and we believe that fore-casting PV production is less complex and will have similar results for enabling industry growth.

Gregg Patterson is President and CEO for PV Powered, Inc. Prior to joining PV Powered, Mr. Patterson was a Vice President of Hewlett Packard within their extremely successful Printing and Imaging Group. His responsibilities at HP included general management of $1 billion businesses spanning both enterprise and consumer segments and direct involvement in mergers and acquisitions, successfully leading the acquisition and integration of several key companies bought by HP.

THE FUTURE OF SOLAR ENERGY

PV Powered P97.indd 97PV Powered P97.indd 97 5/11/09 15:04:335/11/09 15:04:33


Do you believe that the solar inverter will be the intelligent interface between distributed generation resources and the smart grid?GP. Th e inverter truly is the intelligent node of a distributed solar PV system. Th e sophisticated power electronics in a solar inverter are the

logical and most cost eff ective platform to overlay the two-way command and control infrastructure required to remotely manage distributed solar power within a utility portfolio paradigm. With the ability to monitor and control their distributed solar resources, utilities can then begin to develop strategies to use advanced features including low-voltage ride-through, VAR and frequency support, and a variety of addi-tional ancillary services to maintain or improve power quality and reliability. Th e inverter provides the scal-ability and standardization that the industry needs for distributed solar power to grow from an unknown and potentially destabilizing factor on the grid to a signifi -cant component of our renewable energy portfolio.

Can you tell us more about PV Powered?GP. Th e team we have assembled at PV Powered has been relentlessly focused on designing and building the most reliable solar inverters in the industry. We took out a clean sheet of paper and designed a com-mercial inverter platform that will deliver 20-30 years of reliable operation. Our industry-leading innova-tions have brought new materials, reliability modeling

and design rules from industries where uptime is a business requirement. We have validated these products through accelerated life testing and in the fi eld with an installed base of more than 15,000 inverters. We were the fi rst inverter company to provide our customers with a 20-year war-ranty and will be introducing a 30-year warranty on our products for the utility industry. Our new 260kW inverter with 97 percent effi ciency is the building bloc for our new MW platform that is an ideal platform for the larger commercial and utility scale distributed solar installations that our customers are designing today.

EXECUTIVEINTERVIEW

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

Can you tells us more of the SEGIS program’s signifi cant promise for accelerating the penetration and smooth integration of distributed generation (solar) onto the utility grid?Gregg Patterson. SEGIS addresses the challenges of signifi cant distrib-uted PV deployment onto the US electric grid. It is a great example of government working hand-in-hand with the industry to drive innovation and support the growth in clean energy. Th e program was a competitive process that started with proposals from more than 20 companies and resulted in the selection of fi ve. We are honored that the PV Powered-led team was selected for the largest award.

Can you tell us about the company’s team and its efforts?GP. We assembled a team of experienced leaders from the utility industry including Portland General Elec-tric, Schweitzer Engineering Laboratories and Sensus. As the level of distributed solar increases, there will be a need for PV systems to provide their host utili-ties with much greater awareness and control. PV systems currently installed in commercial rooft op applications must disconnect from the grid at the fi rst hint of instability, but as PV system penetration increases this is not an eff ective solution for the host utility or the system owner. In 2010 we will be dem-onstrating the application of AMI infrastructure and synchrophasor measurements to enable intelligent control over how PV systems respond to grid instability. Additionally, the PV Powered team is developing mitigation techniques that will smooth the ramp rates of PV systems, which are caused by passing clouds and have achieved initial success in forecasting PV system energy production for one-hour and six-hour time frames. Wind forecasting played a signifi cant role in enabling large-scale wind power penetration and we believe that fore-casting PV production is less complex and will have similar results for enabling industry growth.

Gregg Patterson is President and CEO for PV Powered, Inc. Prior to joining PV Powered, Patterson was a Vice President of Hewlett Packard within their extremely successful Printing and Imaging Group. His responsibilities at HP included general management of $1 billion businesses spanning both enterprise and consumer segments and direct involvement in mergers and acquisitions, successfully leading the acquisition and integration of several key companies bought by HP.

THE FUTURE OF SOLAR ENERGY

PV Powered P97.indd 97PV Powered P97.indd 97 6/11/09 09:10:456/11/09 09:10:45

A perfect fit


Rhone Resch of the Solar Energy Industries Associationexplains how solar slots into the energy puzzle.

SOLARPOWER

Resch ed:4August 5/11/09 15:25 Page 98

Long before the arrival of the American Recovery andReinvestment Act, Rhone Resch and the Solar EnergyIndustries Association were working behind the scenes tohighlight solar as a viable solution to America’s energy wor-ries. With some of the world’s best solar resources, the US iswell placed to create energy from the sun and has the oppor-

tunity to leverage solar to play a pivotal role within the country’s energy mix. However, Resch does admit that solar currently has some shortcomings.

“Although solar isn’t more cost-effective at the moment, it certainly has the po-tential to be much more cost-effective than traditional sources of fossil fuels,” hesays. “In large part it’s because you manufacture solar. You don’t mine it or drillfor it, and because of that you’re able to scale up the manufacturing and drivedown costs per unit; and as we do, so you will see the price of solar continue togo lower and lower while the traditional forms of energy continue to go higher.”

New jobsSolar’s emergence as a viable alternative energy source is already beginning

to show across the US. Attempting to kill two birds with one stone, PresidentObama’s tactic of deploying further jobs into the solar industry will hopefullymeet the need of America’s rising unemployment rate. Obama has pledged toinvest $150 billion into creating five million new ‘green collar’ jobs – solar man-ufacturing and installation forming an important part of that number.

Resch notes that those states that have been hardest hit by the recession– Ohio, Michigan, Indiana and Illinois – are those that are now creating andfilling solar employment positions. Workers made unemployed in the auto-motive or other manufacturing sectors are now turning to solar, while trades-men are being employed to install solar units.

“When you install solar you’re using the tradesmen, the backbone of oureconomy,” says Resch. “We’re re-employing those who have been let go byindustries that can no longer survive in the United States; and we’re givingnew opportunities in an industry that is sustainable, that provides good qual-ity jobs, and well-paying jobs for the future.”

Despite this, integrating solar as a vital part of the country’s energy mixis no easy task. In the second quarter of 2009, the SEIA spent $54,000 lobby-ing the government on solar power, whereas Chevron spent $6 million to fur-ther its own interests. The capital funds of fossil fuel corporations are muchgreater and have traditionally held the lobbying power in Congress. Key toovercoming this is presence, explains Resch. He notes that every quarter theassociation is increasing its presence and educating Congress on the value ofsolar energy. “It’s important to not necessarily just look at the numbers of dol-lars spent, but to look at some of the accomplishments that we’ve achievedover the last year and to see the return on the investment of those dollars.

“For example, in the bailout bill in October of last year we got a long-termextension and expansion of the tax credits for solar energy in the United States,and that’s a 30 percent tax credit for businesses. It was expanded to be a 30 per-cent tax credit for homeowners as well, which is an eight-year extension, so that’sa huge victory providing stability for our industry to grow in the United States.”

He also points to the 19 provisions in the stimulus bill for solar energycompanies, significantly more than the oil and gas industry. The SEIA hasbeen very strategic in working with Congress to ensure its policies and in-centives are heard, and the market is likely to expand quickly. “What’s criti-cal is that we’re getting the industry engaged and to appreciate the role thatWashington can play in the energy sector,” says Resch.


American Recovery andReinvestment ActTop solar provisions included in the bill, whichwas signed on February 17, 2009:

• Creation of a Department of Treasury GrantProgram

• Improvement to the investment tax creditby eliminating ITC penalties for subsidizedenergy financing

• A new DOE Loan Guarantee Program • Create tax incentives for manufacturing by

offering accelerated depreciation and a 30percent refundable tax credit for thepurchase of manufacturing equipment usedto produce solar material and componentsfor all solar technologies

Taken from www.seia.org


that solar can be used by utilities to alleviate some of the hot spots: certainareas of the grid have more congestion than others. By putting solar on build-ings strategically in those areas, you can alleviate that stress on the grid.

“The third is that you can build solar farms in the desert or on landfills oron brown field spaces or other areas and can directly connect to interstatetransmission lines. These solar farms could range from five megawatts to 500megawatts, and depending on the transmission infrastructure you can con-nect some smaller projects to existing transmission lines that have the capac-ity to absorb more electrons. Now, you may not be able to build a 500megawatt power plant on that line, but you certainly can build a 50 megawattpower plant on that line. You will see solar start to improve the efficiency oftransmission by making sure that the transmission lines are being as fully uti-lized as possible.

“Finally, in the long run, we need to build new transmission in theUnited States. We have partnered with the American WindEnergy Association and developed a study and recommenda-tions called Green Power Super Highways. It outlines all of therecommendations that are necessary in order to build newtransmission in this country. It takes more than 10 years to builda new transmission line, and we cannot wait 10 years before westart to generate electricity from solar farms in the southwest.We cannot wait 10 years before we start to address climatechange, so the siting and the financing and the permitting ofthese new transmission lines is critical,” he says.

Resch believes that it won’t be long before solar reaches a par with tradi-tional fossil fuels. Solar is already cost competitive in certain areas of the coun-try and is a viable cost alternative for natural gas. Natural gas is used togenerate peak electricity, as well as base loads, and aligned with the time thatsolar can be maximized. He notes that solar is displacing the most expensiveelectrons to consumers: “Peak prices in California vary depending where youare, but in PG&E they’re $0.37 per kilowatt hour and in San Diego Gas andElectric in the south, they’re $0.42 per kilowatt hour.

“Solar is the lowest cost option in those areas already. It is critical is thatstate governments create an accurate price signal for electricity that not allelectrons are the same. That you can’t have the same rate 24 hours a day, sevendays a week. Rather, when the utility is paying more for its electricity, con-sumers should pay more for their electricity. That becomes a very clear pricesignal in the marketplace that will allow solar to compete more with tradi-tional fossil fuels.”

Public attitudes have long supported solar; promoting its benefits to thelegislatures is the hard part. A recent poll conducted by Kelton Research onbehalf of the SEIA showed that 92 percent of the American public want theUS to use more solar energy. Support from solar transcends party lines andeconomic strata.

“People strongly support greater use of solar energy – there are not manythings in the world that achieve a 92 percent public support rate. It’s puttingus up in a category with puppy dogs and ice cream in terms of popularity andthat is fantastic, but what we also need to do is to be smart about it and tomake sure that it’s not just a technology that people like, but a technology thatpeople start to utilize and that we get Congress and the state governments tosupport greater use of solar energy.” �

“That means inviting their congressmen out to ribbon cuttings or open-ings of new factories. To invite senators to briefings on energy. To visit themwhen they come to Washington and tell them about the new employees thatthey’re hiring and the new technologies that they’re developing. Combined,what this creates is a grassroots capability that has the potential to be secondto none, and the grassroots is absolutely critical if we are going to be success-ful in Washington.”

Since the American Recovery and Reinvestment Act was announced, theDOE has systematically been providing awards and funding for solar, forR&D projects or university partnerships to addresses the technology barriersthat create the high cost of solar usage. The number of solar awardees for thefunds is high, but Resch explains that the technologies aren’t commercial yet.“We certainly can expect the R&D investment to result in new products in thenext several years,” he says.

He notes the success of the provisions of the stimulus bill for the solar in-dustry, which are now starting to pay dividends, such as making the invest-ment tax credit refundable. By turning it into a grant, applicants can nowreceive a check from the federal government for 30 percent of the cost of thesystem, rather than a 30 percent tax credit. As well as this, the stimulus billalso created an expanded loan guarantee program and a new tax credit formanufacturing.

“All of these are critical to address some of the challenges we face in a re-cession economy. Specifically, that those companies who used to invest insolar projects last year may not this year, because either they’re not loaningmoney on the debt financing or they don’t have the tax equity on the tax side,and subsequently we found at this time last year that investment dollars weredrying up for the solar industry. We were able to address both of those issuesin the stimulus bill and we’re starting to see in the third quarter the demandfor solar increase significantly due to these new programs,” he says.

Solar transmissionOne of the worries surrounding a big change in America’s fuel mix is

how the various types of renewable sources will fit into the grid, given thatthe transmission structure was built for the traditionally dominant fossil fuelresources. Resch explains that solar fits in many ways, one being distributedgeneration capacity. “Solar generates electricity at the point of consump-tion. By putting solar on your roof, you’re putting a small power plant onyour home or your business that will provide a substantial amount of its en-ergy, so it relieves some of the stress on the grid because those electronscome from the solar panels on your roof rather than a power plant that maybe 100 miles away.

“So greater use of distributed generation certainly helps to alleviate stresson the grid and cuts down on the need for major expansions. The second is


“There are not many things in the world thatachieve a 92 percent public support rate. It’sputting us up in a category with puppy dogsand ice cream in terms of popularity”

Rhone Resch is the President and CEO of the Solar Energy Industries Association.


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TAXINCENTIVES

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

“Do these people have enough money to pull the project off ? Will the revenue from the project support the debt they will incur to build the project? Th e third part is where our fi rm helps companies. Because of the way the fi rm has been built over the years, we can provide almost 100 percent of all of the fi nancial advisory aspects of that application.

“We can do you economic and fi nancial modeling. We can create pro forma income statements, balance sheets and cash fl ow statements. Some of the programs, like a loan guarantee, require the applicant to calculate a credit subsidy cost, and we can calculate that for you.

“We have to be able to demonstrate how many jobs will be created or retained. We also have to be able to model what the Buy American provi-sion and our Davis-Bacon requirements would do to the project.”

Burkart explains that the length of time it takes to satisfy all these requirements can vary widely, depending on the program: a loan guar-antee can take several years, while for some tack credits the deadline for submitting an application is a matter of months or even weeks. Aft er the application is made, the Department of Energy may take 30 or 60 days to review it, then another 30 to 60 days to negotiate a fi nal agreement.

The American Recovery and Reinvestment Act of 2009, popularly known as the ‘stimulus bill’, specifi es bil-lions of dollars in funding for renewable energy and electric transmission technologies. As Greg Burkart of Duff & Phelps explains, this represents a new source of funding: “Here in the United States, histori-

cally we’ve only had two levels where we’ve been able to obtain economic development funding, and that was either at the state level or at the com-munity or city level. Now, with the Recovery Act, we have a new source of funds at the federal level.”

Th ese funds include direct loans, loan guarantees, grants and subsi-dies. Burkart points out that within that there are several diff erent types of grants and several diff erent types of tax credits, including the Section 45 Tax Credit, which is based on the production of electricity that is sold to third parties. “If you put up a wind farm,” he says, “and you sell the elec-tricity into the grid, you could get a production tax credit under Section 45 with our code. Th e same thing would apply if a company puts a solar panel on its roof; it can then get an investment tax credit of up to 30 percent.”

Th ere are also tax credits for manufacturers of alternative energy components – such as blades or towers for windmills or PV panels for solar – as well as guarantees for companies developing projects to gener-ate electricity from renewable sources, either using new technology or technology that is already commercially available.

Grants also play a signifi cant role in the stimulus package funding for renewables; and again, there are several diff erent types: those that support research into the development of alternative technology, and those for who have invented the technology and are trying to demonstrate it.

Companies also now have the option of taking a cash grant in lieu of the investment or the production tax credit, which Burkart says has been a very popular choice.

Making a choiceWith so many options available, how can energy companies choose

the best one to meet their needs? According to Burkart, these applica-

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

“When you dig down into them, you might fi nd out that they would create 300 direct jobs and that they’re claiming 2700 indirect jobs”


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What then, can potential applicants do to ensure the process runs as smoothly and quickly as possible? Burkart says the fi rst important point to consider is the standard of the technology being used. “For ex-ample, the last thing you want to do is be somebody that has a conven-tional windmill, and you’re applying for a loan guarantee for new and signifi cantly improved technology. Th at’s a real quick way to get kicked out. But you’d be surprised how many people call you and they have a commercially available technology and they want to apply for something under ‘new and improved’.

“Th e second thing is we spend a lot of time on the American Recovery and Reinvestment Act nature of the money. We try to help our clients focus in on the projects that are shovel ready, things that are ready to go: if they’ve got a check from the government, they could be digging dirt 30 days from now. Th ose are of high importance, fi nding projects like that.

“Th en we also spend a lot of time demonstrating the job. You’d be surprised how many applications the De-partment of Energy or the Department of Agriculture get, where people claim that they’re going to invest $100 million and create 3000 jobs. When you dig down into them, you might fi nd out that they would create 300 direct jobs and that they’re claiming 2700 indirect jobs. Th e department will look at numbers like that with a jaundiced eye, and so they should.”

Doing it rightTo increase your chances of success at the federal level, Burkart

recommends trying to obtain a non-federal matching fund from the states and the local government. He gives the example of a client with a project for about $270 million to create a new manufacturing facility to manufacture lithium ion batteries. He says the company received $120 million of state incentives and the federal government then gave $150 million of federal matching funds to do the project.

“Th e federal government likes to see that somebody else has skin in the game,” Burkart says. He also argues that many people underes-timate how much time the various agencies – whether it’s Treasury, Department of Energy, Department of Agriculture – how much time they spend digging into the fi nancial model.

“For example, what happens if the in-terest rate spikes, or if oil spikes? What if the price of natural gas plummets, as we’re currently seeing? Th ey spend an inordinate amount of time on this. A lot of times these project sponsors and developers have just put together some spreadsheets that the bankers would have historically reviewed and ac-cepted, but the agencies have a completely diff erent perspective on this. Th ey ask more what ifs, sensitivity-type questions.”

In terms of the future, Burkart believes that within the next six to 18 months, the industry as a whole will be in a phase of ap-plying for the funds. Aft er 18 months, he sees the emphasis changing to comply with the various agreements that have been struck.

Another interesting development will be the new partnership between the Department of Energy and fi nancial institutions. “What they’ve done is reach out to the private sector and created a fi nancial institution partnership where they will partner with large banks that will then be lenders and applicants under the loan guar-antee program, where the bank will be the actual applicant. Th at means in the future we will have a much more sophisticated applicant.

“Th e second thing that will happen is that banks in turn can go out and help solicit applications for these loan guarantees. Banks are really good at parlaying these opportunities into a much more market-accept-able program than the government is, so in the future we’ll see banks playing a larger role in our fi nancing programs in particular.”

Gregory Burkart is a Managing Director at Duff & Phelps.

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Modernizing electricity grids around the world to acceptlarge amounts of renewable energy resources plusadding more intelligence to make grids ‘smarter’ is fair-ly universally accepted as a necessity to build a clean andsecure electric power industry. The best way to achieve

this goal is a topic of debate among power system designers. Although ener-gy storage in utility grids has existed for many decades, the impact of storagein future grids is receiving more attention by system designers, grid opera-tions and regulators. The amount of storage in a grid and its value is a subjectof debate. Understanding the leading storage technologies and how they canaffect grid operations is an important first step in this assessment.

In April 2003, the Department of Energy convened a meeting of 65 se-nior executives representing the electric utility industry, equipment man-ufacturers, information technology providers, federal and stategovernment agencies, interest groups, universities and national laborato-ries to discuss the future of the North American electrical system. The goalof the meeting was to establish ‘Grid 2030’, a national vision for electrici-ty’s second 100 years.

From that meeting, energy storage emerged as one of the top five con-cerns for the future grid. Since then more attention has been given to storagein the grid at all levels, from large-scale bulk-storage systems to small units ator near the point of load. Other nations are ahead of the US with regard tobulk storage, as the value to grid operations was recognized sooner. The fu-ture of electric grids will be impacted by growing penetration of plug-inhybrid electric vehicles (PHEVs) and electric vehicles (EVs), which willrepresent a new dimension for grid management with vast amounts of en-ergy storage present in the grid in the form of millions of electric cars.

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

Spectrum of electricity storageNearly every person in industrialized countries depends on some form

of energy storage every day. Every electronic device, from cell phones to lap-top computers, depends on battery power to function properly. The evolu-tion of these storage energy devices continues to grow as newer applicationsare introduced.

One application having a great impact on potential utility grid applica-tions is electric cars. The technologies that have worked in electronic devicesare being scaled up for higher power use in cars and the electric grid. Figure1 is a storage technology chart published by the Electricity Storage Association(ESA), which shows various technologies in terms of total power (kW) andenergy capacity (time).

Power applications such as uninterruptible power supply (UPS) backupfor data centers and automotive starting batteries represent the largest mar-ket for lead-acid batteries, whereas laptop batteries and power tools have fu-eled incredible growth for lithium-ion. For bulk energy storage in utility grids,pumped hydropower plants dominate, with approximately 100 GWs in ser-vice around the globe.

In general terms, power applications would be storage systems rated forone hour or less and energy applications would be for longer periods. Eachof these technologies is finding applications in the electric grid. The loca-tion in the grid will vary from the transmission system for bulk storage sys-tems to the residential feeder circuit for smaller systems based on theeconomics of each technology.

ADDING VALUE TO THE GRID


The energy storage technologies that help make our electricity infrastructuremore intelligent. By Brad Roberts

STORAGE

Roberts_ED :4August 5/11/09 15:29 Page 104

>> Pumped hydroUtility system designers have seen the benefits of massive amounts of en-

ergy storage in the form of pumped hydro power plants. A typical pumped-hydro plant consists of two interconnected reservoirs (lakes), tunnels thatconvey water from one reservoir to another, valves, hydro machinery (awater pump-turbine), a motor-generator, transformers, a transmissionswitchyard, and a transmission connection. The product of the total vol-ume of water and the differential height between reservoirs is proportion-al to the amount of stored electricity. Thus, storing 1000 MWh (deliverablein a system with an elevation change of 300m) requires a water volume ofabout 1.4 million cubic meters.

>> Compressed airThe basic concept for compressed air energy stor-

age (CAES) is a peaking gas turbine power plantthat consumes less than 40 percent of the gasused in a combined cycle gas turbine and 60percent less than a single-cycle gas turbineto produce the same amount of electricoutput power. This is accomplished byblending compressed air to the inputfuel to the turbine. By compressingair during off-peak periods when en-ergy prices are very low, the plant’soutput can produce electricity duringpeak periods at lower costs than con-ventional stand-alone gas turbines.

>> Battery Advancements in battery technology

over the last 20 years have been driven primar-ily by their use in consumer electronics and powertools. Only in the last 10 years have efforts to design bet-ter batteries for transportation resulted in possible uses for power gridapplication. One driver that has helped make potential utility applica-tions possible is more efficient cost-effective power electronics. To bepractically applied in the AC utility grid, reliable power conversion sys-tems (PCSs) that convert battery DC power to AC were needed. Thesedevices now exist and have many years of service experience, which makea wide range of battery technologies practical for grid support applica-tions.

>> Flywheel Spinning a weighted mass on the end of the shaft of an electrical motor

or generator to provide ‘ride-through’ energy during short input powersags or outages has been around for decades. Slow speed (up to 8000RPMs) steel flywheels have been used as ‘battery substitutes’ in the unin-terruptible power supply (UPS) market for many years. These devices arepractical for ride-through times up to 30 seconds. Achieving longer stor-age times at high power levels requires significant changes to the flywheeldesign and choice of materials.

>> Electrochemical capacitorsCommonly called ‘supercapacitors’, electrochemical capacitors look and

perform in a similar way to lithium-ion batteries. They store energy in the twoseries capacitors of the electric double layer (EDL), which is formed betweeneach of the electrodes and the electrolyte ions. The distance over which thecharge separation occurs is just a few angstroms. The extremely large surfacearea makes the capacitance and energy density of these devices thousands oftimes larger than conventional electrolytic capacitors.

>> New battery technologyThe interest in energy storage for greater use in transportation and renewable

energy research activities is increasing in private industry, universities and nation-al laboratories since Congress mandated increased funding for R&D in energy stor-age. Major universities like the Massachusetts Institute of Technology (MIT) have

work under way to design new storage technologies. MIT is investi-gating ways to create very large-scale batteries capable of stor-

ing enormous amounts of power in the utility grid.

>> Thermal storageAll of the energy storage technologies

discussed are targeting ways to help theutility grid cope with balancing genera-tion and load in the most optimal wayspossible. Utility grids have been tradi-tionally designed to deal with the highestload peaks that occur typically less than afew hours per day for only a few days per

year. Any storage device that helps meetthis objective should be considered in utili-

ty system planning, just like batteries andpeaking generators.

Thermal storage devices that can be deployedat the residential and commercial level should be given

more attention. Modular ice storage systems can generateice during off-peak power periods to power air conditioning sys-

tems for several hours each day during the peak afternoon load times. Similarlyin cold climates, modular heat storage systems can capture electric power duringoff-peak periods and use that energy to store heat in a ceramic heatsink to be dis-patched in higher peak periods during the winter. As more utilities consider realtime pricing of energy based on actual cost, all forms of energy storage will pro-vide more value and contribute to lower the overall peak demand.

>> HydrogenDevelopment of hydrogen-based fuel cells as clean energy sources continues

around the world. In the transportation arena, PHEVs appear to be developinga commanding lead over fuel cell power vehicles as the clean energy choice.Hydrogen economy proponents argue that large wind farms could be used topower hydrogen processing facilities and pipelines could carry bulk hydrogen tomajor population centers as the energy source in lieu of large electrical trans-mission lines. Like today’s large natural gas pipeline networks that store gas con-veniently in the system to match customer demand, hydrogen would be storedas necessary to match the demand of fuel cells for electricity and hydrogen pow-ered cars.


TYPES OF STORAGE


the huge investment in electric-based transportation. In fact, growth of elec-tric vehicles to 50 million units (45 kW capacity average) by 2030 would dwarfthe installed capacity of major renewable energy sources. The real technolo-gy challenge will be making all of the new electric power resources functionin a fully integrated ‘smart grid’.�

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

ConclusionsEducation about the value of energy storage in operat-

ing electric power grids has been lacking for a long time. Asrevealed in the 2003 conference on establishing a vision forthe future smart electric grid, storage was identified as play-ing a vital role in managing new and more complex net-works. Since that time more attention has been given to thebenefits storage can provide. The infrastructure stimulus billpassed by Congress provided increases in funding for stor-age in the electric grid and significant monies to advancestorage devices for PHEVs.

As countries around the world continue to increase theirrenewable energy portfolio, namely wind power, the partic-ipation of storage in the success formula needs attention.Like wind power, storage can benefit from financial stimulusto support the growth and demonstrate the value in actualperformance. The US, Japan and Germany currently benefit from having fair-ly large amounts of storage (pumped hydro) in their grids.

Recognizing the value of storage in dealing with variability of renewableresources is essential to harnessing the maximum potential of wind and solarpower. Fortunately, storage systems used in grid applications will benefit from


Sodium-sulfurThe sodium-sulfur (Na-S) battery is a high-temperaturebattery system consisting of a liquid (molten) sulfur positiveelectrode and molten sodium as the negative electrode,separated by a solid beta alumina ceramic electrolyte. Theelectrolyte allows only positive sodium ions to pass throughit and combine with the sulfur to form sodium polysulfides.

Flow battery technologyFlow batteries are a class of batteries that performsimilarly to hydrogen fuel. They employ electrolyte liquidsflowing through a cell stack with ion exchange through amicro porous membrane to generate an electrical charge.Several different chemistries have been developed for usein utility power applications. The advantage of flowbattery designs is their ability to scale systemsindependently in terms of power and energy.

Lithium-ionThe battery technology with the broadest base ofapplications today is lithium-ion. This technology can beapplied in a wide variety of shapes and sizes, allowing thebattery to efficiently fill the available space, such as a cellphone or laptop computer. This packaging flexibility isaccompanied by light weight relative to aqueous batterytechnologies such as lead-acid.

BATTERY POWERComparing battery storage

Lead-acidLead-acid is the oldest and most mature of all batterytechnologies. Because of the wide use of lead-acid batteries ina variety of applications from automotive starting touninterruptible power supply use, lead-acid is the lowest costof all technologies. Lead-acid battery plants are still used forback-up power sources in large power plants as ‘black start’sources in case of emergencies. Their long life and lower costsare ideal for applications with low duty cycles.

Advanced lead-acid The high volume of production of lead-acid batteries offers atremendous opportunity for expanded use of these batteries iftheir life could be significantly extended in cycling applications.Adding carbon to the negative electrode seems to be theanswer: lead-acid batteries fail due to sulfation in the negativeplate that increases as they are cycled more. Adding as muchas 40 percent of activated carbon to the negative electrodecomposition increases the battery’s life.

Nickel-cadmium Nickel-cadmium (Ni-Cd) batteries represented a substantialincrease in power in middle of the last century. Ni-Cadbatteries quickly gained a reputation as a rugged durablestored energy source with good cycling capability and abroad discharge range.

FIGURE 1 – Electricity storage by technology

CAES Compressed airEDLC Dbl-layer capacitorsFW FlywheelsL/A Lead-acidLi-lon Lithium ironNa-S Sodium-sulfurNi-Cd Nickel-cadmiumNi-MH Nickel-metal hydridePSH Pumped hydroVR Vanadium redoxZn-Br Zinc-bromine

PSH

CAESNa-S

L/A

EDLC

Na-S

FW

Ni-MH

Li-lonVR

Zn-Br

0.001 0.01 0.1 1 10 100 1000 10,000Rated power (MW)

100

10

1

0.1

0.01

0.001

0.0001

Disc

harg

e tim

e (h

r)

Ni-Cd

Adapted from an article originally published by IEEE.


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

Federal leadershipRecognizing the potential for renewable

energy to jump-start the economy – in addi-tion to mitigating the eff ects of climate change – President Obama called for a doubling of renewable energy in three years.

“To fi nally spark the creation of a clean-energy economy, we will double the production of alternative energy in the next three years,” he said, during his January 2009 speech. “In the process, we will put Americans to work in new jobs that pay well and can’t be outsourced – jobs building solar panels and wind turbines, constructing fuel-effi cient cars and buildings, and developing the new energy technologies that will lead to even more jobs, more savings and a cleaner, safer planet in the bargain.”

President Obama made renewable energy a key aspect of his legislative agenda – giving hope to the industry despite the harsh invest-ment environment. In addition to proposals for a renewable electricity standard and a cap-and-trade system, President Obama incorporated renewable energy as a major feature of ARRA, which became law in February 2009.

2010 and beyondRenewable energy investment in the third

quarter of 2009 is showing signs of resurgence. As of mid-September, third-quarter venture capital and private equity investment has far surpassed second quarter investment levels, suggesting that the market is recovering.

Experts predict that although 2009 invest-ment levels will continue to rise, they will still be below 2008 levels. In 2010, however, ACORE anticipates that the industry will experience strong growth, continuing in the years to come, as long as long-term policy frameworks – including cap and trade, a national Renew-able Energy Standard and a federal fi nancing authority – are implemented. Provisions in current proposed legislation in both the House and Senate would establish all three of these long-term policy frameworks.

One of the most infl uential policies to promote long-term growth in the sector is the proposed Clean Energy Deployment Admin-istration (CEDA), or Green Bank, that would provide aff ordable fi nancing for the accelerated

the sector, especially where state govern-

ments provided incentives. Aft er the fi nancial market crisis of late

2008 and early 2009, however, commod-ity prices declined. Simultaneously, the credit market became constrained as lenders sought to increase earnings and reduce and avoid risk.

As a result, renewable energy investment in the fi rst half of 2009 dropped substantially compared to the fi rst half of 2008. Th is in-ability to fi nance renewable energy projects and companies can have serious consequences for continued growth of the industry and the economy in general.

“Th is year, the rate of renewable energy installations has fallen by about half, largely due to an inability to secure fi nancing,” says Sanjay Wagle, a Renewable Energy Advisor at the Department of Energy. “In addition to lost construction jobs, renewables manufacturers

INVESTMENTOUTLOOK

RENEWABLE RECOVERYDespite a tough year, the future is bright for green

energy, says Mike Eckhart.

The outlook for the renew-able energy market in the United States remains posi-

tive, despite lagging levels of new investment in 2009 compared to the boom years of 2007 and 2008. Th e American Recovery and Rein-vestment Act (ARRA) of 2009, Particularly contains a number of provisions widely ex-pected to stimulate investment and contribute to a major scale-up of the industry in the US, beginning anew in 2010.

Investment in renewable energy relies on two primary factors: the availability of capital to fi nance projects – which have high upfront costs – and commodity prices of electricity and fossil fuels. Th roughout late 2007 and the fi rst half of 2008, commodity prices were high, giving renewable energy projects compara-tively high returns, and money fl owed into

Eckhart P108-109 new.indd 108Eckhart P108-109 new.indd 108 5/11/09 15:18:285/11/09 15:18:28


deployment of clean energy, energy infrastruc-ture and manufacturing technologies. Current proposals in Congress would allocate up to $10 billion for the creation of an independent gov-ernment corporation that could provide loans, loan guarantees and other fi nancing for clean energy technologies.

Combined with the Recovery Act provi-sions – which will successfully bolster short-term growth in the industry, these policies are necessary to ensure long-term growth and investment in the US renewable energy sector.

However, there is already debate in the administration and in the Congress about why the federal government (hence, the taxpayers) should continue to have a direct role in renewable energy fi nancing. Th ey are asking: “Can’t the private sector do this with-out government being involved?”

Th e answer is in the magnitude of the capital needed to achieve two percent renew-able energy by 2020. According to the Hudson Clean Energy Partners, the US will need $350 billion to $500 billion of project fi nance to achieve the goal, or about $30 billion per year. Th e highest level of investment was less than $20 billion in 2008.

Some experts believe the federal govern-ment will be needed to help establish a stable policy environment to attract the $30 billion per year in private capital, and it might be needed to help fi nance the new technologies as they come with the market.

Th e US Senate will be taking up the energy and climate legislation this fall. Th e schedule recently slipped because of the healthcare debate and the urgency of passing re-regu-lation of the fi nancial sector, but we remain optimistic that the energy and climate bill will be passed this year or next, giving us a national Renewable Electricity Standard and a CEDA/Green Bank initiative. If so, renewable energy will get back on a rapid growth path and stay on it through at least 2020. ■

Mike Eckhart is Executive Director for the American Council on Renewable Energy.

A helping handTo mitigate the high cost of fi nancing renewable energy projects, ARRA created

and enhanced a number of mechanisms to fi nance projects and boost markets.

Cash Grant In-Lieu of Investment Tax CreditTo help eliminate the challenges associated with tax credit fi nancing, ARRA

offers eligible projects the option of receiving a cash grant instead of the 30 percent Investment Tax Credit. The cash grant offers immediate funding for renewable energy projects placed in service before 2011 and is intended to address the lack of readily available project fi nance during the recession.

“This new program directly addresses the problem, by turning existing tax credits for renewable energy projects into upfront capital, enabling companies and fi rms to secure fi nancing and begin construction again,” says Sanjay Wagle, Renewable Energy Advisor at the Department of Energy.

The Department of Energy expects the grant program to support the construction of up to 5000 renewable energy projects, supported by over $3 billion in cash grants.

According to Wagle, “The $3 billion in grants could enable between $10-14 billion of capital investment in projects that would not be fi nanced without this program – projects that are ready to be built but are waiting to close fi nancing and start construction.”

Section 1705 Loan Guarantee ProgramIn addition, ARRA expanded the Loan Guarantee Program, which was originally

established under Title XVII of the Energy Policy Act of 2005 to help pre-commercial energy technologies bridge the ‘Valley of Death’ between technology development and commercialization.

The Recovery Act creates the Section 1705 Loan Guarantee Program, intended to facilitate rapid deployment of renewable energy and transmission projects by strengthening investor confi dence in the ability of borrowers to repay loans. Section 1705 aims to promote commercially ready technologies, whereas 1703 was established to advance pre-commercial, cutting edge technologies.

In late July, the DOE released two funding solicitations for the Loan Guarantee program, which are expected to provide up to $30 billion in loan guarantees for renewable energy and transmission infrastructure projects by the end of 2011.

Manufacturing Tax CreditOn August 13, the Department

of Energy released guidelines for the implementation of another Recovery Act program – the Qualifi ed Advanced Energy Project (QAEP) tax credit for renewable energy manufacturers. ARRA included $2.3 billion in tax credits for companies that “re-equip, expand or establish” facilities that manufacture renewable energy property. Intended to increase both energy independence and economic development, the credit provides up to 30 percent of the cost of investment in qualifying facilities.

“Th e US Senate will be taking up the energy and

climate legislation this fall”

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TRANSMISSION

According to a joint publication by the American Wind Energy Association and the Solar Energy Industries Association there are cur-rently almost 300,000 MW of wind projects, more than enough to meet 20 percent of the nation’s electricity needs, that are waiting in line to connect to the grid because there is inadequate transmission capacity.

In California alone, more than 13,000 MW of large solar power plants are waiting to connect to the grid. US Infrastructure spoke to Su-sanne Garfi eld-Jones of the California Energy Commission to fi nd out how California intends to overcome the challenge of inadequate trans-mission infrastructure in order to meet its renewable energy targets.

The lack of transmission infrastructure to access remote renewable energy resources is the most critical barrier to California meeting its renewable energy targets of 33 percent by 2020. What is the State of California doing to improve its transmission infrastructure?Susanne Garfi eld-Jones. Executive Order S-14-08, signed by California Governor Schwarzenegger on November 17, 2008, establishes a Renewables Portfolio Standard (RPS) target that directs all retail sellers of electricity to serve 33 percent of their load with renewable energy by 2020. Th e order directs state government agencies “to take all appropriate actions to imple-

California is the most populous state in the US, and im-ports more electricity than any other state, with a total energy demand second only to Texas. However, the Golden State is rich in conventional energy resources and leads the nation in electricity generation from

non-hydroelectric renewable energy sources, including geothermal power, wind power, fuel wood, landfi ll gas and solar power. Meanwhile, its hydroelectric power potential ranks second in the country behind Washington State.

Th e generation of clean energy may well be getting easier, but moving it to market is not, and renewable energy projects are suff ering due to the limitations of the power grid. Dreams of replacing all fossil fuels in the near future are coming up against the reality of a grid that cannot handle the new demands.

If President Obama’s vision of renewable generation is to be a success, greater investment in transmission infrastructure will be required. Th e Department of Energy has identifi ed transmission limi-tations as the greatest obstacle to realizing the enormous economic, environmental and energy security benefi ts of obtaining at least 20 percent of electricity from wind power.

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

GRIDLOCK?

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ment this target in all regulatory proceedings, including siting, permitting and procurement for renewable energy power plants and transmission lines.” Th e Executive Order and associated memoranda of understanding by and among several state and federal agencies established a joint state-federal Renewable Energy Action Team (REAT).

Th e REAT’s primary mission is to streamline and expedite the permit-ting processes for renewable energy projects, while conserving endangered species and natural communities at the ecosystem scale. Th e Executive Order recognizes the major role of the California Renewable Energy Transmission Initiative (RETI) in achieving the RPS target. Th e Executive Order directs the California Energy Commission (Energy Commission) and requests the California Public Utilities Commission (CPUC) and the California Independent System Operator (California ISO), to work with RETI stakeholders to develop a product that identifi es top priority renew-able energy zones that can be developed reliably, cost-eff ectively and with least environmental impact.

RETI is a statewide initiative formed in September 2007 to help identify the transmission projects needed to accommodate California’s renewable energy goals, support future energy policy and facilitate trans-mission corridor designation and transmission and generation siting and

permitting. RETI is an open and transparent collaborative process in which all interested parties are encouraged to participate. It is assessing all of the competitive renewable energy zones in California that can provide signifi cant electricity to California’s consumers by the year 2020. It is also identifying those zones that can be developed in the most cost eff ective and environmentally benign manner and will prepare detailed transmis-sion plans for those zones.

The lack of timely permitting for transmission in California has long been a concern. What advances have been made to tackle this problem?SGJ. To allow the timely permitting of transmission for renewables, the state must ensure the establishment of the critical link between trans-mission planning and transmission permitting decisions.

Th is issue is being addressed in two forums. As part of its biennial Integrated Energy Policy Report proceeding, the Energy Commission develops a Strategic Transmission Investment Plan. In recognition of the importance of coordinated statewide planning as a pre-requisite for timely, eff ective permitting, the Energy Commission held two workshops on this topic as part of its 2009 Strategic Transmission Investment Plan



priate transmission projects that are both environmentally acceptable and economically effi cient.

Construction of renewable energy facilities and transmission lines may offer signifi cant environmental benefi ts, but any new construc-tion risks facing public opposition for aesthetic, economic or environ-mental reasons. What have been the main challenges that California has faced in its mission to achieve its renewable portfolio standard?SGJ. With regard to the development of transmission to access renewable energy, the main challenge continues to be the public opposition due to land use concerns. Th is challenge is being addressed by RETI using a col-laborative stakeholder-driven planning model whose goal is to balance land use and environmental concerns with electric transmission needs.

Th e planning results from the RETI process should facilitate the permitting of appropriate transmission facilities to meet the RPS goals by resolving contentious environmental issues early in the process.

If California were to benefi t from an upgraded and modernized transmission infrastructure, what could it potentially achieve in terms of energy generation from renewables?SGJ. Th e recent RETI Phase 2A report identifi ed 102 transmission line segments that can deliver 160 percent of the estimated renewable ‘net short’ for a 33 percent RPS by 2020 target. Th e net short calculation takes into consideration 33 percent of load-serving entity sales minus the con-tribution from existing renewables. Th is 160 percent of net short equates to 95, 536 gigawatt-hours of renewable generation. A total of 36 com-petitive renewable energy zones (CREZ) were identifi ed by RETI with at least one transmission line segment accessing renewable generation from each CREZ. It should be noted that there is considerably more renewable generation that can be developed in the CREZ than the 160 percent of the estimated renewable net short identifi ed by RETI.

RETI WORK IS ORGANIZED INTO THREE PHASESPhase 1: Identifi cation, characterization and ranking of Competitive Renewable Energy Zones (CREZ) specifi ed for solar, wind, geothermal or biomass energy facilities in California and neighboring regions.Phase 2: Development of a statewide conceptual transmission plan to access priority CREZ, based on more detailed analysis of CREZ.Phase 3: Development of detailed plans of service for priority components of the statewide transmission plan.

The fi nal Phase 1B report with the CREZ rankings was completed in January 2009. The initial Phase 2 report was completed in August 2009. Particulars about RETI Phase 3 have not been determined and will ultimately be infl uenced by how the California ISO and electric utilities respond to RETI stakeholder efforts to this point.

For more information on RETI, please see the following website: http://www.energy.ca.gov/reti/index.htm

proceeding. Th e Energy Commission will formulate recommendations based on the workshop record in its 2009 Strategic Transmission Invest-ment Plan, to be released in draft form by October 1, 2009.

Th e CPUC, which has jurisdiction over transmission permitting for investor-owned utility projects, has opened an investigation into the barriers to transmission for renewables.

Cost allocation issues also pose a signifi cant barrier to developing transmission infrastructure. How is this issue being addressed in California?SGJ. Cost allocation for in-state projects within the California ISO terri-tory is not a barrier, as transmission costs are spread among all users of the California ISO-controlled grid through a transmission access charge. Publicly owned utilities (POUs) in California allocate costs among their own customers.

Cost allocation may be a barrier for interstate transmission projects for accessing renewable generation. Th ere is potential federal legislation that would establish new Federal Energy Regulatory Commission author-ity for siting and cost allocation that would address this issue.

“Making this link will ensure that needed projects are planned for and are permitted in a timely and eff ective manner that maximizes existing infrastructure and rights-of-way, minimizes land use and environmental impacts”

What are the main regulatory barriers to new transmission and how can they be overcome?SGJ. Major regulatory barriers include the lack of coordinated statewide transmission planning and fragmented transmission permitting ju-risdiction. Th is has made it diffi cult to site and permit transmission to interconnect remote renewable resources in a timely fashion.

Th e state should ensure the development of a coordinated statewide planning process that is open to all stakeholders and will lead to the development of needed facilities, including joint investor-owned utility (IOU)/POU projects. Such a planning process needs to build on the RETI stakeholder-driven process to ensure environmentally acceptable projects are identifi ed that help the state achieve its RPS goals.

In California, projects proposed individually by investor-owned utili-ties, publicly owned utilities or third parties are within the jurisdiction of diff erent permitting agencies. Th is is seen as a barrier to the development of joint transmission projects that may be in the best interest of the State of California in the furtherance of its policy objectives.

A solution could be the consolidation of transmission permitting authority within one agency, regardless of project proponent. Further-more, linking coordinated transmission planning with consolidated permitting authority would result in the timely permitting of appro-


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LEADERSHIP

The emergence and rapid growth of the cleantech sector has been referred to by some commentators as the sixth technology revolution. Th e recent credit-crunch related investment dip aside, growth by way of increased European venture capital has been stag-gering – compound annual growth rate of almost 40

percent between 2004 and 2008. In fact, the cleantech sector is pulling in a quarter of all investments made but it’s a fast-moving revolution that’s running short of leaders; more specifi cally, the right kind of lead-ers with the seemingly incongruous mix of entrepreneurial athleticism, company-building skills and organizational know-how.

Choosing a leaderSourcing leaders is a crucial issue in the development of this rela-

tively nascent sector because to make a meaningful impact on climate change we need cleantech to hit its mark and achieve world scale sooner and not later. Investment will also fl ow back into the sector soon as the credit crunch eases. It’s important for investors that cleantech compa-nies start positioning the right kind of leaders now.

Clean technology is a broad industry. Its sweep includes renew-able energy generation, biofuels, energy effi ciency, carbon reduction and all their supporting technologies, components and services. CEOs coming into cleantech companies naturally look at how their skills from other sectors translate to cleantech, rather than relying on direct experience in these markets. Th e cleantech CEO oft en faces the trifecta challenge of raising capital, building teams and even plants – and going up against traditional energy all at the same time. Th is unique collu-sion of demands on the CEO is considerable and unlikely to have been similarly faced in other sectors.

Th e pressing issue for cleantech as a new sector is this: technolo-gies and companies go through critical transition points from both a technical and leadership point of view during their growth. Th e need for diff erent leadership changes radically at the stages of 10, 100, 1000 and 10,000 employees. A company’s character and complexity also

Looking for a new breed of CEO

Anita Hoffmann of Heidrick & Struggles’ Alternative and Renewable Energy Practice

says a new kind of hybrid leader is needed for the cleantech sector to reach its potential in

combating climate change.


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changes radically at these points. Failure to recognize the need for dif-ferent leadership can cause companies to fl ounder and prevent them from reaching their full potential. Rarely will the same leaders take the company from 10 to 100 people or from 100 to 1000 or beyond. Th is is the context against which cleantech companies poised for growth need to think when choosing a leader.

One of the key themes to emerge from the 2009 New Energy Finance Summit – and supported by further research by Heidrick & Struggles – is that a new leadership profi le is needed for these unique challenges and demands, the ‘extreme corporate entrepreneur CEO’. Th is is some-one who is uniquely entrepreneurial and operational at the same time; someone who is an ‘ultra-visionary’ and an ‘ultra-operator’.

Th is corporate entrepreneur blends the skills and competencies of the visionary entrepreneur and the professional manager. Th is hybrid CEO has the foresight and energy to take a company through rapid growth while, at the same time, giving enough structure and process to deliver results. In addition, this leader needs to be extremely attuned to, and able to infl uence regulatory issues in their industry, driven as it is by regulatory incentives and frameworks. Few, if any, executives are strong visionary entrepreneurs and company builders, and eff ective operators at the same time.

Where do we fi nd them?Th ere will be gift ed and talented individuals who are the excep-

tion, but the reality is the sector will probably struggle in the short-term to fi nd enough extreme corporate entrepreneurs needed for the sector to take off and achieve scale. Strategies can be put in place to develop and phase in talent, but the longer-term solution would be for the sector to work with governments and educators to ensure leaders of tomorrow are given a solid grounding in both traditional and new management skills.

Ideally, these new skills would include dealing with much more complexity, managing in diff erent contexts and communicating eff ectively to an ever-in-creasing and varied stakeholder group. Th e creation of post-graduate and mid-career education programs to help executives already in this sector acquire the right mix of skills to grow companies to real scale would also make a signifi cant diff erence.

Th is longer-term approach doesn’t preclude taking action now for companies yet to fi nd their extreme corporate entrepreneur. Investors and boards should be looking at the competencies and composition of their executive team as a key strategic imperative. Th ey should be investing the same time and eff ort in understanding and reviewing their talent and planning as they are in developing fi nancing and operational excellence.

For example, instead of expecting one person to take the business from start-up to scale, there are two options worth considering: pair up one corporate entrepreneur CEO with an excellent COO; or put in place an operational CEO for the next one to two years while planning and setting about the hire of the corporate growth entrepreneur for when the credit crunch eases.

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

“Th is longer-term approach doesn’t preclude taking action now for companies yet to fi nd their extreme corporate entrepreneur”

Other relevant questions include: can your current executive team step up and generate serious growth if and when the market allows? Do you know their strengths and weaknesses and do you have an external benchmark for how good they really are? Do you have a strategy in place for replacing key leaders at critical points in the company’s growth?

Similarly, investors can also ask questions now that allow them to better develop an evolving leadership strategy and plan for the com-panies they invest in. Th e following questions help pin down the talent management challenges inherent in these fast-growing cleantech com-

panies: is your management team still the right one to deliver the operational effi ciencies needed now, and for future growth? If not, how do you plan to grow the business from where it is today, to where you want it to be in fi ve to seven years, to real scale? What could you deliver if you had a CEO or a team with very diff erent skills and capabilities, in the next two years, years three to fi ve and years fi ve to eight?

Investors typically back a competent manage-ment team from the start of an investment to exit and construct executive packages accordingly. Th ere is oft en little fl exibility to change manage-ment. Going forward, investors in the cleantech sector need to think through both at the point of investing and at other investment milestones.

While these are questions investors, boards and chairmen should be asking now, the answers

will, nonetheless, point to a problem for which there is no instant cure: there are just not enough extreme corporate entrepreneur CEOs to go around. Th e long-term solution will be to work with government and educators to ensure executive education and training is complemented with new management programs to develop the hybrid leaders needed in the cleantech sector. Th ese skills will not only ensure that the solutions for climate change grow to scale, but will also help traditional sectors renew and expand. Th e future of both our environment and the returns for investors in cleantech are at stake.

Anita Hoffmann is Partner, EMEA Alternative and Renewable Energy/Climate Change and O&G for Heidrick & Struggles.


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With the United Nations Climate ChangeConference fast approaching, all eyes are nowfirmly focused on energy policy. The need tobalance the security of America’s energy futurewith the growing need for more efficient, sus-tainable and environmentally friendly energy

sources has never been greater. A more diverse energy supply – one consisting of fossil fuels, as well as

biofuels, wind, solar and nuclear – has been heralded as the answer to bothenergy security and environmental issues. But whatever energy path we de-cide to follow, the fact remains that demand will soon outstrip supply. Weneed to make the most of traditional fossil fuels while investing in cuttingedge research to develop sustainable sources. Another national priority isthe need to reduce our dependence on foreign sources of energy, such as im-ported oil.

The North American power sector now finds itself at a crossroads. Theimpact of the financial recession and a vastly greener agenda from the new ad-

ministration have sparked a downward trend in generating plant develop-ment costs in the last year, uncovering opportunities in some fuel sources andsounding alarm bells for others.

According to the Energy Information Administration’s (EIA) AnnualEnergy Outlook 2009, electricity demand is set to increase by 26 percent by2030, an average of 1.0 percent per year. Estimates also show that coal willcontinue to provide the largest share of energy for US electricity generation,with only a modest decrease from 49 percent in 2007 to 47 percent in 2030.As of June 2009, 36 new coal plants had been permitted, or were under con-struction or near construction in the US, with 47 more announced.

Concerns about greenhouse gas emissions are predicted to have little ef-fect on construction of new capacity fuelled by natural gas, the generation ofwhich is set to increase to 21 percent in 2027, before dropping to 20 percentin 2030 – about the same level as in 2007.

PredictionsThe EIA’s outlook also sees the generation from nuclear power in-

creasing by 13 percent by 2030, as additional units and upgrades at exist-ing units increase overall capacity and generation. The nuclear share oftotal generation will decrease, however, from 19 percent in 2007 to 18 per-cent in 2030.

The outlook for power plant constructionin a range of energy sectors.

CONSTRUCTION

ENERGIZINGTHE FUTURE

POWER GENERATION_4August 05/11/2009 15:03 Page 117


Renewable generation on the other hand is predicted to increase by morethan 100 percent from by 2030, by which time it will account for 14 percentof total generation.

As electricity demand grows and 30 GW of existing capacity is retired,259 GW of new generating capacity will be needed by 2030. If we are to be-lieve the EIA’s predictions, the majority of this new capacity will be in theform of renewable generation and coal-fired power plants.

However, it is difficult to attach too much weight to these predictions,particularly regarding the development of new coal-fired power plants. A re-cent report by the National Energy Technology Laboratory (NETL) entitled‘Tracking New Coal-Fired Power Plants’, states that experience has shownthat public announcements of coal power plant development do not providean accurate representation of actual new operating power plants. It is not un-usual for projects that have been announced to then be cancelled before orduring the permitting stage.

Figures from the NETL state that actual plant capacity, commissionedsince 2000, has been far less than new capacity announced; the year 2002 re-port of announcements reflected a schedule of over 36,000 MW to be installedby 2007, whereas only 4500 MW (12 percent) was achieved.

According to the Earth Policy Institute, since the be-ginning of 2007, 95 proposed coal-fired power plants havebeen cancelled or postponed in the United States – 59 in2007, 24 in 2008, and at least 12 in the first three monthsof 2009. This covers nearly half of the 200 US coal-firedpower plants that have been proposed for constructionsince 2000.

DelaysThere are many reasons why delays and cancellations

occur, including the fact that the cost of building a newpower plant is astronomical. According to CambridgeEnergy Research Associates (CERA) the costs of buildingnew power plants more than doubled between 2000 and2008. The latest IHS CERA Power Capital Costs Index(PCCI) shows that the cost of new power plant construc-tion in North America rose 130 percent in this period.These costs increases could be partly explained by risingprices for commodities such as steel, nickel and copper, aswell as supply issues and longer deliver times.

Issues also arose due to the lack of skilled engineers inthe workforce, as older workers retired and were not re-placed. This resulted in shortages in plant design teams anddelays to scheduled construction. This further increased thelikelihood of cancellations, which are more prevalent asprospects of fulfilling all projects in the queue become im-practical.

The NETL points out that delays and cancellations havebeen attributed to regulatory uncertainty regarding climatechange. There are hopes that the Copenhagen ClimateChange Conference in December will help clear up someconcerns surrounding environmental regulations, but thisis by no means certain. Since the US went into recession, thecost of developing power plants has declined somewhat, so

many of the obstacles that stood in the way of new construction have now beenalleviated, creating new opportunities for increases in capacity.

International outlookAcross the ocean, construction is due to start in 2012 on two new nuclear

reactors at Sizewell on the UK’s Suffolk coast. Following the acquisition ofBritish Energy, French power giant EDF Energy plans to build two reactorsgenerating 1600 MW, which together with another plant in Somerset, couldsupply 13 percent of the country's electricity.

The region’s business leaders are keen to ensure that local companiesbenefit from the employment and other opportunities offered by the multi-billion-pound development. Work on the existing Sizewell B power station,which was commissioned and built between 1987 and 1995, involved 2000suppliers, half of which were from East Anglia.

At a conference organised by the Nuclear Industry Association (NIA)in late October, EDF bosses and industry chiefs said a broad range of workwill be available. Keith Parker, Chief Executive of the NIA, commented“The development of new nuclear power stations could have a huge impacton the region. EDF has announced its intention to build at Sizewell. These

NUCLEAR POWER PLANTS IN EUROPE

BelgiumBulgariaCzech RepuplicFinlandFranceGermanyHungaryLithuaniaNetherlandsRomaniaTotal

726459174112103

582419063634269663,26020,470185911854821300102,616

-2-11-----4

-1906-16001600-----5,106

Country Number Net capacity Number Net capacity IN OPERATION UNDER CONSTRUCTION

MWe MWe


CH2MHill_AD.indd 121CH2MHill_AD.indd 121 3/11/09 10:39:053/11/09 10:39:05

with most of this growth coming from renewable sources other than hydro-electricity.

In Canada, nearly two-thirds of the homes in the province of Quebec arerun entirely on electricity, most of which is supplied by hydropower. Theprovincial utility, Hydro Quebec, is the second largest provider of electricityin Canada, with a generating capacity of 27 GW.

Western Europe generates about 22 percent of the total world demandfor hydroelectricity, although most practical hydroelectric resources have al-ready been exploited there, and little further development is expected. France,Norway and Sweden account for more than half of the total hydroelectricityconsumption in the region. Demand for renewable energy in Western Europeis expected to grow to 7.6 quadrillion BTU by 2015, an increase of more than1.8 percent per year. n

reactors at their peak of construction are going to be employing 3000 to4000 people.

“There are opportunities not only for high-tech engineers but also con-struction companies and civil engineering and there are knock-on impacts forsmaller companies within the area, including transport companies and cater-ers. The potential is enormous, and that's just during construction. Once it isbuilt the power station will operate for 60 years, employing 300 to 400 peopleat each reactor, offering well-rewarded, well-qualified jobs. It will have a bigimpact on the local economy.”

The UK is not the only European country to see new nuclear construc-tion. As of September 2009 there were a total of 196 nuclear power plant unitswith an installed electric net capacity of 169,711 MW in operation in Europeand 17 units with 14,710 MW were under construction in six countries. In2008, France held the top position in terms of elec-tricity generated by nuclear energy, with a share of76.2 percent, followed by Lithuania with 72.9 percent,the Slovakian Republic with 54.4 percent, Belgiumwith 53.8 percent and Sweden with 42 percent.

Coal power generation is also on the increase inEurope. In 2008, Italy’s major electricity producer,Enel, announced that it would convert its massivepower plant from oil to coal and increase the per-centage of its power generated by coal to 50 percent.Italy’s total reliance on coal is predicted to rise from14 percent to 33 percent over the next five years.Other European countries are expected to put intooperation about 50 coal-fired plants over the same pe-riod, which are expected to be in use for the next fivedecades.

RenewablesConsumption of hydroelectricity and other re-

newable energy sources combined is expected to bebetween 37 and 47 quadrillion BTU in 2010.Renewable energy sources are projected to accountfor nine percent of the total world energy consump-tion in 2010. Hydroelectricity, while remaining aminor factor in terms of world energy consumption,is important regionally.

The consumption of renewables in the US is ex-pected to grow more slowly than the rest of the world,at two percent per year over the period 1990-2010,


“Western Europegenerates about 22 percentof the total world demandfor hydroelectricity”



Why is design so important in utilities today?Alan Saunders. With utilities facing aging in-frastructure, smart grid deployments and new renewable generation projects, there is more design work being done by utilities and their engineering and construction fi rm partners. Not only is there more design work than ever before, networks and facilities are more com-plex and require greater accuracy, collabora-tion and effi ciency in design. At the same time, long-term engineers and designers are retiring and being replaced by new designers who are more tech-savvy but have less practical utility experience. With that background, utilities large and small are examining their design processes and investing in solutions that will improve design quality and process effi ciency.

Is design a standalone process, or does it have signifi cance beyond the engineering department? AS. Utilities are ultimately asset managers, so having accurate and precise infrastructure asset information is critical for them. For new and retrofi t projects, this asset information originates in the design tool, which is very oft en one of our Autodesk products. We fi nd that for many utilities, getting the accurate and precise

as-built data into the system of record is a great opportunity for improving data quality and

EXECUTIVEINTERVIEW

process effi ciency. Once the as-built data is ac-cessible to operations and maintenance (O&M) teams, it can become the foundation for better management of the assets across their lifecycle, eff ectively improving decision-making, analy-sis and reporting. Just imagine the opportuni-ties to reduce truck rolls if the O&M team has confi dence in their infrastructure model and can visualize assets in their real world context before leaving the offi ce.

What about creating models for built facili-ties and networks?AS. Th is is another area where utilities are in-vesting, particularly as they prepare for smart grid projects that require better intelligence about what is in the fi eld today. Many utilities have told us that they consider their GIS and asset records to be only 60-70 percent complete, so they are in the process of surveying and acquiring loca-tion and condition data on their existing assets in the fi eld. We have many utility customers using our design tools to create an infrastructure model from existing records, raster data and fi eld survey data, including LiDAR and aerial photography.

Do you see model-based design being used in utili-ties? If so where? AS. Yes. For utilities and engineering fi rms designing networks, treatment plants, substations and other utility facilities, it’s not suffi cient to produce drawings that are essentially just pictures of the assets. Th ey want their designs to be models that refl ect real-world objects, have data associated with them and keep track of relationships between objects. Th ey want to be able to visualize and analyze these models before they are built, and

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

Alan Saunders is the utility and telco industry lead for Autodesk. He is responsible for Autodesk’s global utility design solution strategies. He has over 25 years of experience in the global energy and utilities business and has led successful initiatives in distribution planning, design, operations, customer service and business development.

“Benefi ts are realized across the project

lifecycle, with more sustainable designs,

improved collaboration and increased

operational effi ciency”

use the model to automatically generate accu-rate cost estimates and bill of materials for the construction team. Benefi ts are realized across the project lifecycle, with more sustainable de-signs, improved collaboration and increased operational effi ciency.

How can technology help address the changes in this utility workforce?AS. Th e new generation of engineers and de-signers entering the utility today have diff erent expectations regarding technology than their predecessors. First of all, they are not going to be satisfi ed searching through fi le cabinets for paper drawings of networks and facilities. Th ey expect to be able to access this informa-tion online from wherever they are working.

Th ey also want to be able to work in a 3D, model-based environment where they can automate workfl ows and business rules, consider scenarios, understand the real-world context for their designs, and avoid clashes and confl icts before the project goes to construction. Th is changing workforce, and the requirements they are driving around intel-ligent, model-based design tools has been a key factor for many of our custom-ers who are updating their design environments.

What changes does Au-todesk see in utility design over the next few years?AS. We see continued evolution towards model-based design from our utility custom-ers. We will focus on leading the way with solutions that improve design quality and enable design data to add value across the asset lifecycle.

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CUSTOMEROPERATIONS

Public Service Electric and Gas Company (PSE&G) is developing programs in its New Jersey service territory that are consistent with the federal energy master plan, encouraging investment in energy effi ciency and helping contribute to the federal aim of increasing the number of

green collar workers. By encouraging its customers to participate in energy effi ciency

initiatives, Public Service Electric and Gas Company (PSE&G), New Jersey’s oldest and largest publicly owned utility, seeks to decrease its climate change footprint across its service territory. Th is task is made more challenging by the fact that PSE&G’s customers have low incomes, live in inner city environments, and oft en face problems meeting their own basic energy needs.

“In our program we identify target areas and customers that are interested and conduct energy audits,” says Joseph Forline, VP of Customer Operations. “Based on the outcome of the energy audits, we determine what type of work we can do to save them money on their energy bill. Th ese are things that could be as simple as changing the light bulbs from your standard lightbulbs to compact fl uorescent light-bulbs, to changing their heating and air conditioning systems, sealing up their insulation, putting additional insulation in the attic, changing the windows; typical things. Th e cost of it is not carried completely by the customer. A big contribution to the cost is made by the utility and we get that back in rates,” explains Forline.

Aside from its residential projects PSE&G is operating a program supplying energy to the hospitals situated within the company’s territory. Currently covering approximately 40 percent of the state of New Jersey, the territory borders the New Work-Philadelphia corridor and so supplies much of the inner cities’ energy needs. Within this there are between 75-100 hospitals and PSE&G is heavily focusing on ensuring they are able to provide a hospital effi ciency program.

“Many of the hospitals in our territory have been struggling to make ends meet or have been looking for ways to reduce their energy bills,”

says Forline. “In our hospital effi ciency program we have contacted 52 hospitals, and 33 of those hospitals have put in applications to participate in our program. We conduct an investment-grade energy audit and we come out with investments that can reduce their energy use, whether it’s lighting, heating and air conditioning systems, insulation or other energy effi ciency investments.

“We also have another program that does the same types of things but focuses on the small business segment and there are existing energy effi ciency programs run by the state of New Jersey. We try to identify the opportunities in between those segments to fi ll a need in the marketplace and also drive the initiative.”

In order to facilitate these programs, PSE&G is supporting federal policy and creating green jobs. Forline explains that the company has cre-ated 700 employment positions, partnering with post-secondary educa-tions such as technical schools to develop training programs and be able to hire employees directly into the initiative positions. He notes that many of these positions are being taken by the employment of inner city residents.

“Our company’s a little unique in the industry in that we do a signifi -cant amount of work with an internal workforce, as opposed to contract-ing out a lot of that work and we are continuing that eff ort with some of these new growth areas. PSE&G is one of the leading companies and we are focused on creating green jobs and supporting investments in energy effi ciency and renewable energy,” says Forline.

Customer focusFrom deployment of energy to employment of its customers, PSE&G

is determined to succeed in its customer-centric approach. “We put a lot of focus on the customer via benchmarking and analysis of our perfor-mance versus the industry and based on a couple of diff erent measures, we are one of the leading utilities in the country from a customer stand-point and that starts with our reliability,” he explains. “We’ve received a PA Consulting Award as the most reliable utility in America for three of the last four years, and we’ve been the most reliable utility in the north-east for seven consecutive years.

“We also put a tremendous amount of emphasis on listening points, surveys and customer feedback, and these include customer perception surveys, which are built in through the goals and targets of every man-ager and union employee through our shared savings program. We do perception surveys of many attributes: we measured 42 attributes of our customers across all segments. We also do something we call a ‘moment of truth survey’, which is a survey we give customers right aft er they deal directly with one of our employees, and that’s whether they’re calling our call center or if they’re getting serviced by one of our fi eld technicians for a new meter set or a heater repair, so we take a lot of pride in our customer surveys. We have customer perception working teams where we identify four or fi ve key initiatives every year that will drive improve-ments in our customer satisfaction.

“One of the other areas that is very unique to our company is the fact that we do have an appliance service business, and we think that that has been helpful in our customer service scores over the years. A lot of utilities got out of this business in the 1990s, and this is where we have about 900 employees that go out and fi x heaters, water heaters, ranges and dryers, anything that burns natural gas. We handle that.

SAVING MONEYTHROUGH ENERGYEFFICIENCYJoseph Forline explains how PSE&G is giving back to its the customers.

“Many of the hospitals in our territory had been struggling to

make ends meet”

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

Customer educationIn order to educate its customers PSE&G has recently introduced an

electronic newsletter, sending out a monthly email to diff erent portions of its customers such as its municipal customers, large and small business customers, and a large section of its residential customers. Th e newsletter provides energy tips and promotes the company’s energy programs.

“We promote the New Jersey Board of Public Utilities Clean Energy Program through that and that includes links to the websites,” says Forline. “We have also recently introduced a brand new website and new customer system called iPower. We’ve made a $160 million dollar investment in the last two years and any customer can go in and enter the size of their home, what appli-ances they have, how many people live in the house, whether or not they work, when their house was built, and

model your energy effi ciency and get suggestions on how to reduce your cost. Generally they’re things that tie into our programs.”

PSE&G have adopted a customer-centric approach, and one that’s likely to pay off , not only supplying its consumers with their energy needs but also their employment needs. It remains to be seen if this is likely to attract more new customers.

Joseph Forline is VP of Customer Operations at Public Service Electric and Gas Company.


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INTHE BACKCOMMENT

The slow pace of negotiations leading up to the conference and the ab-sence of any agreements on the financial aspects has widened the gap betweenthe US and the developing world. Carol Browner, Obama’s energy advisor, re-cently created controversy by stating that she did not expect the US senate tovote on its global warming bill before the Copenhagen summit, which is ex-pected to limit Obama’s ability to formulate any serious policies regarding cli-mate change.

The division between the US and the developing world also deepened fol-lowing the former’s continued opposition to the Kyoto Protocol and its urg-ing of other rich countries to create a new legal agreement. The EU sided withthe US, which angered China and India most significantly – China stated theprotocol to be “not negotiable”. Although China is currently the world’s biggestemitter of CO2, it is supporting India’s standpoint that because its historicalemissions are much less than that of the US, it should not be subject to suchhigh carbon restrictions.

China and the G77, a group of 130 developing countries, accused the USand the EU of attempting to “fundamentally sabotage” the Kyoto agreement.The US approach of moving away from a universally binding legal agreementto one where emission cutting targets would be set on national timetables canbe said to allow developed countries to do little, and avoid any firm constitutionthat would protect poorer nations from the catastrophes of global warming.

At the Bangkok climate change talks in October, India’s environmentminister, Jairam Ramesh, pointed out that it was the developed world thatcaused the current global warming crisis, and refused to accept limits on

his country’s growth. India’s failure to negotiate shows worrying signsfor December.

Hoping to win back China’s support, Obama will be undergo-ing a series of talks with China’s President Hu Jintao in Beijing onNovember 16 in an attempt to secure a bilateral deal. Such agree-

ments made prior to the UN summit are regarded as thebuilding blocks to future negotiations, but whether Obamais simply buttering up the Chinese president to accept his

terms remains to be seen. Gordon Brown has highlighted the serious-

ness of the December talks and proclaimed thepotential future of killer heatwaves, floods and

droughts to be “catastrophic”. This is the lastchance for negotiations before such effectsbecome unavoidable and with the oppor-tunity to drastically change the environ-mental stage, groundbreaking legislation

is vital. Whether richer countries choose touse their increasingly scarce cash to do sowill be critically important to the future ofour planet. �

The Copenhagen summit means nothing less than crunch time.Speeches have been glossed and promises made in this year’s runup to the UN Climate Change Conference, with each countrywanting to seem the most ambitious. December is fast approach-

ing though, and smiles are quickly fading as the reality sets in and financialcommitments need to be made.

Following President Bush’s complete rejection of the 1997 Kyoto proto-col, now is the time for America to stand up and set an example to the rest ofthe world. President Obama has reiterated time and time again his intentionsto reduce 80 percent of carbon emissions by 2050, but putting his money wherehis mouth is seems to be his biggest sticking point.

Developing countries, such as China and India, believe it is the responsi-bility of wealthy countries to not only set an example, but also to provide

hundreds of billions of dollars to help them adapt to the effects ofcarbon emissions. UK Prime Minister Gordon

Brown recently announced thatfunding of $100 billion a year,each year until 2020, was neededfor this to be successful. But with

each country still in a state of re-covery from the recession, devel-

oped nations are lookingincreasingly reluctant to

part with their cash.

NATALIE BRANDWEINER looks at the emerging issues in the run-up to the United NationsClimate Change Conference in Copenhagen in December.

Getting serious about climate change

124

BACK SECTION_COMMENT:13 July 6/11/09 13:31 Page 124

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IN THE BACK126 REGIONAL FOCUS: DENMARK

A Scandinavian country located in Northern Europe, Denmark has been called the “happiest place in the world,” as well as its capital, Copenhagen, being named the most livable city. Its fi ve million citizens enjoy all the benefi ts of living in a country with strong social programs, as well as that of an environmentally conscious community.

Denmark is ranked as the 10th greenest country in the world; his-torically it has been a campaigner and activator of environmental pres-ervation, establishing a Ministry of Environment in 1971 and being the fi rst country to make legal an environmental law in 1973. It is a signing member of international agreements such as the Climate Change-Kyoto Protocol, the Antarctic Treaty and the Endangered Species Act.

Despite Denmark being the fi rst European country to experience the eff ects of the recession, its recovery has been fast. Experts in the Danish business believe the route out of the recession lies in the link between fi nance and environmental policies, which also provide an opportunity for the country to further realign itself with environmental goals. Amalienborg Palace,

Copenhagen

Setting the standard for green living, Denmark has been selected as the host for the UN Climate Change Conference in December.

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IN THE BACK127REGIONAL FOCUS: DENMARK

Danish Prime Minister Lars Lokke Rasmussen at the

World Business Summit on Climate Change, May 2009

The Little Mermaid statue in Copenhagen

Green city guide: CopenhagenAs the country’s capital, Copenhagen is regarded as being one of

the most environmentally friendly cities in the world, receiving the Eu-ropean Environmental Management Award in 2006. Comprised of 700 cleantech companies and 46 research institutions, the city is described as a cleantech cluster and the spearhead of the bright green environ-mental movement, an ideology founded on the belief that the union of technological change and social innovation is the most successful path to sustainable development.

December 2009 will see the long awaited UN Climate Change Conference take place in Copenhagen, where the world’s leaders will be discussing, with a plan to formulating, action to mitigate climate change. It is hoped that Copenhagen will set an example of a bright green envi-ronmental city.

Utility companies of DenmarkDONG energy procures, produces, dis-

tributes and trades energy and is Denmark’s leading energy company. It has market shares of 49 percent on electricity produc-tion and 35 percent on heat production and owns production facilities across Denmark, Germany, Norway and the UK. It is com-mitted to renewable energy and operates hydro and wind power in Norway.

Energinet.dk is an electricity and natural gas transmission operator. It is state owned and was formed in 2005 following the merger of power grid operators Eltra, Elkraft System and Elkraft Transmission. Th e company owns and operates a 400 kV electricity transmission grid and is also the co-owner of the power interconnections with Sweden, Norway and Germany.

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IN THE BACK128 PHOTO FINISH

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

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