P&E US 7

HELLO SUNSHINEBrad Collins brings solar energy into the limelightPage 40

THE FIFTH DIMENSIONWhy energy effi ciency is the most important fuel sourcePage 34

PLUGGED INHow electric cars came back for a new ridePage 96

BLAST FROM THE PASTNuclear lessons help build AEP’s safety programPage 76

Boonor

Energy savior or elaborate smokescreen: why the concept of clean coal has divided the nation. Page 26

www.nextgenpe.com • Q3 2009

Cover.indd 1 19/6/09 15:52:33

Wind PoWer industry Chooses the Pi system

Why They Use The PI sysTem

the Pi system has become the industry standard for enterprise-wide visibility into operational and business data for wind power:

• 9 of the top 10 wind power producers in the North American wind power generation field already use the PI System. Next year it will be 100%.

• 17 of the top 20 wind producers worldwide use the PI System

• In the US market 20,000 MW’s out of a total of 22,803 MW’s are generated using the Pi system

Iberdrola, s.A.

“We have now successfully integrated OSIsoft’s software solution as a means of effectively managing the enormous amount of wind data that we process, as well as meeting the requirement to have a system with the capability of growing with us.”

Gustavo moreno GutierrezIberdrola CORe manager

enXco: Remote Assets, Varied Vendors - But a single solution

enXco Service Corporation’s Operations Control Center (oCC) uses the state of the art Pi system™ to operate and monitor over 2600 turbines, totaling 3.9 GW of power, from manufacturers such as Gamesa, GE, Mitsubishi, NEG Micon, REpower , Siemens, and Vestas. this nerC-compliant state-of-the-art facility allows enXco to manage re-mote assets from varied vendors with a myriad of legacy and modern it and turbine technologies.

EmpowEring BusinEss in rEal TimEPI INfRAStRUCtURE fOR thE ENtERPRISE

www.osisoft.com

Osisoft.indd 2 19/6/09 13:48:50

the Pi system from osisoft

VIsIBIlITy Of GeneRATIOn, TRAnsmIssIOn And dIsTRIBUTIOn AsseTs In ReAl TImefor more than 25 years, utility companies and manufacturers have trusted OSIsoft

and relied on the Pi system as a mission critical part of their enterprise-wide energy

and asset management strategy. More than 14,000 global customers rely on the PI

System. they use it to get visibility into their operations, boost performance, perform

enterprise and regulatory reporting, improve profitability and mitigate risks associated

with managing diverse generation, transmission and distribution asset portfolios.

the PI System, provides 24/7 real-time high resolution data, as well as actionable

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while meeting corporate responsibilities for compliance reporting and energy

conservation. Because users of the PI System can see what is happening in real time,

they make better informed decisions based on real time date and events and report

substantial benefits:

enVIROnmenT, ReneWABle And COnseRVATIOn

• Users can measure and monitor energy and other resource consumption, conserve

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• Most owners/operators of wind generation assets leverage OSIsoft’s PI System to

accomplish this

POWeR GeneRATIOn

• the PI System enables a utility to optimize plant operations, reduce startup costs,

increase revenues

• Approximately 60%% of the average power generated daily in the USA is monitored

by Pi systems

TRAnsmIssIOn & dIsTRIBUTIOn

• An integrated view of the distribution grid from operations to end user enables

better utilization of assets and optimization of load balancing - a fundamental piece

of the smart grid

• 100% of the ISOs as well as 50% of the RtOs in the USA leverage the PI System

eneRGy effICIenCy

• Efficiency improvements and performance benchmarking reduce overall energy use

OSIsoft’s PI System is a critical foundation for successful implementation of power

generation applications. the PI System is a flexible, powerful and continually growing

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…TO An enTIRe seRVICe AReA

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MSE_DPS.indd 2 19/6/09 13:23:10

Wind and solar power are unpredictable. Rapid changes in output cause grid instability. The use of conventional carbon-based generation, such as gas and

diesel turbines, manages the instability today. But it won’t be able to support the aggressive goals outlined by state renewable portfolio mandates tomorrow.

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releases or absorbs power from the electricity grid to avoid instability. If needed, the ALTI-ESS continues to release or absorb power until

conventional generation has suffi cient time to ramp.

The ALTI-ESS is a breakthrough in energy storage technology that enables utility-scale renewable integration and keeps the hope of a green future alive.

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Without energy storage, renewable integration isn’t so green.

Altairnano.indd 1 18/6/09 14:24:46

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diesel turbines, manages the instability today. But it won’t be able to support the aggressive goals outlined by state renewable portfolio mandates tomorrow.

Only fast-response solutions like Altairnano’s Energy Storage System, or

ALTI-ESS, can successfully mitigate renewables’ unpredictability. Responding within milliseconds to rapid shifts in renewable generation, the ALTI-ESS

releases or absorbs power from the electricity grid to avoid instability. If needed, the ALTI-ESS continues to release or absorb power until

conventional generation has suffi cient time to ramp.

The ALTI-ESS is a breakthrough in energy storage technology that enables utility-scale renewable integration and keeps the hope of a green future alive.

Download a complimentary whitepaper, “Mitigating the Unpredictable

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your renewable generation goals.

Without energy storage, renewable integration isn’t so green.

Altairnano.indd 2 18/6/09 14:24:46

Accenture.indd 1 19/6/09 13:52:01

Why has the concept of clean coalsparked such debate?

A rich seam ofdiscontent

Once upon a time, coal was king. It

heated our homes and energized our

factories, and the mines provided em-

ployment for thousands of people. It

literally powered our lives.

Then we became more aware of what we

were doing to our environment. We discovered

the dangers of emitting CO2, depleting the ozone

layer and increasing global warming. As we strove

to clean up our world, coal became the bad guy.

Now things are swinging around again.

Desperate to reduce our dependency on foreign

oil and make use of our still abundant reserves,

the Obama administration is once more looking

to coal for answers.

As part of his election platform, President

Obama pledged to deploy clean coal technolo-

gy. Energy Secretary Steven Chu, who had been

less than positive about coal before his nomina-

tion, was forced to backtrack, and now agrees

that clean coal is worth pursuing.

On the other side of the debate, environ-

mental groups claim that the big coal-burning

truth falls somewhere in the middle. No, we

should not single-mindedly pursue clean coal at

the expense of other renewable energy sources.

But neither can we afford to ignore it completely.

As our environmental situation worsens, we must

investigate every option available to us.

To keep abreast of this and the many other

relevant issues covered in this edition – including

how improving our energy efficiency could help

us beat both global warming and the recession,

the latest on plug-in hybrid vehicles, and the chal-

lenges of serving customers in remote regions –

visit our website at www.nextgenpe.com. We’ll be

sure to keep you on top of developments in the

great clean coal debate as well. n

Marie Shields Editor

utility companies are using the concept of clean

coal as a smokescreen to hide their own inaction

on environmental issues; that they are engaging

in a high-level – and expensive – PR campaign,

with a lack of investment in research to back up

their words.

It’s easy to see why companies whose in-

come depends on burning coal would feel

threatened by its potential disappearance. But

there is definitely money going into clean coal

research: at the DoE’s National Energy

Technology Laboratory, researchers are busy

chasing the goal of creating 90 percent CO2 cap-

ture with 99 percent permanence.

And in June, the federal government an-

nounced it was reviving FutureGen, the $1.6 bil-

lion initiative to create a coal-based power plant

that will use new technology to reduce green-

house gas emissions. The project had been

mothballed by the Bush administration, osten-

sibly due to cost overruns.

So will clean coal be our salvation or our

downfall? As with most contentious issues, the

Editor’s note7

“We believe there is [such athing as clean coal]. Webelieve the technology’s there.We believe that it’s scalable,and that’s exactly what weintend to do” Michael Morris,CEO, American Electric Power(Page 26)

“We refer to energy efficiency asthe fifth fuel. What we’re trying todo is change the paradigm thatexists within our industry” DougEsamann, SVP Strategy andPlanning, Duke Energy (Page 34)

“The massive deployment ofrenewable generationenvisioned by the Obamaadministration cannot occurwithout a renewed investmentin transmission infrastructure”Denise Bode, CEO, AWEA(Page 94)

ED NOTE:temp text 22/06/2009 10:33 Page 7

Numerex AD:euro 2/2/09 10:42 Page 16

76

Contents9

When the stars alignBrad Collins on why solarenergy’s time has finally come

40

26

34

COVER STORYThe carbon questionWhy we can’t agree on clean coal

Lessons learnedNuclear’s mistakes have becomethe backbone of AEP’s safetyprogram

Ramping up thefifth fuelHow Duke Energy ispouring everythinginto energy efficiency

CONTENTS:june09 19/06/2009 15:26 Page 9

SMART GRID

48 We built this cityMike Carlson on how Xcel Energy is pioneering

the Smart Grid City in Boulder

58 Opportunity knocksMarcus Torchia explains why this is the ideal

time for smart grid implementation

66 The cutting edgeWhy Austin Energy is at the forefront of smart

grid development

72 The truth about smart gridHassan Farhangi reveals its secrets

RENEWABLES

80 Store and deliverAEP’s Ali Nourai examines the challenges of

energy storage

88 Reliable sourcesPSE&G’s renewable strategies for a cleaner,

brighter future

94 Transmission propositionAWEA CEO Denise Bode offers the case for new

transmission infrastructure

96 Electric renaissanceWhy plug-in hybrid cars are on the rise again

100 Our nuclear futureDavid Hill stresses the importance of nuclear

power in becoming carbon-free

104 TeamworkHow Northwestern University is helping energy

and sustainability to work together

ROUNDTABLE DISCUSSION

52 Smart gridWith Sharon Allan of Accenture,Mae Squier-Dow of CURRENT Groupand Lee Ayers of OSIsoft, Inc.

66

96

48

P L A T I N U M S P O N S O R INDUSTRY INSIGHT

32 Thierry Perchet, HuntsmanAdvanced Materials85 Jeff Brunings, Altairnano86 Ron Potter, TeamQuest

EXECUTIVE INTERVIEW

38 Sharon Fortmeyer-Selan,SunGard Energy Solutions56 Philip Mezey, Itron92 Dana Zentz, Summit Power

Mike Carlson

Andres Carvallo

Electric renaissance

Contents10


106 Red, white and greenThe government’s role in making America

more energy efficient and environmentally re-

sponsible

CUSTOMER OPERATIONS

108 Keeping up appearances Val Jensen explains ComEd’s sociological ap-

proach to understanding customer behavior

114 Northern exposureThe challenges of serving customers in

Canada’s far north

ASK THE EXPERT

55 Dave Roberts, OSIsoft, Inc.64 Brian Deaver, CURRENT Group 103 Nancy Hartsoch, SolFocus, Inc.112 Patrick Carberry, Bottom LineImpact

108

88

114

118 Comment: G20120 Events122 European focus124 Travel: Germany126 In review128 Final word

IN THE BACK

German efficiency

G20

Reliable sourcesNorthern exposure

Keeping upappearances

Contents11


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Editor MARIE SHIELDSManaging Editor BEN THOMPSON

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CREDITS NGP+E7.indd 12 19/6/09 15:11:21

Wavecom AD:euro 2/2/09 10:47 Page 21

FrontlineTHE BRIEF14

CHINA’S GREENDREAM

cles, well in advance of the

Westernworld.

Rather than justmak-

inggreenproducts,

Chinawill nowbe

implementing them

inabid to reduce

itsnotoriousstatus

asamajorproducer

ofgreenhousegases.

ZhangXiaoqiang,Vice

ChairmanofChina’sNational

DevelopmentandReform

large carbon footprint.

However,making a large slice

of its economy green is not

necessarily a new strat-

egy for the country.

China alreadymanu-

facturesmost of the

world’s solar panels

andwind turbines

and is already techno-

logically ahead in produc-

ing innovative energy storage

batteries for plug-in hybrid vehi-

Will be invested inenvironmental

programs in thenext 10 years

$200billion

CHINAHASSTATED that its cabi-

netwill releasedetails very soonof

a ‘newenergy’program that is pre-

dicted to see it challengePresident

Obama for the title of global leader

in climate change.

The planwill be a long-term

commitment. It was reported in

both Chinese and international

media that $200 billion is due to

be invested during the next 10

years in environmental programs

aimed at reducing the country’s

In a bid to catch up withWestern environmental

attitudes, China haspledged to increase its

renewables program, withthe aim of matching

Europe by 2020.

UPFRONT NGP&E7:nov08 19/6/09 15:50 Page 14

FrontlineTHE BRIEF 15

technologies in theseareas,” said

theNationalDevelopmentand

ReformCommission’sChairman,

ZhangPing. “So the twocountries

canachievewin-win results

throughclosecooperation.”

Zhang said that in recent

years China and Japan have been

actively collaborating on energy

and environmental conservation.

The two Asian giants have estab-

lished an annual forumon the is-

sues.Many business-level

projects are signed via the plat-

form, according to Zhang.

TheUShasplacedcontinuous

pressureon theChinesegovern-

ment toactmore to cut its

CO2emissions.

However, following

themost recentUN

leadership roundup

toencourageprelimi-

nary climate change

talksbeforeCopenhagen

inDecember, theUShas

scaleddown itsdemandsonChina

andadvised that instead itwould

need tocommit toenergyefficien-

cy standardsbutwithout specific

targetfigures.

Only theworld’sdeveloped

superpowers, including theUS,will

bepressured toadhere towhat is

expected tobeaspecific targetof

80percentby2050.TheUS’previ-

ous refusal toenter theKyoto

agreement thatwas formed tocut

carbonemissionsmakes its recent

commitmentunder theObamaad-

ministrationa radicalu-turnonen-

vironmentalmatters.

The relationship between

China and the US regarding cli-

mate change is critical for setting

a blueprint for smaller, less-devel-

oped countries.Whether this is a

demonstration of an improve-

ment in international relations or

simply a race to become the

world’s greenest superpower re-

mains to be seen.

ment. “Collecting environmental

taxes from [polluting] companies

is one of the directions of China’s

tax system reform,” says Zhang

Lijun, Deputy Head of the

Environmental Protection

Ministry. “Several departments

are currently working together to

develop research on this issue,

andwhen the conditions are

right wewill launch an environ-

mental taxation system for pol-

luting companies.”

ZhanghasalsosaidChina

will rampup its investment to curb

rural pollution, asenvironmental

problems in thecountry's vast

countrysideare “increas-

inglyprominent.”

Pollution has

been aggravated

in rural areas

due to chemical

fertilizers, pesti-

cides and livestock

breeding, according to a

report published by the

Ministry of Environmental

Protection (MEP) on China’s en-

vironmental situation.

The increasing industrial and

miningwastes in thecountryside

arealso threatening thesafetyof

drinkingwater, the report said.

Zhangsaid thecentralgovern-

mentwouldspendonebillion

yuan thisyearonsubsidies forvil-

lages tosetuppollution treatment

facilities. Last year,500million

yuan fromcentral fundswasdi-

verted tonearly700 rural villages

whereover fourmillionpeople live.

JapanandChinaalsopledged

topromotecooperationonenergy

conservationandenvironmental

protectionduring their second

high-level economicdialogueheld

inTokyo in June.

“Chinaattachesgreat impor-

tance tosavingenergyandpro-

tectingecology,while Japanhas

broadexperienceandadvanced

Commissionwill hasannounced

thatChinawouldnowbeusing

windandsolarpower tohit a20

percent renewable targetby2020.

Thegoal forwindenergy is

100GWand thegoal for solar is 3

GW; thecountry is alsoplanning to

install 100millionenergy-efficient

lightbulbsduring2009.

The Chinese government

says it is also considering levying

taxes on polluting businesses in

a bid to improve the environ-

last year

yuan from centralfunds was diverted

to nearly 700villages

500 million

VITAL STATISTICS

China produces

of its power fromfossil fuels

80%

It produces

fromnuclearenergy

1.2%

China’s annualuse of geothermal

power is

8724GW/hr

It has

barrels of oilreserves

18billion

of wind energycapacity is installed

in the country

764MW

China’s commercialenergy use is

of oil equivalentper capita

904.93kg

A Miao village in ruralChina, where pollution

levels are rising


FrontlineIN MY VIEW16

Natural gas is playing and will continue to play an in-

creasingly important role in building a brighter future.

To meet growing energy needs and to mitigate the

growth of greenhouse gas emissions, wemust develop

and deliver greater supplies of natural gas to markets

worldwide.

Despite the current economic downturn, global energy

demand is expected to be about 35 percent higher in

the year 2030 than it is today. Much of this increase

will come from developing countries as growing popu-

lations seek higher standards of living. About 1.6 bil-

lion people worldwide still are without electricity, and

about 2.4 billion people continue to depend on basic,

carbon-intensive fuels such as charcoal.

Strengthening and enlarging the international mar-

ket for natural gas is essential to fulfilling its potential.

An international market for natural gas – enabled by

partnerships, spurred by technological innovation and

supported by sensible and stable public policy – is

more important than ever.

Wewill need advanced technologies that enable us to

achieve new economies of scale for liquefied natural

gas. And we will need stable, sensible policy frame-

works that encourage long-term investment.

In order to bring required new energy supplies to

market, our industry must commit to enormous, long-

term, capital-intensive and technologically sophisticat-

ed projects. The International Energy Agency estimates

that cumulative investment in global energy supply

and infrastructure needed to the year 2030 will exceed

$25 trillion.

Thanks to our solid partnership and combined ef-

forts,Qatar Petroleum and ExxonMobil have found in-

novative solutions to improve offshore production; the

processing, transportation and sale of LNG; domestic

gas supply; and petrochemical operations.

By increasing the availability and affordability of nat-

ural gas, we are diversifying the world’s energy portfo-

lio.We are strengthening global energy security. And

with increased natural gas production we are bringing

to market a cleaner-burning fuel source.

From a speech given in Qatar, March 2009

REX TILLERSON, Chairman andCEO, Exxon Mobil Corporation


FrontlineWHAT’S NEW 17

DETERMINED to green all aspects of society,

the federal government has launched a $4

billion plan to create environmentally friend-

ly public housing for America’s low-

income citizens.

Vice President Joe Biden

announced the green project

plans during a speech in

Denver, stating the scheme

will replace windows, insula-

tions and light bulbs in those

areas regarded to currently be a

carbon eyesore. The project is expected to

direct $50 million to those areas across the

country that have taken the worst blows of

the recession.

The project is also expected to increase

the number of those working in the ‘green

GREENER LIVING

ARCTIC POLLUTANTS

FAST FACT

Over the past25 years, the

average annu-al Arctic seaice area has

decreased by

5%

NOW

INDP

OWER

collar’ sector. Green collar champion Van

Jones announced that the investment into the

green housing would consume 40 percent of

the budget that was set aside for green

schemes in government buildings.

The economic stimulus package is

receiving green treatment in the roll-

out of the recovery plan, and

Obama’s strategy to create five

million new green collar jobs

will incorporate various

schemes for the target to be

reached.

Although a huge effort is being

made on behalf of the government, building

renovations will also be contributed to by

those receiving the environmental up-

grade. Homeowners will be able to choose

to become carbon friendly by simply ticking

an option box on their utility bills.

EARLY JUNE saw the convening of some of

the world’s most learned scientists at the

University of Hampshire to discuss key find-

ings from a study attempting to understand

‘short-lived’ airborne pollutants in the Arctic

and how they contribute to the dramatic

changes currently occurring in the climate-

sensitive region.

The study, named POLARCAT, was a

two-year campaign conducted to focus on

the transport of pollutants

into the Arctic

from the lower latitudes. One surprise

discovery was that large-scale agricultural

burning in Russia, Kazakhstan, China, the

US, Canada and the Ukraine is having a

much greater impact than previously

thought.

In addition to the primary problem of

soot, other short-lived pollutants include

ozone and methane. Although global warm-

ing is largely the result of excess accumula-

tion of carbon dioxide, the Arctic is highly

sensitive to short-lived pollutants. Forest

fires, agricultural burning, primitive cook-

stoves and diesel fuel are the primary

sources of black carbon; oil and gas activi-

ties and landfills are major sources of

methane.

IT IS FEARED that

the Obama adminis-

tration’s plans for

renewable energy

will be hindered by

the fact that the

powerful winds of

the Midwest are

dying out. The

Journal of

Geophysical

Research, due to be

released in August,

is expected to re-

port a slowdown in

wind speed that

began almost 30

years ago.

As the

American Midwest

is the world’s

largest producer of

wind power, this is

likely to have a cat-

astrophic effect on

Obama’s Plan for

America if the con-

clusions match the

predictions. The in-

vestment in wind tur-

bines for 2008was

approximately $17

billion. It is believed

the reduction inwind

speed is a result of

climate change.

TheUS governmenthas launcheda

plan tocreateenvi-ronmentalpublic

housing

$4 billion


FrontlineINTERNATIONAL NEWS18

CARIBBEAN GRID

ST.LUCIAELECTRICITYSERVICES

LIMITED(LUCELEC) isgearingup

todeploythefirst full-scalesmart

meteringsysteminthe

Caribbean.St.Luciahasone

powergenerationstationand

sevensubstationsthatservice the

entire islandand56,000 cus-

tomers.The island,616sq.km, in-

cludesamixof terrain, including

highmountains,denseforests,

low-lying landsandbeaches,cre-

atingachallengingenvironment

forwireless technology.LUCELEC

deployeda200meterpilotwhich

provedasuccesswithallmeters

communicatingreliablyonaregu-

larbasis toLUCELECoperations.

“LUCELEC’sobjectiveswith the

AMIdeploymentare toreduce

meter readingcostsand increase

operationalefficiency.This in-

cludesreducingsystemlosses

andimprovingourcustomerser-

vice,”saidGilroyPultie,

LUCELEC’smanagerof transmis-

sionanddistribution.

RACING GREEN

LAMBORGHINI’S chief execu-

tive, StephanWinkelmann, has

announced that the Italian

sports carmaker is to create a

greener versionof its notorious-

ly fast-poweredproducts. “We

haveanobjective to reduceCO2

emissions to thegreatest possi-

ble degree,” he explains, stating

the company is aiming tomake

itsmotors “more considerate of

the environment, in termsof

emissions and theuseof re-

sources.”

Thecompanyhasset targetsand

isplanning tocut35 percentof

thecarbonemissionsgenerated

by its carsby2015. Lamborghini’s

carscurrentlyemitmore than

three times theemissions froma

typical saloon,andsoamove to-

wardamorecarbon friendlyde-

sign isgreatlywelcomed.The

motor giant is further donning

its greenhatwith the installa-

tionof 17,000 squaremeters of

solar panels on the roof of its

main factory at Sant’Agata

BolognesenearBologna.

PLANE TAX

AWORLDWIDE CARBONTAX for

aviation travels is gathering

speed to becomea regulation for

the future. The policy has now

drawn support from the

Australian government, whohave

proposed that airlinesmust also

becomeaccountable for carbon

emissions, and a carbon reduc-

tion target to be set on all air-

lines. The issue of airline

emissions is due to be addressed

at the Copenhagen summit in

Decemberwith theUNexpected

to set targets andbe the overseer

of ensuring the targets to bemet.

The scheme is expected to run

similar to the carbon-trading

scheme currently operated byUS

utilities. Under a similar policy,

airlineswould be subject to set

an emission limit, and if adhered

to, given free carbon credits.

Environmental pressure group

Greenpeacewelcomed the pro-

posal, stating that unless such a

deal is struck, ships andplanes

are predicted to consumebe-

tween 50 and 80 percentof the

world’s carbon budget by 2050.


FrontlineINTERNATIONAL NEWS 19

CLEAN COAL

ACOALREVOLUTION isoccurring

across thepond.TheUKEnergy

AndClimateChangeSecretary,

EdMilliband,announced in June

that there is tobenomorebuild-

ingof coalplants in the region

unlessutilitiesadhere to thenew

regulationsof cleancoal, anda

portionof thecarbondioxide

emitted is capturedandstored

underground.

Headvisedthatthenewpolicy is

anattempttosolvethreechal-

lenges:ensuringsecurityof the

country’senergysupply, theneed

tomakesubstantialcuts ingreen-

housegasemissionandthe

growingglobalneedtobuilda

low-carboneconomy.TheUKpoli-

cymakesthecountrythefirst in

theworldtocommit itself totar-

getsandregulationsregarding

coalplantcarboncapture. Ithas

pledgedtocutcarbonemission

34percentby2020;anynewcoal

plantsthataretobebuiltmust

firstprovethatcarboncapture

andstoragetechnologyis inoper-

ationandon100percentoutput.

AIR CAR

THERE IS NOBETTER fuel than

emission-free fuel. French auto

engineer GuyNegre has invent-

ed a car that combats all those

previous problems of carbon

emissions and fuel dependency

– the ‘Airpod’ is powered by

compressed air. The car pro-

duces only a fraction of carbon

compared to that of standard

fuel guzzlingmotors, can travel

65mileswith only a one-minute

recharge and costs just under

$5000. The only drawback to

the air-poweredmotor is its

speed limitation of 30mph.

“Compared to electric cars, air-

powered cars cost a fraction of

the price to buy, they don't need

expensive batteries to be re-

placed every five years or so

and crucially they take only a

fraction of the time to

recharge,” explains Negre.

Negre recently signed a $50

million dollar deal with Indian

car giant Tata to license the

technology, and has also signed

multiple deals tomanufacture

the car in the US, Latin America

and Europe.

SMART CANADA

GEORGESMITHERMAN,the

MinisterofEnergyandInfrastructure

fortheCanadianprovinceofOntario,

joinedcityofBurlingtonMayorCam

JacksonandBurlingtonHydro

Electric Inc. intherecentofficial

launchofGridSmartCity.Theproject

bringstogetherawiderangeof

stakeholdersfromindustrytogov-

ernmenttoworktogethertopro-

motethegrowthofsmartgrids.The

newprogramwillshowcasehow

smartgrids integrateelectricitypro-

ductionanddeliveryandconsump-

tiontoproduceamoreefficient,

reliableandresponsivesystemthat

isbetter fortheenvironment.

GridSmartCitypartnerswillcollabo-

rateonsmartgridprojectsto illus-

tratenewtechnologies.These

projectswillhelptofuel thegrowth

of innovativegreenindustries.Smart

gridtechnologies,combinedwith

advancedcommunicationsandcom-

puteranalytics,willaidgreateruseof

renewablegreenenergysources

fromthesun,windanddevicessuch

aselectricvehicles.


NEW YORK ON TARGET

NEWYORK STATE Governor

David Paterson recently an-

nounced the clean energy goals

for the state. “By 2015, New

York will meet 45 percent of

its electricity needs through im-

proved energy efficiency and

clean renewable energy,” he

said. “We call this our

‘45 by 15’ program.

Now is the time for us

to change howNew

York uses energy. Now is the

time for New York to take an en-

ergetic step toward shaping

our future.”

Patersonsays this effort

will help rebuild thestate’s

economy,meet its energyneeds,

andprotect theenvironment.

CLIMATE COMPROMISE

LAWMAKERS in theDemocratic-

controlledHouseof

Representativessay theyhave

reachedacompromiseagree-

mentonabill aimedat combating

climate change.

CaliforniaRepresentative

HenryWaxman,whochairs the

HouseEnergyandCommerce

Committee, says theagreement

includesa17percent reduction in

greenhousegasemissionsbelow

2005 levelsby2020.Waxmanand

othershadsoughta20percent

cutwithin thesametime frame,but

facedstrongopposition fromlaw-

makers fromstates that relyheavily

oncoal-poweredplants.

Themeasurewouldalsoallo-

catea certainpercentageof free

pollutionpermits for certainbusi-

nesses.TheObamaadministration

and its allieswantbusinesses to

purchasepermits toemit green-

housegasses fromotherfirms that

use lessenergy, a systemknown

ascapand trade.

Source: voanews.com

SUNTECH BETS ON THE US

norealmarketyet, and investments

inup-and-comingcompanies like

NitolSolar,onwhich it just lost$25

million.

Buildingcapacity in theUSis

alsoarisk.With themarketsharply

downduetotherecession, there’s

currentlyaglutofpanels forsale, in-

cludingplenty fromSuntech. If the

marketdoesn’t recoverasquick-

lyasexpectednextyear,

thecompanycouldbe

leftholdingthebag. It

willalsohavetoen-

surethat itsproduc-

tion linesarehighly

automatedtooffset the

higher laborcosts,some-

thingEuropeancompanies like

SchottSolar,which justopenedits

own100megawatt facility inNew

Mexico,maybebetterat.

Butall told,Suntech is likely to

comeoutahead.Withunemploy-

ment rateshigh,statesandlocal

communitieswillbekeentooffer

Suntechbig incentives foraplant.

AndwithSuntechpanelsendingup

abitcheaper, rivals likeSunPower

andSharpcouldbediscomfitedby

themove.

INAREVERSALof theusualorder,

ChinesesolarcompanySuntech

hasannouncedplanstositesome

manufacturingoperationson

Americansoil. Itwill spendthenext

fewmonthsdetermininga location

fora factory,andpotentiallyhave it

inoperationwithinayear,produc-

ingpanels for the localmarket.

Suntech’smove is in-

creasingly typicalof

thesolar industry.

Withmargins

tightandcompe-

tition intense,

cuttingdownon

long-distanceship-

ping(andtheatten-

dantbreakagerate for

panels)canshaveoffenoughof the

price togivecompaniesanedge

over thecompetition.

Suntech is implementingan

increasinglyaggressivestrategy.

Despiteseeing its2008profits fall

to less than$100million, thecom-

pany recently repurchased$150

millionof its seniornotes. It isalso

making riskydevelopmentbets in

thin-filmsolarandbuilding-inte-

gratedproducts, forwhich there’s

FrontlineWHAT’S NEW20

In Q4 2008 of Power & Energy, LLOYD YATES, CEO of Progress EnergyCarolinas, emphasizes the importance of environmental stewardship andthe company’s commitment to energy storage in a service territoryplagued by natural disasters.

Go to www.nextgenpe.com to browse ‘Past issues’ and view the coverstory of the Q4 2008 issue, and read of Yates’ determination to lead autility of “environmental excellence”.

FROM THE VAULT

Suntech’s2008profit

fell to less than

$100million


RECANDSUMMITPOWERhave recently formeda

partnership todeveloputility-scalephotovoltaic

projects in theUSmarket.Thispartnershipwill

bringanexperiencedpowerprojectdeveloperand

financial backing togetherwitha trusted, fully inte-

gratedmanufacturerof high-performancesolar

modules.The joint venturewill focuson thedevel-

opmentof solar electricprojects inurbanenviron-

ments, deployinganurban infillmodel.These

projectswill deliver cost-effective, reliablepower

withminimal risk forutilities.

Summit Power Group is a leading full-scope,

value-added power project development firm.

Currently, Summit is leading the development of

over 2500megawatts of additional gas-fired,

SOLAR DEVELOPMENT PARTNERSHIP

NEW DEMAND RESPONSE THERMOSTAT

HONEYWELLRECENTLY intro-

ducedUtilityPRO,a touchscreen

programmable thermostatde-

signedspecifically forutility-

sponsoreddemand response

programs. Featuringasleekde-

signandsimple,user-friendly in-

terface, thenewthermostatwill

helputilitiesdriveprogrampartic-

ipation,giving themgreater con-

troloverpeakenergyuse.

Utilities alsowill be able to

improve communicationwith

customers through industry-

leading features like customized

textmessages.

“Fromtheclassic round ther-

mostat to today’sprogrammable

touchscreens,Honeywell is syn-

onymouswith temperaturecon-

trol andcomfort,” saidKevin

McDonough,GeneralManagerof

HoneywellUtilitySolutions.

“We’vecombined thisexpertise

withdecadesofdemandre-

sponseexperience tocreate the

UtilityPROthermostat.”

Thechallengewithexisting

demandresponsethermostats is

that theycanbedifficult forhome-

owners toprogramandoperate. In

addition, theydon’tallowutilities to

completely leveragethe linktocus-

tomers thetechnologyprovides.

UtilityPROaddresses these

concernsbyadding the latestde-

mandresponse features to

Honeywell’saward-winning,best-

sellingprogrammable thermostat.

WithUtilityPRO, homeowners

andbusinesses get a thermostat

that is simple to use and effective.

Its intuitive logic andmenu-driven

programming help usersmaxi-

mize energy savingswhilemain-

taining comfort.

Fromautility’sperspective,

the thermostatprovidesa load

control device thathaswide-

spreadcustomerappeal.

In addition,

UtilityPROhelps

improvecus-

tomer serviceby

allowingutilities

to communicate

directlywith

customers

throughcus-

tomized text

messages–an industryfirst.The

thermostat also canprovidecus-

tomerswithbillingdata, including

month-to-datechargesandyear-

over-yearusagecomparisons.

HoneywellUtilitySolutions,a

divisionofHoneywellBuilding

Solutions,has25yearsofexperi-

encedesigningand implementing

demandresponseprograms for

utilities.Thebusinesshas in-

stalledmore thanonemillion load

controldevices todate,which

makes itoneof the largest imple-

mentersof residentialdemandre-

sponse inNorthAmerica. It also

providessmartmetering,anden-

ergyandwaterefficiencysolu-

tions toutilities.

For more information, visitwww.honeywell.com/utility.

Total renewable net generation byenergy source and state

TOP TEN

32

54

1

87

109

6

Washington

California

Oregon

New York

Idaho

Alabama

Montana

Tennessee

Texas

Maine

84,510,483

71,962,775

39,679,286

29,941,296

11,932,329

11,136,248

10,660,546

8,559,249

8,480,231

8,245,783

UpfrontWHAT’S NEW 21

IGCC andwind projects. Please see www.sum-

mitpower.com for an experience and qualifica-

tions summary.

REC is the leadingvertically integratedplayer

in thesolar energy industry.RECSiliconandREC

Waferareamong theworld’s largestproducersof

polysiliconandwafers for solar applications.REC

Solar is a rapidlygrowingmanufacturerof solar

cells andmodulesand isengaging in solar systems

sales in selectedmarket-segments. In2008,REC

had revenuesof$1453million (NOK8,191million)

and$581million inEBITDA (NOK3,279million).

Approximately2400employeeswork inREC’s

worldwideorganization.

Please see www.recgroup.com for more information.


LOCATEDONTHECAMPUSof Iowa

StateUniversity, theinstitute isa

government-owned, contractor-

operatedresearchfacility. Ithosts

morethan250scientistsandengi-

neerswithin itsworkforceandsup-

pliesapproximately18percentof

thefederalsponsoredresearch

fundingawardedtoISU.

The laboratorywases-

tablished in1947by

theUSAtomic

Energy

Commissionasa resultof itsmethod-

ology forproducinghigh-purityurani-

ummetal for theManhattanProject.

Since then, the laboratory has

widened its areas of research to

reflect current interests of national

concern, such as energy re-

sources, high-speed computer de-

sign, environmental

cleanup and restoration,

and the synthesis and

study of new

materials.

FrontlinePROJECT FOCUS22

LOS ALAMOS NATIONAL LABORATORY

MANAGED BY LOS ALAMOS

NATIONAL SECURITY, the in-

stitution is one of the largest

laboratories in the world and

is also the largest employer in

northern New Mexico. It is one

of the two laboratories in the

US where the design of nu-

clear weapons is undertaken.

The laboratory in which

the Manhattan Project begun

duringWWII, its origins lie in

secrecy and it was initially

given the name

of Site Y. The

first nuclear

test was con-

ducted in

Alamogordo, New

Mexico in 1945, and some of

the weapons were later used In

the attacks on Hiroshima and

Nagasaki.

Since that time, Los

Alamos has also been responsi-

ble for the development of the

hydrogen bomb, as well as

other variants of nuclear

weapons. The institute has also

immersed itself into research

into medicine for humanitarian

causes – it is currently testing

three vaccines for AIDS.

AMES LABORATORYBACK TO THE LABTHE US DEPARTMENT of Energyresearches and develops its nationalscience interests through a systemof facilities and laboratories, whichit oversees. The NationalLaboratories and TechnologyCenters are federally funded butadministered and staffed by privatecorporations and universities. In thefirst of an ongoing series, Power &Energy examines the 17 nationallaboratories and the varying ways inwhich they impact the region’senergy usage.


FrontlinePROJECT FOCUS 23

ARGONNE NATIONAL LABORATORY

THE INSTITUTE isoneof theoldest

that comprises theDOE’s 17 labora-

toriesand is the largest in thesize

in theMidwest.Argonnecurrently

hasfivemainareasof research.

It undertakesbasic scientific

research in experimental and theo-

retical science in thephysical, life

andenvironmental sciences. It

alsobuilds andmaintains

scientific facilities for

theuseof scientists

and it is alsoone

of themain

areas inwhich

advanced

study is done

of energy technologies. It is devel-

oping solutions to environmental

problemsandpromoting environ-

mental stewardship, andfinally it

also focuseson contributing tona-

tional security. The labundertakes

work in thenuclear fuel cycle, biol-

ogy, chemistry and systemsanaly-

sis andmodeling.

FERMI NATIONAL ACCELERATOR LAB

LOCATED INBATVIA, near

Chicago, FermiNational

Accelerator Laboratory (Fermilab)

specializes in high-energyparticle

physics and is operatedby the

Fermi Research Alliance. In 2006,

the labwon theDolden Family

Award from the Society of

WomenEngineers forwomen

representingmore than 40per-

cent of theworkforce.

Its research isprimarily fo-

cusedonnuclear,specifically in

thefieldofparticlephysics,and

it’sannouncedthediscoveryof

thetopquark in1995. Inaddition

tohigh-energycolliderphysics,

Fermilab is also responsible for

researchinganumberof smaller

fixed target andneutrinoexperi-

ments.Anewparticlewasdiscov-

eredonSeptember32008at the

DZeroExperimentof Fermilab.

Fermilab is not just prominent

in the scientific field, but alsoplays

host to anumber of cultural events,

suchas classical and contemporary

music concerts andart exhibitions.

OAK RIDGE NATIONAL LABORATORY

ESTABLISHED IN1943,

the laboratory is amulti-program

scienceand technology institute

and is the largestof all 17 labora-

tories.OakRidgeNational

Laboratory (ORNL)encompasses

approximately4300staff and is a

managedbyapartnershipbe-

tween theUniversityofTennessee

andUT-Battellewithaminimum

fundingof$1.4billionannually.

Its research is fo-

cused into sixmajor

areas. Neutron science

incorporates a neu-

tron scattering project.

High-performance com-

puting is another area; the labora-

tory provides themost powerful

computing resources in theworld.

ORNLalso researches biological

systems, a huge effort is fixated

onunderstanding advancedma-

terials. The lab is also amajor re-

search centre for the

development of energy in various

forms and for security.


Companies in this issue are indexed to the first page of the article in which each is mentioned.

Accenture 6, 48, 52, OBCAdica 69Altairnano 4, 85American Coalition for Clean CoalElectricity 26American Electric Power 26, 66, 80American Solar Energy Society 40AmericanWind Energy Association 94Bottom Line Impact 112, 113British Columbia Institute ofTechnology 72Center for American Progress 26ComEd 108Conergy AG 91Control4 48CURRENT Group 48, 52, 64, 65Cyveillance 116DTN/Meteorlogix 75Duke Energy 34

Energy Storage and Power LLC 82General Motors 96GridPoint 48Honda 96Honeywell International 21, 60Huntsman 32, 33Hydro One 114Idaho National Laboratory 26, 100IDC 58ISEN 104Itron Inc. 56Landis + Gyr 48Lixar 48Millennial Net 63Meettheboss 127MSE Power Systems, Inc. 2NETL 26Numerex Corp. 8OSIsoft IFC, 52, 55

PSE&G 88REC Group 21, 92, 93Schweitzer Engineering Laboratories 48Sensus 70Sierra Club 26SolFocus, Inc. 103SunGard Energy Solutions 38, 39Tantalus 47TeamQuest Corporation 86, 87, IBCToyota 96Ventyx 48Wavecome 13World Coal Institute 104Xcel Energy 48

SEVERALTOPGOVERNMENTclimate changescientists

recently releasedanewreportwarning that theeffectsof

globalwarmingwill becomemoresevereunless the

Obamaadministration takesactionquickly.

For years, scientistshave talkedabout the threatof

risingsea levelson remote tropical islandsandmelting

ice in thepolar regions.Butanewreportby theGlobal

ClimateResearchProgrammakes the threatof global

warmingpersonal.

“Climate change ishappeningnowand

it’shappening inourown

backyards, and it

affects thekinds

of thingspeo-

ple careabout,” says JaneLubchenco. Lubchenco is

theheadof theNationalOceanicandAtmospheric

Administration.Shesays the reportpresents scientif-

ic evidence thatwill informpolicymaking.

The report, compiledbymore than30scientists

at 13governmentagencies,describesclimate-related

changes that arehappening in theUnitedStates.

TomKarl,wasaprincipal authorof the report.

“USaverage temperaturehas risenby 1.5degrees

Fahrenheit over thepast50years,”hesays. “We’ve

hadmore rain coming inheavydownpours that can

lead toflooding. Lesswinterprecipitation is falling

as snow,moreas rain.”

The report, commissionedby theWhite

House,uses climatemodels toproject

whatwill happen if action isnot taken to

reduce thecarbondioxideemissions that

most scientists say causeglobalwarming.

It predicts increasinglydeadlyheatwaves,

andhigher incidentsof asthmaanddis-

eases transmitted through thewaterandby

insectsand rodents. Source: voanews.com

THECARBONQUESTIONAre we facing a coal-free future?

ENERGYDEVELOPMENTSAn update on the energyuse of EU countries

TIMEFOROPTIMISMDoug Esamann raisesthe bar on energyefficiency

DON’T MISS...

26

34

122

COMPANY INDEX Q3 2009

URGENT ACTION NEEDED

FrontlineCOMPANY INDEX24


Find Out MoreContact NGU at 212 920 8181 Ext 347www.ngusummit.com

A Controlled, Professional & Focused EnvironmentThe NGU Summit is an opportunity to debate, benchmark and learn from other industry leaders. It is a C-level event reserved for 100 participants that includes expert workshops, facilitated roundtables, peer-to-peer networking, and coordinated technology meetings.

A Proven FormatThis inspired and professional format has been used by over 100 CIOs and CTOs as a rewarding platform for discussion and learning.

The Next Generation Utilities Summit is a three-day critical information gathering of C-level technology executives from the utilities industry.

Next Generation Utilities Summit

Ritz Carlton, Marina Del Rey • California

13 – 15 October 2009

“Terrifi c opportunities to ‘Speed Date’ potential business partners in a cost effective, highly effi cient format which is run very well.”Rudiger Wolf – VP & CIO, Puget Energy

“Excellent format, highly productive and informative with a great mix of current state and future state reality based research and experience.”Charlie Ward – IT Enterprise Architect, Duke Energy

FP_NGUSummit_California_Oct-09.indd 25 19/6/09 15:28:32

on the face of it, clean coal seems like an ideal answer to our energy

woes. Since a large part of our energy production still comes from coal

and is likely to continue to do so for the foreseeable future, why not in-

vestigate ways of making it less harmful to the environment, and more

efficient into the bargain? That way, we can lessen our dependence on

foreign oil, help protect the planet and save money at the same time.

The clean coal concept does have friends in high places. As part of his election platform,

President Barack Obama pledged to deploy clean coal technology, saying that, “Carbon cap-

ture and storage technologies hold enormous potential to reduce our greenhouse gas emis-

sions as we power our economy with domestically produced and secure energy.”

Energy Secretary Steven Chu, who had been quoted several times in the run-up to his

nomination as saying, “Coal is my worst nightmare,” was forced to backtrack during his con-

firmation hearing to calling coal merely, “A pretty bad dream.” He also went from being “not

very optimistic” about the feasibility of clean coal, to seeing it as a “significant challenge.”

When asked in a subsequent interview if clean coal was feasible, his answer was, “Yes.”

During the hearing, Chu also said, “There are . . . some people in the United States who

feel perhaps we should turn off coal. But even if we do it, China and India will not. And so we

are in a position to develop these technologies so that the world can capture carbon.”

26 www.nextgenpe.com

COVER STORY

The

carbonquestion

Carbon sequestration and theconcept of clean coal are not newideas. So why are they suddenly

arousing such polarized opinions?Marie Shields investigates

COVER STORY v2:18oct 22/06/2009 10:16 Page 26

27www.nextgenpe.com?


Technical Analyst, explains, this funding is spread across several areas.

“There’s a newer program that focuses specifically on carbon capture from

the existing power plants, which includes a piece that looks, for example,

at water issues related to that.

“There’s another program called the Clean Coal Power Initiative that

funds large commercial-scale demonstration projects, which is being man-

aged for the DoE by NETL. We’re currently evaluating applications for the

third round of that program, which is focused exclusively on carbon cap-

ture and storage. Funding for that is appropriately $600 million.”

OppositionThere’s obviously a lot of money being put into carbon capture and

storage research, by the government at least. And yet clean coal’s oppo-

nents would claim this is no better than pouring money down the drain.

According to environmental groups and left-leaning think tanks, clean coal

is nothing more than an elaborate smokescreen – a neat way of making

consumers believe the big utility companies are doing something to com-

bat climate change. This leaves the companies free to continue burning

coal, which in its traditional form is universally acknowledged to be both

dirty, and most politically incorrect of all, non-renewable.

InvestmentIn addition to giving the idea lip service, the government has also taken

action. One example of this is FutureGen, a $950 million initiative launched

in 2003. In its original incarnation, FutureGen was to create a coal-based

power plant in the small Illinois town of Mattoon, which would have used

new technology to reduce greenhouse gas emissions. But costs for the pro-

ject spiraled, and it was mothballed by the Bush administration last year.

When the new government took over, it said that the project would

be restructured. In March, Secretary Chu said that he intended to go for-

ward with FutureGen “in some modified way.” Then in June, the govern-

ment announced it was reviving the project, at the same time upping the

price tag to $1.6 billion, with $600 million of that coming from a coali-

tion of 20 big companies, and the remaining $1 billion from the $3.4 bil-

lion of stimulus package money conveniently allocated to clean coal

technologies.

At the DoE’s National Energy Technology Laboratory, considerable ef-

fort is also going into investigating new coal technologies. The carbon se-

questration program began here in 1997 with $100 million in funding

appropriated by Congress. R&D funding for the program in the current fis-

cal year is $150 million. As Tom Sarkus, NETL’s Senior Manager and



According to an investigation by 60 minutes, as quoted on the website

of the liberal political policy think tank Center for American Progress, big coal

companies talk a lot about investing in clean coal research, but don’t put their

money where their mouths are. The CAP article accuses the American

Coalition for Clean Coal Electricity (ACCCE), which it calls a front group for big

utility companies, of spending large amounts of money on advertising the

idea of clean coal, but very little on developing the technology to support it.

It says ACCCE is determined to convince Americans that clean coal is the so-

lution to global warming, at the expense of other, renewable alternatives.

CAP representatives did not respond to P&E’s request for an interview.

Michael Morris, CEO of American Electric Power, an ACCCE member, in a re-

cent interview with P&E’s sister media channel, MeettheBoss TV, was more

forthcoming. When confronted with the idea that coal companies are en-

gaged in very high level PR around clean coal and that the investment is

not there to back up the words, he responded: “That may be true of a lot

[of companies], but it surely isn’t true of American Electric Power. This pro-

ject at Mountaineer has got a price tag of around $100 million, and we’re

deeply invested in that. The ultimate expansion now to the first commer-

cial scale will be on the order of $400 million, so we’re working with our

checkbook rather than with our mouths.

During the same interview, Morris also pointed out that, “The carbon

capture and storage project that we’re doing in West Virginia in our

Mountaineer Station is essential to the ongoing debate of whether there

is or isn’t such a thing as clean coal. We believe there is. We believe the

technology’s there. We believe that it’s scalable, and that’s exactly what we

intend to do. Internally we are focused on these are very important issues.

We need to continue to fund them as we go. And again, at the end of the

day it will serve our customers, the communities where we do business and

our shareholders as well.”

The project Morris is referring to is AEP’s Mountaineer Carbon Capture

and Storage Project, which comes online later this year, with the aim of re-

moving 100,000 and 300,000 tons of CO2.

PartnershipBack at NETL, Tom Sarkus is more concerned with ensuring the long-

term safety aspects of carbon sequestration than he is with the political

storm surrounding it. One of his team’s objectives is to create 90 percent

CO2 capture with 99 percent permanence. “We’ve defined that as mean-

ing that there would be less than one percent leakage after 100 years,” he

says. “And all to be achieved with no more than approximately a 10 per-

29www.nextgenpe.com


cent increase in the cost of electricity when you compare it to a non-se-

questered system.

“We want to develop these technologies and mitigate concerns over

climate change. But the last objective tells us we have to do this in a way

that is at least cost competitive.”

In addition to its own internal research, NETL operates within seven

government industry partnerships that span different geologic regions of

the United States and Canada in order to characterize and develop carbon

sequestration opportunities. Taken together, theses seven partnerships

consist of more than 350 different organizations, including state-level gov-

ernment agencies, universities and private industry.

The member organizations include 40 states, three American Indian

nations and four Canadian provinces. There are also nine foreign govern-

ments, not counting the United States and Canada, that are participating

in the projects in these regional partnerships. Sarkus explains that inter-

national governments are involved because, “There’s a saying that all pol-

itics is local, and the geologists tell me that all geology is really local. While

there is an aspect of that that’s true, there are also some things you can

learn from observing and participating in projects in other regions or even

in other countries.”

Despite NETL’s obvious commitment to making carbon sequestration

work, there are still those who oppose clean coal on every front. The

strongest opposition has come from environmental groups, particularly

those belonging to the Beyond Coal Campaign, spearheaded by the Sierra

Club. According to the Sierra Club’s website, the Beyond Coal Campaign is

working to: “Stop the construction of dirty, new coal plants by educating

investors and decision-makers about the economic and environmental

risks of investing in new coal; retire old plants that are the worst contribu-


Steven Chu

There are three technology platforms used to

generate electricity from coal. The first is a

traditional boiler, coupled up to a steam turbine and

a generator. The second is fluidized bed combustion,

which has a much higher level of fuel tolerance. It can

utilize grades of fuel that would otherwise have to be sent

to landfill or disposed of elsewhere.

The third is integrated gasification combined cycle

(IGCC). There are currently about 30 IGCC plants

worldwide. Fifteen of those operate on petroleum liquid

and gaseous fuels. Of the remaining 15, nine of them

operate on petroleum coke and six of them are designed

to operate on coal: three in Europe, two in the United

States and one in Japan.

HOW TO GET ELECTRICITY FROM COAL


tors to health-harming soot and smog pollution and replace them with

clean energy solutions; and work with communities to protect our moun-

tains, lands and waters by keeping our vast coal reserves in the ground.”

DebateP&E arranged to interview Bruce Nilles, Director of the Beyond Coal

Campaign, but he could not be reached at the appointed time and did not

respond to subsequent attempts to contact him. However, the Campaign’s

stance on clean coal is plainly stated in the Sierra Club fact sheet, ‘The Dirty

Truth About Coal: Why Yesterday’s Technology Should Not Be Part of

Tomorrow’s Energy Future.’ “The coal industry knows it must change or it

will be out of business – that is why it is pushing ‘clean’ coal,” it says. “But,

coal as it exists today is anything but clean.

“The supposedly ‘clean coal’ technologies that have attracted the most

attention in recent years are carbon capture and sequestration (CCS) and in-

tegrated gasification combined cycle (IGCC). As of now, CCS remains an un-

proven technology, and experts disagree as to how long it will take for this

technology to be available for commercial and wide-scale use. IGCC unfor-

tunately emits just as much global warming pollution as other coal plants.”

NETL’s Tom Sarkus becomes quite animated at the suggestion that we

shouldn’t be spending money on investigating new ways of using coal in-

stead of putting it into funding renewable energy sources.

“It’s missing the point,” he responds. “Long term we all recognize that

we have to go toward other sources of energy such as renewables or even

nuclear energy. But that’s very long term and may not happen for 50 or 100

years or more.

“In the meantime the issue is not either this or that, it’s not an either/or

issue. All of the energy experts that I talk to generally come to a consen-

sus that we need all of those forms of energy. We don’t have the luxury of

not using one fuel source in favor of another.

“All of the credible analyses that I have seen say that in order to

achieve any level of stabilization of CO2 in the atmosphere you need to pur-

sue three approaches roughly in equal measure. The first is to start shift-

ing towards less carbon intensive energy sources, not just renewables, but

also sources such as nuclear energy.

“The second pathway is to become more aggressive in pursuing en-

ergy efficiency and energy conservation. And the third category is carbon

capture and storage, in order to preserve fossil fuels as a viable option. The

studies that I have seen generally agree that you cannot achieve climate

stabilization with any one or any two of those approaches. You need to use

all three, in roughly equal measure.”

OptionsSarkus does have a point. Just because CCS is an ‘unproven’ technol-

ogy is no reason not to pursue it. About IGCC, which the Sierra Club fact

sheet describes as “as polluting as traditional coal plants,” Sarkus says,

“Many people feel that IGCC, because it has a combined cycle power plant,

is capable of achieving higher levels of thermal efficiency, and it also pro-

duces a gas stream that is more amenable and economical for CO2 cap-

ture and storage.”

The environmentalists’ biggest beef seems to be with the coal-burn-

ing utilities it accuses of muddying the waters by apparently promoting

the concept of clean coal as if it exists today, and as if it will solve all of

our environmental problems on its own, when it’s obvious that it won’t.

It’s not surprising that companies whose main revenue comes from coal

production and consumption should feel threatened by the idea that this

income source could disappear. But this does not mean that we should

refuse to investigate methods of burning coal in a cleaner, more efficient

fashion.

It can be easy to let the debate obscure the real issues. The United

States still has large, untapped coal reserves. We produce about 20 per-

cent, or 1.1 billion tons, of the world's coal supply – second only to China –

and coal generates about half of the electricity we use. It would be naïve

in the extreme to suggest we can stop burning coal overnight. At the same

time, our environmental situation is becoming increasingly desperate.

Perhaps clean coal, in its perfect form, does not yet exist, but neither

does the technology to use renewable sources such as solar, wind and

hydro to supply enough power to meet our growing energy needs. We need

to pursue every avenue, and this includes developing ways to burn clean-

er coal in the short term, especially if it buys us more time to develop re-

newable options.

The final word goes to Deputy Laboratory Director David Hill of the

Idaho National Laboratory. “If we can solve the carbon sequestration prob-

lem,” he says, “particularly in the US where 50 percent of the electricity

comes from coal and there are enormous coal reserves, that would be very,

very important. I don’t believe we should ever strike an energy source from

the list of potential options on political or other grounds. We don’t have that

option left any more.” n

31www.nextgenpe.com

Tom Sarkus outlines the carbonsequestration efforts currently underway at NETL

Terrestrial sequestration refers to capturing CO2 with

plants and with microorganisms that are generally

present in soils. There’s definitely a place for that. If

we can increase the carbon uptake of terrestrial sinks by

just one percent over the next 50 years our estimate is

that that could store an additional 12 billion tons of CO2.

Geologic sequestration is a larger portion of what

we’re doing at NETL – injecting the CO2 into underground

rock formations. It’s something that is happening now in

other industries but you can draw some inferences by

analogy. One of the options for geologic sequestration is

enhanced oil recovery. Enhanced oil recovery using CO2

flooding is currently being used in the US, in some places

on a fairly large scale.

Another kind of formation that we’re researching is

saline formation because often the sedimentary rock

formations that we want to target contain a brine

formation far more commonly than they might contain

petroleum, oil or natural gas.

TYPES OF CARBON SEQUESTRATION



World energy consumption is forecast

to triple by 2050 – never has the need

to fi nd a new source of power and

energy been greater. New materials science

must also rise to the challenges of the new era

of energy and power generation.

Huntsman research and development

teams in the US, Europe and China are looking

at a range of creative and innovative solutions.

Recently the company won a major award for

two new resin systems for graphite composite

fuel cells for large-scale production of auto-

motive and stationary power applications,

which will be available in late 2009/2010.

These fuel cells have been developed in

partnership with GrafTech International hold-

ings as part of a Department of Energy spon-

sored program. Since the conversion of fuel to

energy takes place via an electrochemical pro-

cess, the process is much cleaner, quieter and

up to three times more effi cient than burning

fuel.

Wind and sunIn the area of wind energy, Huntsman

predicts that the market will continue to grow

extremely rapidly over the next few years. The

European Union has already made the imple-

mentation of wind energy a high priority, with

the aim of generating 20 percent of annual

energy production from renewable sources

by 2020.

Likewise, the US is turning to wind energy,

with an average growth of over 25 percent in

the last two years. Since the start of modern

wind energy technology, Huntsman has

developed a range of adhesives for securing

wind turbine blades. These include new gen-

eration nanotechnology materials based on

truly submicron particles that can form bonds

with dramatically improved fatigue resistance

when compared to traditional solutions.

Solar heating and solar power, each with

their own distinctive technologies, will also

see a rapid increase in usage as we continue to

seek alternative sources of energy. There will

be a massive increase in solar power arrays

to produce electricity from sunlight. In future,

whole areas of roofi ng may have photovoltaic

cells installed, producing a signifi cant propor-

tion of the energy for the building. Since 2002,

the production of photovoltaic electricity has

doubled every two years. This is an area of

growth where Huntsman is actively working

with partners in order to help to improve the

effi ciency and bring down the production

costs of photovoltaic modules.

TransmissionPower transmission and distribution is

another segment to which Huntsman has

contributed with several innovative insula-

tion materials: Araldite HCEP, a hydrophobic

epoxy resin for outdoor insulators, has gained

market share from ceramic insulation because

it enables the manufacturer to produce lighter

weight insulators that are water repellent.

Insulators made of Araldite HCEP show better

toughness, resulting in less damage, and they

need less maintenance and provide high arc

resistance.

Based on the market success of this new

resin, Huntsman has developed a semi-fl exible

version: Araldite S-HCEP, which can be used as

cost-effective housing material for composite

insulators. It provides several technical ad-

vantages compared to liquid silicone rubber;

for instance, it is resistant against bird and

rodent attack. It has high tracking and erosion

resistance and shows much less leakage of

current in salt fog tests. It has currently been

introduced into the worldwide T&D market.

Energy saving in lighting applications is

another main trend in industry. Organic light

emitting diodes (OLEDs) will become the

next generation of lighting. OLEDs are large,

paper-thin, fl exible and lightweight devices,

consuming 70 percent less energy compared

to current light bulbs and providing new

opportunities for design and architectural

integration. Huntsman is developing the im-

portant encapsulation materials and barrier

layers for these devices.

There is no single solution to the many

challenges of future energy harvesting, but

we can anticipate multiple solutions such as

wind, wave, fuel cells and solar cells to see

large scale commercialization on a global

basis. It is certain that these new technologies

will demand new materials – a challenge that

we are prepared to meet.

INDUSTRY INSIGHT

Leading innovation across the energy value chainMeeting the challenges of the next era of energy and power generation. By Thierry Perchet

Thierry Perchet is Global Energy Marketing

Manager, Huntsman Advanced Materials.

He has over 25 years of experience in

engineering and materials science in

composites and adhesives, beginning with

R&D and followed by sales and marketing.

Perchet is now responsible for all Huntsman

global marketing activities in wind power

and electricity management.

“There is no single solution to the many challenges of future energy harvesting”

Huntsman.indd 32 19/6/09 15:41:40

Hunstman.indd 1 18/6/09 14:26:51

President Obama’s pledge to become a world leader in cli-

mate change is certainly not anything new – Asia is already

ahead of the US in its SUV and PHUV manufacturing, France

has a huge nuclear fleet and nationwide smart metering is

being formulated in the UK – and as each country begins to

up the ante in energy efficiency, the US president is certain-

ly adding extra challenges to his already extensive list.

Strategizing in the fast-paced, ever-changing energy in-

dustry requires vast amounts of meticulous planning and a

small amount of risk taking. Energy institutes have been re-

searching the growing risk of CO2 levels for many years, and

as both private and public awareness has been steadily in-

creasing, 2009 is the year for implementation. But as targets

continue to be set, both at a state and federal level, formu-

lating company strategy is critical to ensuring survival in the

coming decades.

The thoughts and processes of Duke Energy have been

formulated into a five-year plan, and Doug Esamann is the

man responsible for that planning. “I have all the web forecasting and for-

ward-looking projections of customer demand, as well as commodity price

forecasting and coordinating the effort at the company to develop the

strategic business plan, ” he explains.

The ‘fifth fuel’Energy efficiency is the flagship of Duke Energy, who has named it their

‘fifth fuel’ concept. Increasing renewables is a major part of the company’s

strategy, but as Esamann explains, the greatest strategy for saving energy

isn’t in building renewable plants, but by wisely using the energy that is al-

ready being produced.

“The fifth fuel concept, is energy efficiency being a much more signifi-

cant part of the resource mix. In the past, we consider the other four fuels

being generated through burning coal, nuclear, gas power or renewable en-

ergy. These are the four ways in which you can actually generate electrici-

ty from those fuels.

“What we refer to as the fifth fuel is energy efficiency and what we’re

trying to do through that is to change the paradigm that exists with energy

efficiency in our industry. We get return on investment from investing in

power plants and that’s a good thing, but in the past, our returns on our en-

ergy efficiency programs are really not calculated in the same way. We get

our money back, we get our cost back, and as a result many utility compa-

nies aren’t really positioned well from a return standpoint to invest in ener-

gy efficiency.”

Energy efficiency has been coined the ‘fifth fuel’ – placing it on a level

playing field with all other sources at Duke. The initiative, ‘Save a watt’, is


A renewed sense of

THE BIG INTERVIEW

A changing trend of environmentally friendly attitudes is becoming a global phenomenon. AsSVP of Strategy and Planning for Duke Energy, Doug Esamann is the man responsible forassigning those attitudes and determining risks, and as the rest of the world carefully watchesthe US energy industry attempt to take a leadership role, this is no easy task.

optimism

“There are30 states or so

that haverenewable

portfolio standardsalready in place”

Esamann ed:18oct 22/6/09 11:01 Page 34

35www.nextgenpe.com

lated, and the company are developing wind fields and selling the output

ofwind farms to various utility operators and suppliers, due to the increase

in renewable standards upon all utilities.

“There are 30 states or so that have renewable portfolio standards al-

ready in place, and somany utilities are looking for themost economic alter-

natives tomeet those standards, andwind has been a very strong player in

thosemarketplaces.Thechallenge for thatwindbusiness is that likemanyre-

newables, it’s very geographydependent, somost of thedevelopment tends

tobe in theareaswhere thewind ismappedoutas thestrongest,which tends

tobeTexas and theupperMidwest –where thebestwind fields are.

So for us here in our regions, either in the Carolinas or in our

Midwestern states, ourwind footprints aren’t nearly as strong, butwe saw

an opportunity to get into the renewables business in a largeway through

acquisitionswhich created that pipeline of development for us that exists,

andwe’re excited aswe seemore pressure to developmore renewables for

the United States,” says Esamann.

HydroelectricThere is also a huge hydro capacity focus. Duke Energy is the second

largest investor-owned hydroelectric operator in the US and uses its capa-

bilities for the management of water resources. The company operates a

dam inbothNorth andSouthCarolina,which is used to create cooling lakes

for its nuclear plants, as well as its coal plant. Energy generation such as

an attempt to change the structure at the regulatory commissions so as to

change the way in which energy is perceived.

“That hasbeenabannerwe’ve carried into the regulatory commissions

at the various states and it’s very different than theway it’s been in thepast,

so it’s been a challenge to change that. The issueswe’re dealingwith today

are in trying to change the regulatory paradigm that exists around energy

efficiency,” he says.

Attitudes and trends towards energy efficiency are changing. Esamann

notes the growing consciousness from Duke’s consumers regarding their

environmental footprint, as well as a general understanding that energy

prices are almost certain to rise.

“We’ve been in a long period of time where rates have been stable to

actually declining on a real basis, and so we need to reinvest in our sys-

tem,” he explains. “This will have an impact of potentially raising the cost

of our product to customers and so that will drive a real desire, in addition

to the environmental desires for customers to becomemore efficient, and

we’re well positioned to do that.”

Wind generationHowever, to ensure everywatt is savedandefficiencymaximized, Duke

is also concentrating its efforts on renewable energy and is currently devel-

oping a number ofwind power generation projects to add to those already

operating. The wind generation business is commercial, rather than regu-

“We’ve done a lot of analysis on carbon and the implications for us, andhow we want to manage carbon, and we’re certainly making efforts today

to put us on a trajectory to reduce our carbon footprint.”


renewable energy.’Ohio is a little different. Ohio is really focusedmuchmore

on ‘Wewant renewableenergy inOhio.’And theyhavea fairly aggressive tar-

get long termwhich creates challenges in andof itself.”

Esamann notes this as being the expense as-

sociated with renewables, as a pose to other al-

ternatives, due to the circumstance of tax credits

creating competition and increasing price, espe-

cially in particular areas where there is a lack of

renewables, such as Ohio.

“For example, wind in Ohio is not a very

highly rated environment for wind generation but

you get less efficiency from the energy you get

out for the investments that you make, and that

makes it more expensive,” he noted. “So those

things couple together to make it very challeng-

ing to try and meet some of the standards, and

we work a lot on this. We work with lots of peo-

ple. We put bids out in the marketplace to try to

get developers to come in and it’s a pretty expen-

sive proposition to implement all this as we sit

here today and look at it.”

As the US continues its push towards amore

self-sufficient state, with the advancement of

technology, will it ever be possible for states to be completely indepen-

dent of imports, or will those challenges be too great? Esamann thinks

it’s possible, providing that the energy is sourced from theWest Rockies

and Texas.

TransmissionOf course, there is the issue of transmission that underlines the ge-

ographic dependency challenges. Using solar and wind sources from the

West is doable; it’s the transmission of it to the East that is the biggest

challenge. Rather than bringing all that energy across land, Esamann

predicts that more than likely the energy will remain in its current mar-

ket, and instead renewable energy will be produced in the East that is

geographically available.

“Our approach is in engaging our customers and essentially using dis-

tributed generation on customer premises as a way to distribute these re-

sources throughoutour system, andwe think thatmakesa lot of sense.You

have to get the right relationship and economic terms negotiatedwith your

customers and in certain cases,most cases, youhave toget regulatory com-

missions toallowyou todo that andbecause it’smoreexpensive, some reg-

ulatory commissions aren’t alwayshappy to approve thosekindsof plans,”

says Esamann.

this is worthless in times of drought, such as in 2007, and can change the

way in which water is used.

“We’ve used the hydro a lotmore as away to ensure thatwehave cor-

rect lake levels and water levels for use of those lakes by the communi-

ty, as well as for our own operations. So we haven’t put a premium on

getting power from the hydro piece as much as we have in using it to

manage the water resources that we have control of. At this point our ex-

pansion of that is really in very small chunks if at all, and so we really

don’t see a significant opportunity to expand the hydro fleet that we have

today.”

Esamann’s reason for limiting the importance of hydrowithin the five-

year strategy is based upon his prediction that hydro is unlikely to have a

large growth trajectory. He explains the challenges

for hydro activitywithin thePacificNorthwest, such

as fish andwildlife impacts; “Iwould expect it to be

used more like how we’re using it, which is a way

to helpmanage thewater resources that are avail-

able to us in the communities that we’re in.”

Geographic challengesHe remains realistic about the implementation

of renewables andbelieves the federal targets of in-

creasing renewable usage is unattainable, again

pointing to the challengesof geographic dependen-

cy. “One of the issues we’ve always had as a com-

pany is that the regionswe serve aren’t really that

rich in renewable energy opportunities,” he says.

“Thewind studies rate the quality of thewind

area by geography, and if you look at the

Southeast and the Midwestern United States

where we serve our customers, it’s not a very rich

environment forwind; likewise solar. You seemany

solar patterns in the Southwest and, to some extent, the far Southeast, so

solar is a reasonable opportunity for us in the Southeast but not as good

economically in the Midwestern region for us.

“We are subject to statemandates right nowof renewable standards.

InNorth Carolina, we have to get to a three percent renewable standard by

2012. We don’t get to 12 percent in North Carolina from a required stand-

point until 2018. And in Ohio, we have a standard that requires us to be at

least one percent by 2012, and again we don’t get to a 12 percent require-

ment inOhiountil the2020 timeframeandbeyond. So that’s reflectivemore

of how states are different in terms of their access to renewables.”

Esamann’s strategy to reach such standards is the reason why he is

focusing on energy efficiency from a primarily business perspective, fo-

cusing on ROI. He hopes a fourth of the target can be met through ener-

gy efficiency initiatives – the acquisition of renewable energy certificates

fromplaces that are not delivery specific to Duke’s territory, with the other

half from sources within the company’s own service territory – reiterating

the challenge of geographic dependency.

He notes the limited access to renewable energy sources and the af-

fectsof this forOhio.“Thegovernors recognize thatwhentheypassedthe leg-

islation here they said, ‘Well, you can get some of it from elsewhere and just

show us that you’ve bought the certificates and that you’re helping support


“We’ve been in a long period of timewhere rates have been stable toactually declining on a real basis, andso we need to reinvest in our system”

DOUG ESAMANN


Smart gridIn order tomake efficient Duke’s own transmission infrastructure, the

company has begun deployment of its smart grid project, using technolo-

gy to capably deal with their customers more closely and respond to the

real time information on the system.DavidMohler, Chief Technology

Officer at Duke, has been configuring what is technologically

feasible for the last few years, and ran a number of pilot

testsbefore compilingabusinessplanwithwhich tobegin

rolling out a large-scale deployment.

“We really started toget excitedabout thepossibil-

ities that the smart grid brings. It’s not automated me-

tering – that’s only a part of it; the real value of it is the

ability to get access to a lot more information.We don’t

necessarily want to handle a lot of information but we

want to be able to use it to bettermanage our system, to be

more proactive about seeing failures in the system and reacting

to thembefore the failure actually happens.

“Wewant to get consumer usage information so thatwe canworkwith

consumers and allow them to get access to different value-added services

that help themmanage their energy cost and usage.We’re all about selling

moreenergy, sellingmorekilowatt-hours –we’re a volumebusiness.Butwe

seeanopportunity in the future throughsmart grid toactually becomemuch

more active,workingwith customers in trying tomanage their energy costs

and their energy usage in amuchmore efficient way.”

Duke currently has approval in the state of Ohio and is moving ahead

with full deployment, a plan consisting of three to four years and resulting

in full smart grid implementation. In Indiana, deployment is in hearing

stages, and following lengthydiscussions, theoutcome looks set tobemore

thanpositive.North andSouthCarolina is continuing forwardbut at amuch

slower pace, due to some of the technology previously placed in North

Carolina. Esamann notes the automatedmeter reading thatwas initially in-

stalled as a cause for slowing up the development, and as a result is now

working closely to deploy the project.

“We really feel that this is a great way to improve reliability, to give op-

portunities for customers tobemoreengagedwithus in termsofmanaging

their energy and as prices go up, as environmental consciousness and

awareness continues with customers, they will be seeking out our help on

these things,” he says.

The future lookspromising forDukeEnergy. Esamannexplains that the

next two to three years is heavily focused on tackling those environmental

issues currently dominating utility targets and theworld’s press. “We really

want to keep the priority on getting energy efficiency – getting the regulato-

ry regimes right, pushingout newprograms toour customers.

“Weseeahugedemandon thepart of our customers for newproducts

and so we want to keep working that issue and finding success in rolling

out those products. We’ve got a couple of states where we’re scaling full

deployment with smart grid, and with the technology we now have, this is

enabledwith a lotmore energy efficiency So those are real focal points for

us,” he adds.

Making renewable energy a reality is the underlining of Esamann’s

strategy, although this is no easy task. The work of renewable suppli-

ers is challenged by the promise of tax equity investors to fund the pro-

jects partnered with utility companies. The current global recession

adds to this difficulty of financing their products, and so Duke is em-

bracing the opportunity to form new partnerships and support those

suppliers in the renewable sphere.

“We also want to move forward with the carbon strategy,” says

Esamann. “We’ve done a lot of analysis on carbon and the implications for

us, andhowwewant tomanage carbon, andwe’re certainlymaking efforts

today to put us on a trajectory to reduce our carbon footprint. Butwewant

to keep working on a more robust strategy and part of that will be depen-

dent upon seeing legislation and what gets included in there, as well as

what things will count towards things like offsets and that type of stuff.

“We’vealsobeenworkinga lotonnuclearandbringing itcloser to fruition.

Wehaveasiteandhavebeenworking throughthenuclearprocesshereat the

NRC and trying to get our permits. We need to go through the regulatory

process in our states. But two to three years fromnow,we’d like to be in con-

structionmodeonanuclear plant, butweneed tokeepworkingand clearing

hurdles tomake that happen.

“If you lay on top of that we still want to educate customers and other

folks about their energy usage and what they can do. Transparency is al-

ways helpful to enabling those things to happen,” Esamann concludes. �

37www.nextgenpe.com

Duke Energy’s approach reflects a new way of thinking

about energy efficiency. It recognizes energy

efficiency as the ‘fifth fuel’ – complementing

coal, nuclear, natural gas and renewable

energy. These are all part of the overall

portfolio for meeting customers’ growing

need for electricity. The fifth fuel will help

customers meet their energy needs with

less electricity, lower costs and reduce

environmental impact.

Five programs are proposed for

residential customers and three are proposed

for the large industrial and commercial segment.

Additionally, Duke is recommending five pilot programs

before expanding to more customers:

• Residential energy assessments – including mail-in

and online analysis and onsite energy audits

• Smart $aver – including incentives to install compact

fluorescent light bulbs and high-efficiency home

heating and cooling systems

• Low income services – assistance in purchasing

energy efficient equipment and home weatherization

• Energy efficiency education program for schools –

including incentives for students performing online

energy audit of their home

• Power manager – monthly credits in exchange for Duke

to cycle home’s air conditioning during peak demand

SAVE A WATT


How is the global financial crisis impacting com-

modity transactions and what trends do you see

emerging as a result of this?

Sharon Fortmeyer-Selan. Barely two years ago,

weheralded the hedge funds and financial insti-

tutions for the liquidity they brought to com-

moditymarkets. Thewidespread financial crisis

has dampened this liquidity as some partici-

pants retrenchedorwithdrew fromcommodities

markets. More significantly, it has brought ex-

treme volatility and fueled deep concern, some

might even say fear, about counterparty risk.

These impacts are in turn giving rise to sev-

eral key themes or trends. One trend is a signif-

icant shift of volumes of over-the-counter (OTC)

trades to exchange-backed clearing or clearing

houses. Another is a trend toward independent

validationofpositionsandbookswhich translates

into an increased need for price and valuation

transparency. A third trend is toward tighter inter-

nal controls and increased regulatory oversight.

How will the shift to cleared trades impact

processes and systems?

SFS. Clearing requires a sufficient number of

participants and liquidity to work. Nymex intro-

duced its clearing platform and began offering

OTC cleared products in 2002. Since then, the

number of OTC products Nymex offers has

grown to over 600. One element of achieving

this is to develop standardized products and an

efficientway to price and settle them. Tohandle

the complexities of more exotic trades, we will

need to implement new processes for price dis-

covery and upgrade technology to support the

unique characteristics of these trades.

Systems like SunGard’s Aligne that incorpo-

rate grid-technology, service-oriented architec-

tures, configuration flexibility and scalable

performance provide a platform for clearingOTC

trades. Today’s ability to connect and settle di-

rectly with exchanges like Nymex and ICE and

clearing houses will be complemented by the

ability to present an aggregated viewof thedata

across transactions and operations for immedi-

ate decision-making.

What is the best way for businesses to achieve

transparency and control?

SFS. Speed and accessibility of reliable, timely

market data is a key success factor for commod-

ity traders and other market participants.

Aggregating price, volume and other key trans-

action data frommultiple sources including ex-

changes, pools, counterparties and partners

and applying analytics against the results en-

ables transparency. The automated capture of

data from the exchange cleared transactions in

conjunction with clearly defined processes for

price discovery helps support the requirement

for transparency. Increasingly availablewith low

latency, this data enablesmore immediate deci-

sion-making.

Defining and documenting transaction

processes from deal capture to expiration is a

critical element of controls. Establishing the

rules basedon roles, risk tolerances, or other pa-

rameters, monitoring adherence to them, and

setting alert thresholds is also key. Automating

the associated process workflow strengthens

and streamlines the controls.

Commodity STP: clearing, transparency, control


What began as a banking crisis has changed the capital markets and shakenenergy commodity markets as well. P&E asked Sharon Fortmeyer-Selan ofSunGard Energy Solutions about the trends emerging from the crisis, and whattools can help to address them.

EXECUTIVE INTERVIEW

Sharon Fortmeyer-Selan is Senior Vice

President, Marketing for SunGard Energy

Solutions. She brings over 25 years of

experience in software solutions marketing

to her role. Fortmeyer-Selan has served as

Chief Marketing Officer for several start-up

software companies and held leadership

positions in solutions marketing for

Compaq, AT&T, and NCR specializing in

transaction processing, business

intelligence and emerging technologies.

How can technology help address these chal-

lenges?

SFS. Automating the flow of information from

the initial transaction initiation through to its exe-

cutionandexpirationhelps to remove thehuman

element of operational risk. This seamless infor-

mation flowprovidesstraight-throughprocessing

that may be facilitated by workflow automation

tools for greater accuracy and speed. Service-ori-

ented architectures with enterprise messaging

andbusinessprocessautomationare foundation-

al technologies to enable the transparency, con-

trols, and agility needed to navigate challenging

business environments.

Standardized contracts andprocesses, real-

time transactions, accurate market data and

configurable risk toolkits combine with direct

market and exchange clearing to help commod-

ity market participants rise above economic

challenges. SunGard’s Aligne provides an ad-

vanced set of risk assessment and riskmanage-

ment tools designed specifically for energy

traders, risk managers and credit officers, to

help them measure and manage a number of

key energy exposures. Aligne delivers these ca-

pabilities through one fully integrated solution

suite, deployed and supported by one collabo-

rative team of experts. �

SunGard Energy ed:18oct 22/6/09 10:23 Page 38

Physical Power Challenged?As a power market participant are you:

» Securing the best transaction terms available?» Accurately anticipating physical transmission capacity?» Meeting contractual obligations in physical markets?

SunGard’s power operations solutions compile, analyze, and manage high volumes of transactions and distribution information to help you gain the flexibility needed to respond to electricity market changes. Electricity providers, schedulers, suppliers and others working in the interconnected electricity grid also rely on SunGard’s solutions to help them manage the related fuels costs, logistics, and environmental regulations.

SunGard Solutions help over 200 major energy industry participants across North America and Europe, including utilities, power generation companies, energy traders and marketers, to more efficiently and profitably trade and market energy, process transactions, and manage risk.

For more information email us at [email protected], or call:

North America + 1 888 296 1906Europe: + 44 (0) 20 8081 2000India: + 91 20 6624 8000Asia/Pacific: + 65 6416 9790

solutions for energy

“Prices are escalating, transactions are occurring faster, data is being exchanged faster… We had to automate to keep ahead with the industry and one of our most crucial steps was to bring in SunGard’s Aligne Trading and Risk.” George Sladoje, CEO & Chairman North American Energy Credit and Clearing Corp (NECC)

©2009 SunGard.trademark information: sungard and the sungard logo are trademarks or registered trademarks of sungard Data systems inc. or its subsidiaries in the u.s. and other countries. All other trade names are trademarks or registered trademarks of their respective holders.

www.sungard.com/energy

SunGard.indd 1 18/6/09 14:29:36


Brad Collins believes that two of the major challenges

we are currently facing across the world – global

warming and the recession – can be tackled with the

same weapon. The solution, he says, is the broad

deployment of energy effi ciency. “This is the low-

hanging fruit in terms of reduction of carbon, and the

replacement of energy sources with less carbon energy sources.

Almost exclusively we would endorse renewable energy technol-

ogy – including wind power, solar power, hydropower, wave power,

biomass and biofuels.”

It makes sense that Collins would say that. As Executive Director

of the American Solar Energy Society, he oversees 13,000 profession-

als in the science and research area of renewable energy technologies,

energy effi ciency and green buildings. In pursuit of its mission to help

transition the US to a sustainable energy future using a broad range

of renewable energy sources – not just the sun – the society provides

advice to everyone from members of the public to the new administra-

tion in Washington.

“Since before the election, with all of the presidential candi-

dates, and after the election as well with the transition team, we

have been providing some of the public documents that we have

prepared over the last several years that are policy related to this

mission,” Collins explains.

“We have documents that deal with the interconnection between

climate change and the solutions, which we consider to be broad de-

ployments of energy effi ciency and renewable energy technologies.

We provided the transition team with information about the breadth

and scope and forecast potential of green-collar jobs. And we con-

sider the largest threat currently facing the world population is global

climate change. The second largest threat is the economic downturn,

and the need to transition to a more sustainable economy.

“We are not necessarily the spokespeople or the people who are

advocating publicly for these policies, but when you look deeply into

their positions, what you discover is that they cite our work, or they

base their policy recommendations on work that we have accom-

plished over the last numbers of years.”

Going greenOne of the big questions currently circulating in the energy sector

relates to President Obama’s proposal to create fi ve million green-

collar jobs as part of his environment initiative. There are those who

have said that such a proposal is not feasible, but Collins disagrees.

“We would strongly endorse the potential that this is feasible,” he

says. “The stimulus package and the budget that President Obama re-

leased are moving precisely in the right direction, and that direction is to

create incentives for workforce development in the green collar arena.”

Collins goes on to describe a case in point. “One of the adminis-

tration’s goals is to increase weatherization: taking buildings that are

not as effi cient when they were constructed and bringing them up to a

higher energy standard. For example, this would involve the replace-

ment of windows, increasing insulation, preparing areas that have air

infi ltration for caulking and then caulking them, and putting in more

effi cient furnaces air-conditioning.

RENEWABLES


When the stars align.indd 40 19/6/09 15:36:08


Brad Collins believes that two of the major challenges

we are currently facing across the world – global

warming and the recession – can be tackled with the

same weapon. The solution, he says, is the broad

deployment of energy effi ciency. “This is the low-

hanging fruit in terms of reduction of carbon, and the

replacement of energy sources with less carbon energy sources.

Almost exclusively we would endorse renewable energy technol-

ogy – including wind power, solar power, hydropower, wave power,

biomass and biofuels.”

It makes sense that Collins would say that. As Executive Director

of the American Solar Energy Society, he oversees 13,000 profession-

als in the science and research area of renewable energy technologies,

energy effi ciency and green buildings. In pursuit of its mission to help

transition the US to a sustainable energy future using a broad range

of renewable energy sources – not just the sun – the society provides

advice to everyone from members of the public to the new administra-

tion in Washington.

“Since before the election, with all of the presidential candi-

dates, and after the election as well with the transition team, we

have been providing some of the public documents that we have

prepared over the last several years that are policy related to this

mission,” Collins explains.

“We have documents that deal with the interconnection between

climate change and the solutions, which we consider to be broad de-

ployments of energy effi ciency and renewable energy technologies.

We provided the transition team with information about the breadth

and scope and forecast potential of green-collar jobs. And we con-

sider the largest threat currently facing the world population is global

climate change. The second largest threat is the economic downturn,

and the need to transition to a more sustainable economy.

“We are not necessarily the spokespeople or the people who are

advocating publicly for these policies, but when you look deeply into

their positions, what you discover is that they cite our work, or they

base their policy recommendations on work that we have accom-

plished over the last numbers of years.”

Going greenOne of the big questions currently circulating in the energy sector

relates to President Obama’s proposal to create fi ve million green-

collar jobs as part of his environment initiative. There are those who

have said that such a proposal is not feasible, but Collins disagrees.

“We would strongly endorse the potential that this is feasible,” he

says. “The stimulus package and the budget that President Obama re-

leased are moving precisely in the right direction, and that direction is to

create incentives for workforce development in the green collar arena.”

Collins goes on to describe a case in point. “One of the adminis-

tration’s goals is to increase weatherization: taking buildings that are

not as effi cient when they were constructed and bringing them up to a

higher energy standard. For example, this would involve the replace-

ment of windows, increasing insulation, preparing areas that have air

infi ltration for caulking and then caulking them, and putting in more

effi cient furnaces air-conditioning.


SPECIAL FEATURE


41www.nextgenpe.com

When the stars alignBrad Collins on why the American Solar Energy Society’s time has finally come.

41www.nextgenpe.com



w

“Weatherization will create massive amounts of jobs. It will raise

the building stock performance in the United States, which will lower our

carbon footprint because it will use less energy. The time frame for how

long this energy effi ciency upgrade or weatherization will last is decades.

“Buildings tend to last 50-plus years. If you improve the perfor-

mance of a building built in, say, 1980, and it now has another 30 years

of expected life, you have 30 more years of lower carbon for that one

building than you would if you did nothing. You have also created an

employment opportunity that’s not outsourcable, and it’s an employ-

ment opportunity that generally exists in the urban centers of our

cities, where we have the highest unemployment.

“So it’s a whole variety of winning solutions all accomplished with

the same targeted goal: let’s create jobs in the weatherization indus-

try. Like many of the other stimulus package and budget targets that

have been proposed by the administration and signed into law, these

are going to help us solve those twin challenges – global warming and

a need to rejump or reboot the economy, but reboot the economy with

a new vision as to what we want it to look like. What we want it to look

like is more effi cient, more sustainable and preparing the workforce

for the 21st century.”

The society’s work has shown that there are currently nine million

people in the United States employed in the green-collar economy, cre-

ating revenue of more than $1 trillion in 2007. This is more than Exx-

onMobil, GM and Wal-Mart combined. But as Collins points out,

we have to be careful that we are comparing apples to apples.

“One of our biggest challenges was to become very explicit and

transparent in what we defi ne as a green-collar job, and fun-

damentally those are energy-effi ciency and renewable

energy jobs. Energy-effi ciency jobs are defi ned as

jobs that are in recycle/reuse/remanufacturing;

jobs that are in the energy services sector,

which would be weatherization; and jobs

that are producing or manufacturing prod-

ucts that are at least 30 percent more

effi cient than the standard.

“So an automobile that gets 30

percent better gas mileage than the

fl eet average is an energy-effi cient

automobile by our defi nition, and all

of the jobs related to that automobile are part of the green

economy. Likewise, if you have building windows, for instance,

that are 30 percent more effi cient than the standard window, then that

whole production process is a green-collar job.

“As the average effi ciencies improve, how many people in that

green-collar part of the economy and what companies qualify go up

too because the bar is raised.”

Single solutionThe society’s forecasts predict that if aggressive deployment

of tax-supported, job-creating incentives in the green-collar arena

becomes a national priority, then by 2030 the United States could

have more than 37 million people working in the green economy. This

would equal between 17 and 18 percent of the total employment of the

country, creating $4.5 trillion in annual revenue.

According to Collins, those statistics help support the notion that

the solution to our global warming challenge and to rebuilding our

economy are the same. He believes that now the challenge is to sup-

port those in public offi ce with data and well thought-out strategies

on how to get there.

“We’ve discovered from work we did on green-collar employ-

ment in various states that there are three necessary requirements

that must be in place in order to motivate the markets and create

the solution. The fi rst of these is to create a local market through, in

some cases, incentive programs. The market has to be outside the

manufacturers’ door. You can’t create a manufacturing entity in one

state and sell it easily 10 states away or overseas. To jumpstart the

green economy, you have to create a ready market in the same area.

“The second thing you have to do is put in place incentives for the es-

tablishment of the manufacturing distribution and servicing industries

for those technologies; whether it’s weatherization, recycling, deploy-

ment of solar on buildings or wind farms. You have to create the incen-

tives that are going to attract capital into that part of the economy.

“And third and foremost, the difference between suc-

cess and failure, comparing one state versus another, is

“For 55 years we’ve been waiting for the stars to align, and all of the sudden we

are scrambling to try to manage what the implications are for us to be proactive in

helping the country”

SoLAr HiStory tiMeLine

1905Albert Einstein publishes his paper on

the photoelectric effect, along with a

paper on his theory of relativity.

1954Photovoltaic technology is born in the United States when Daryl Chapin,

Calvin Fuller and Gerald Pearson develop the fi rst solar cell capable of

generating enough power from the sun to run everyday electrical equipment.

1964NASA launches the fi rst Nimbus

spacecraft—a satellite powered by a

470-watt photovoltaic array.

“And third and foremost, the difference between suc-


43www.nextgenpe.com

w

executive leadership. The executive has to take a role in promot-

ing the vision of a new energy economy based upon renewable and

energy effi ciency. And what we see in the Obama administration is

clearly economy leadership.”

Collins is convinced that we already have some of the ingredients

in place to have a ready market here in the United States. He points

out that there is talk of a federal renewable portfolio standard, and

incentives are being put in place to attract and maintain and grow

businesses in the renewable, energy effi ciency sector. Combine this

with executive leadership from the President and from Congress on

moving swiftly toward a more sustainable energy economy, and it

seems the society’s time has fi nally come.

“In one sense, for 55 years we’ve been waiting for the stars to

align,” Collins says. “Then all of the sudden, lo and behold, we are

scrambling to try to manage the alignment of these stars and what

it means – what the implications are for us to be proactive in helping

the country to meet our mission and therefore to help us reduce atmo-

sphere carbon and to help us jumpstart our economy.

“It’s very gratifying, and more so to the member who comes to me

and says, ‘I’ve been in this society for 40 years and this is fi nally hap-

pening. And now that I’m 85 years old, we’ve got to make this happen,

and I want you to be even more aggressive tomorrow than you were

today.’ In other words, for the fi rst time we are able to respond to the

earnest interest of our long-standing members to be more and more

aggressive in our advocacy, and that’s great.”

new or old?There has been comment from quarters that many so-called green

jobs are not new jobs, but just existing jobs given a shiny new name –

taking jobs from one industry and group and moving them to another.

Collins says the answer to this criticism is complicated.

“There are two things need to be understood. One is in the green

economy, many of the jobs are not, per se, specifi cally green jobs. If you

have a manufacturing plant that builds wind machines, in that plant you

have people who are highly trained and have expertise in wind engineer-

ing and in the design and fabrication of fi berglass. But most of the jobs

in that factory are your accountant, your secretary, your truck driver,

your warehouse manager, your facilities manager, your attorney.

“These are jobs that could be in any industry. The fact that they

happen to be in the green economy is only an artifact of the fact that

the end product is a green product. But the job training and the job de-

scription is the same, whether you’re building widgets or windmills.

“And so, in a sense, you will have a lot of people transitioning out of

jobs in, for instance, the automobile glass manufacturing world into the

fl at plate solar collector manufacturing world because some of the skill

sets are identical. This means you’re going to have a transfer of employ-

ment from, quote, ‘the automobile industry’, into the green economy.”

Collins says the question of how many of these are new jobs is a

question of how fast we can grow the green economy in order to have ad-

ditional employment. He sees the green part of the economy expanding

over the next dozen years and some of the older parts of the US economy

shrinking, although the society does not have, nor does he believe anyone

has, a good set of data on how that balance is going to work out. It’s diffi -

cult to say whether at the end of the day there will be X number more jobs

now in the economy than there were when the transition began.”

“Our position is that we need to move in this direction regardless

of the pain and suffering that might be necessary in the transition,” he

1969A solar furnace is constructed in

Odeillo, France; it features an eight-

story parabolic mirror.

1981Paul MacCready builds the fi rst solar-powered

aircraft ‘The Solar Challenger’ and fl ies it from

France to England across the English Channel.

1982Australian Hans Tholstrup drives the fi rst solar-

powered car ‘The Quiet Achiever’ almost 2800

miles between Sydney and Perth in 20 days.

1990The solar-powered airplane Sunseeker

successfully flies across the US, piloted by

Eric Raymond.



“A case in point might be if a person wants to buy a house and

as part of their mortgage they want to put solar on that house. The

calculation that is normally used to allow them to qualify for the

principal, interest, taxes and insurance should also include utilities

because their utility bill, for the life of their house and for the life of

their mortgage, certainly, will be substantially less than that of the

house across the street.

“So the qualifi cation should be different because the calculation

incentive must be included – for instance, if the amount of their mort-

gage should be no greater than 32 percent of their take-home pay,

this is different if you don’t have to save the other 78 percent of your

take-home to pay enormous utility bills.”

Collins believes that you can have

creative fi nancing that takes into account

the long-term value of the establishment

of these technologies for the homeowner

or for the utility or for the business owner.

“That creative fi nancing should be an

honest evaluation of the reality of how

the purchase of this long-term power plant, that somebody’s putting

on their building, can help free up the market mechanisms which can

help drive this market in order to ramp up to 10 percent of our electric-

ity by 2012. It is doable. It is a very steep hill. It would be a very steep

hill even if there was no credit crisis.

“Here’s an example. At the beginning of World War II, the United

States did not build heavy trucks or jeeps. In Detroit, it took them

less than a year to take the manufacturing processes of the US auto

industry and revise it to produce nothing but heavy trucks, tanks and

jeeps. If you have as a national goal to do something, and it is a shared

vision of the country and it is a commitment that the public and private

sectors are willing to make, enormous changes can occur.

“We hope – desperately hope – that the driver for this sort of

change in this country comes not from increasingly dire projections

as to what’s happening to our climate, but from a more and more en-

lightened vision about the prudence of a solution of the deployment of

energy effi ciency and renewable energy. Then we’ll all be happy.”

reliabilityOne of the questions frequently raised about a greater dependence

on renewable sources of energy is reliability. According to Collins, this

is at one level the Holy Grail – the, ‘How can we be totally independent

emphasizes. “Because the threat of global warming is so enormous,

and jumpstarting of our economy is so critical, that this is a transition

that we must commit to.

“The challenge is going to be to manage it for the least amount of

pain – this is the challenge whenever there’s an economic transition.

There will be dislocations and there will be winners and losers in that

transition. It is our perspective that it’s the role of government to miti-

gate that to the best of its ability. In the context of massive govern-

ment spending, there is greater opportunity for that mitigation than if

this was done without it.

Sourcing renewablesPresident Obama’s plan also talks

about generating 10 percent of our electric-

ity from renewable sources by 2012, which

Collins believes is doable, although he

acknowledges that it will be an enormous

manufacturing challenge, made even more

diffi cult by the tight credit markets.

The state of the credit markets affects the ability of manufactur-

ers to ramp up their production scale to meet this sort of target – to go

to the fi nancial markets and say, ‘I need to borrow $2 billion to build

three plants. One will produce windmills, one’s going to produce solar

for houses, and one’s going to produce utility-scale solar plants.’

On the other end of that equation, Collins says, the purchasers of

those technologies also have diffi culty going to the fi nancial markets

and saying, ‘I want to borrow $500,000 because I want to put a mega-

watt of solar panels on top of my manufacturing building.’

“It is indeed doable, but there are some very serious challenges

that have to be overcome. Resolving the credit markets is one, prob-

ably fi rst and foremost. It will help free up the revenue needed in order

to upgrade the manufacturing quantity for these types of technolo-

gies and allow homeowners and the business owners to borrow the

money to purchase these technologies. This has to be understood

within the context of the purchaser of those technologies – their pay-

back is many, many years, but their cost is all upfront.

“Some of the ways that these targets can become more likely to occur

is if the leaders of this country can come up with reasonable solutions

to overcome that credit crisis. One of them, for instance, that we have

proposed for years, is that there be a special mortgage mechanism or bor-

rowing mechanism where the borrowing is used for green technology.

“57 percent of carbon reductions in the uS by 2030 will come from energy effi ciency, and 43 percent will come from renewables”

2004NASA’s solar-powered Mars Exploration Rover Mission.

Lands successfully on Mars on 4 January 2004 and has just

had its fourth birthday and continues to meet its objectives.

1999Construction is completed on 4 Times Square in New York. It has more

energy-effi cient features than any other commercial skyscraper and

includes building-integrated photovoltaic (BIPV) panels on the 37th

through the 43rd fl oors on the south- and west-facing facades to

produce part of the building’s power.


45www.nextgenpe.com

“And if you have an area that has a need for heating, then gener-

ally when it’s cold, you can mitigate the need for the load by doing

even more energy effi ciency measures. For example, by installing

variable speed air handlers, more insulation, better windows, better

window coverings, better air lock systems and the like.”

It’s obviously a complicated mix of both reducing the demand

and applying the right renewable technology to meet the profi le of

the need. But Collins says that fundamental to all of this is the need

for storage, and the storage will come in terms of molten salts for util-

ity scale solar, where you heat up thermal oil to a high temperature,

about 600 or 800 degrees, and run it through a very large container

that heats up a salt that turns into a heat source.

As the piping goes through it, even if there’s no sunshine, it allows

enough energy to be put back in that oil that it can produce steam. You

have somewhere in the neighborhood of half an hour just in the piping

in a solar fi eld, so that if a cloud goes over a solar fi eld, it doesn’t lose

its energy, even if it has no storage.

“You can also pump air into caverns,” Collins explains, “and have

what is called pumped air storage, and later you can use that air to

turn a turbine to create electricity. You can use hydropower, when it’s

not used, to pump water back into a higher dam somewhere that you

can then recycle the water by having pumped storage.”

Smart loadIn Collins’ view, we have the ability to solve the base load chal-

lenge by using three measures: a smart transmission grid, storage

systems, and being smart about when we use electricity. If you need

to use electricity to wash and dry clothes, if you wash and dry clothes

at 10 o’clock at night when you don’t have the air-conditioning load

going on, it makes a lot of sense. And you need to have market signals

to change consumer behavior in order to help us become more energy

literate consumers.

“If everybody comes home from work and the fi rst thing they do

is turn up the air-conditioning, turn on the TV, run the dishwasher, get

of fossil fuel?’ question. He says the answer

is we can be there, although it would require

a number of interrelated uses of renewable

energy and the transmission of that energy.

For example, if the best wind resources

in the United States are in the Midwest, then

how do you get the energy from the middle

of the country to where the load centers or

the population are, which is on both coasts?

Collins’ answer is to have the commitment to

build a very robust green transmission system

that takes the wind power from the middle of

the country and move it to where it’s needed.

“And likewise, if the best resource for

utility-scale solar energy deployment is the

Southwest, how do you get that energy from

Arizona to Chicago, or from the Southwest to

New England or to New York? It all requires a

very smart green transmission system that is

able to manage the fl ows of energy from one part of the country where

the resource may be active at this hour to another part of the country

where the resource may be active next hour.

“It creates a smart grid with green transmission that’s able to antic-

ipate and transfer those green electrons from where they’re produced

to where they’re needed. It is very possible to do this using two things, a

very smart green transmission grid that is robust, that is intelligent, and

that is predictable, so that you know what the weather’s going to be an

hour from now for wind resources, for hydropower or for solar power.

“And then you have to deal with the whole issue of storage. Stor-

age is the key. In our existing energy distribution system, we have sev-

eral types of generation. We have what’s called base load generation

that runs 24 hours a day. This produces the same amount of electricity

all the time. It could be a coal plant or a nuclear plant, producing the

same amount of energy day in, day out.

“Then we have plants that are what we call peakers, and these are

turned on during the time of the day when you need more energy than

the base load produces. In the summer, it might be an air-conditioning

load. So at noon or thereabouts, the peakers turn on and provide this

extra energy to run all the air-conditioning for the next eight hours,

and then the peakers turn off and you go back to the base load. And

then you have standby spinning reserves that are used if you have

something that the base load and the peakers can’t accomplish.

“It’s a fairly complicated system. The solution, from our perspec-

tive, is to correlate the loads with the resource. In other words, if the

load is air-conditioning – you need air-conditioning when it is hot. And

when it’s hot, the sun is shining. In those areas where the load is going

to peak because of air-conditioning, you install a lot

of solar energy because they’re

going to be in parallel. The

load for the air-

conditioning

will follow the

sunshine.

Wind

Geothermal

Solar

Green trAnSMiSSion

to peak because of air-conditioning, you install a lot

of solar energy because they’re

going to be in parallel. The

load for the air-

proposed transmission of renewable energy



ready to run the laundry, you put this demand on the system and the

system has to turn on expensive and, in many cases, dirty plants in

order to meet that demand for electricity.

“But if you’re a smart consumer, when you get up in the morn-

ing, you plan out when things are going to happen, and what we will

see in the course of the next several years is cost signals becoming

large behavior modifiers for the public. This will come through a

system of smart grids, where your home will have a little device on

it that will tell you how much energy you’re using.

“We will become more and more energy literate as we become

more and more in tune with how our behaviors are affecting our util-

ity bills and our carbon footprints. In our business, it’s called the

Prius effect, where someone who drives a Prius, like I do, is always

conscious of how many miles per gallon they’re getting. It modifies

the way you drive. It’s an instant feedback. And so you don’t do

jackrabbit starts. You turn on the battery charger when you’re going

down long hills. You try to maximize your miles per gallon.

“The same is true when people purchase and install solar on their

houses. It was intuitive for years that people would first and foremost

work to make their home energy efficient before they would go out and

spend money to put solar electricity systems on their house. What’s

happened, in fact, is that many people have gone out and purchased

solar electric systems for their house. First they see how much energy

they’re producing, then they see how much energy they’re using. And

then they say, ‘I wonder if I could use less energy.’”

Collins says that the Prius effect has to be synonymous with

those who are energy producers in their own houses or their own

buildings. They take a closer look at their buildings and say, ‘What

if I replace my windows?’ Or they buy devices that calculate how

much energy their refrigerator, freezer or hot water heater is

using. They calculate the best next step they can take to reduce

the amount of energy they use.

It then becomes a self-fulfilling and supportive environment for

people to become more and more and more energy efficient in their

activities, and Collins emphasizes that if you multiply that by the

entire building stock, or by a large fraction of the building stock,

that’s how solar energy, renewable energy technologies and energy

efficiency can become a reliable source, because we’re doing the

most important part and that’s reducing our demand.

The society’s studies show that 57 percent of carbon reductions

in the United States by 2030 will come from energy efficiency, and

43 percent will come from renewables.

What Collins has found most fascinating is that we’ve always

thought that energy efficiency is the first step and deployment of

renewables is the second step. Instead, what the society has found

is that people are buying solar systems and then discovering what

the next step for them is to replace their air conditioners or buy only

Brad Collins on the green economy In terms of solving unemployment during the economic

recession, the opportunity for entrepreneurial businesses to

grow in a green economy is substantially greater than in tradi-

tional energy economies.

This is because the human resource fraction of the busi-

ness is greater in renewable energy than it is in oil and gas. Oil

and gas has a very high employment per dollar spent in the drill-

ing part of an operation – establishing the field part of an opera-

tion, determining if it’s an oil field or a natural gas field. But once

that’s been established, it runs with very few employees. The

interesting part of that, at least to me, is that if the goal of a gov-

ernment is more employment, this becomes a no-brainer. You

put your dollars into expanding utility-scale renewable energy

technologies as opposed to trying to build more coal plants or

more natural gas electric plants or producing oil.

Many states are resource exporters, meaning that they

take a resource from, for instance, the state of Colorado, and

much of the benefit of that operation inures to another state so

that the revenue goes to the home office, which isn’t necessar-

ily in the state of Colorado.

If you’re a government official, what you would say is, “If

I were to build wind farms in Colorado where we have a wind

manufacturing plant, not only is the employment and the related

tax revenue for that employment and the spending multiplier

for our economy related to employment here in Colorado and

will stay in Colorado, but the net corporate revenues stay in

Colorado and are used to help grow the economy.”

From a strictly fiscal view, you get a bigger bang for your

buck if you support the establishment of incentives and mar-

kets for renewable energy in your state than you do if you con-

tinue to support business as usual with such things as natural

gas development.

More opportunity

“you can also pump air into caverns and later you can use that air to turn a turbine to create electricity”

Energy Star appliances or replace their furnaces with ones that are

more efficient.

“They see the results and then they get the Prius effect. And the

beauty of all of that is the technologies continually advance, so as

they make these energy efficiency upgrades, they’re getting better

and better and better products each and every iteration.” n


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Tantalus.indd 1 18/6/09 14:30:33

WE BUILT THIS CITY

Thanks to its Smart Grid City project in Boulder, Colo-

rado, Xcel Energy is helping to make the intelligent

power grid a reality. But before delving into the

specifi cs of the project, let’s go back to basics – the

meaning of the term ‘smart grid’ itself.

The more people you talk to about smart grid, the

more you realize how many different defi nitions there

are. Some people hang the defi nition solely on smart metering, while

others take a broad approach. Xcel Energy is one of the latter, as CIO

Mike Carlson explains: “There are all kinds of different defi nitions, but

the way we look at it is the horizontal integration of the entire energy

path from generation through consumption, with the use of advanced

Imagine if you could plan your electricity usage to take advantage of cheaper rates and increase effi ciency while using cleaner sources of energy. That dream is coming true in the Smart Grid City of Boulder, Colorado, thanks to Xcel Energy. Marie Shields gets the scoop from CIO Mike Carlson.

SMART GRID


Carlson.indd 48 19/6/09 15:48:15

49www.nextgenpe.com

and because of the cost and complexity and time to deploy. This might

limit you from being able to go to the next iterative level of opportunity.”

Defi ning the possibilitiesHowever you defi ne it, smart grid seems certain to bring benefi ts

to both consumers and utilities. “Short-term you’re probably looking

at the smart grid giving benefi ts to the utility back-offi ce function,”

explains Carlson. “This is what we’re fi nding out in Boulder both in

terms of what’s possible and what’s feasible. These are things that

are very non-evident to our customers, such as a more effective use of

our resources, better dispatch of our crews, avoiding outages through

better monitoring and detection and extending our asset life because

we’re avoiding breakage.

“It will take some time for the data to prove this, but we believe

that by better managing and balancing the grid we will see reduced

line loss and improved effi ciencies in the way the system operates.

These are things that will manifest themselves in cost avoidance into

the future, and a couple of percent in cost avoidance can show up in

real dollars in savings to our customers.”

Carlson believes that one of smart grid’s big initial benefi ts is that

it’s fueling what he calls energy transparency to the customer. He says

that this is where smart meters will provide value: smart grid will be a

catalyst for driving energy information and transparency about energy

consumption to Xcel Energy’s customer base.

“Short term, I’m not a big fan of providing information just to say

it’s out there,” he emphasizes. “It will drive some education to our cus-

tomers about what their consumption is and why their consumption is

the way it is and what options they’ve got to start considering different

ways to better impact and improve that energy consumption profi le.

communication and control technologies to optimize energy produc-

tion, transport and consumption.”

Carlson is particularly insistent that the concepts of ‘smart grid’

and ‘smart meter’ are not synonymous: “We have held the belief for a

very long time that a smart meter is not a smart grid. It’s not the defi ni-

tion of a grid in its entirety; the meter is one component of it. A smart

meter does help the utility automate its billing and maybe some of its

analytics processes.

“But the meter is a secondary component of a smart grid. If we’ll

allow ourselves to look into the future, I think we should be questioning

whether a meter is part of the puzzle at all. That’s not to say that you

don’t have to measure your electric consumption in some way, shape

or form. But do you need a meter to do it? A meter is an archaic device

that at the end of the day only serves to measure. It can’t control. It

can provide information, albeit not by itself. We need to ask ourselves,

are there other, more effi cient, effective and less expensive ways to ac-

complish those tasks?”

Carlson says that if the industry is smart, it will build a grid with foun-

dation optionality that gives short-term benefi ts today, and the long-term

opportunity to naturally expand. From his point of view, there is a big risk

in building something that then has to be ripped out and built again.

“Once you make the investment you’re almost required to run the

course of that investment before you change it,” he explains. “The risk

of this is to not get so far ahead of ourselves that we miscalculate and

island an investment that can’t be leveraged to the next iterative expan-

sion point of smart grid.

“That probably describes one of my biggest concerns about the in-

vestment in AMI. It’s a huge cost that could become an island investment

fi ve years from now, because it can only provide X amount of capability,

SMART GRID CITY

Xcel Energy’s Smart Grid Consortium is working towards a future when the energy grid can predict its problems and strengths while optimizing

available resources. The Consortium has announced plans to build Smart Grid City, a community that combines traditional and emerging technology

to move the energy grid into the digital age. This next-generation grid will allow customers and utilities to collaboratively manage power generation,

delivery and energy consumption. Smart Grid City will boast a fully inter-connected energy system capable of managing the various parts of the grid

involved in producing power and delivering it to consumers.

Key components of Smart Grid City include:

• A dynamic system rich in information technology

• High-speed, real-time, two-way communications

• Sensors throughout the grid enabling rapid diagnosis and corrections

• Decision-making data and support for peak effi ciency

• Distributed generation technologies (such as wind turbines,

sol ar panel, and plug-in hybrid electric vehicles)

• Automated smart substations

• In-home energy control devices

• Automated home energy use

Carlson.indd 49 19/6/09 15:48:19


At the time of interview, Michael Carlson was Vice President and

Chief Information Officer for Xcel Energy. He recently left Xcel to

take up an executive position with GridPoint.

Some will look solely at costs, while others will look at emissions or

environment – everybody’s got their drivers.

“I’m a big proponent of moving the system from load following to

load balancing or demand management, but I do acknowledge that it’s

going to be long term in its acceptance. Unfortunately, in the way people

look at it today, they take that as the energy company controlling when

and why they use electricity. And I would rather have it articulated that

the energy company is going to provide information and technology to

the customer so that they can participate in load management with us,

as opposed to just be the recipient of it.”

Smartening upSmart Grid City is billed on Xcel Energy’s website as “the nation’s

first fully integrated smart grid community,” which will apparently boast

“the largest and densest concentration of these emerging technologies

to date.”

Carlson says the development of Smart Grid City can be described

in two different ways. “Phase I was the targeted installation and enable-

ment of an entire system on two of our substations and about a third of

the city. We put all components in two substations, seven feeders, 15,000

customers, on the grid with advanced communication, broadband over

powerline monitoring and advanced meters. We did put 15,000 advanced

meters into Boulder so we could measure the incremental impact of them,

and then advanced in-home devices.

“Phase II then becomes finishing the rest of the city with advanced

communications capability, but spreading out those monitoring meters

and homes: instead of having a concentrated feeder and substation

you’ve 10 percent penetration. The reason we’re doing that is to compare

the benefits versus the cost of having everybody on an identical system,

as opposed to having a portion of the city on those advanced capabilities.

“Phase III in that model was described as the software integration of

all of the different points along the system from generation to consump-

tion and the software analytics and decision point controls that would be

put in against all that monitoring and capability.”

Carlson describes the alternative way of looking at it as phase I

being the establishment of infrastructure: communications, monitor-

ing, measurement and control. Phase II is customer engagement:

automated home response, information portals, demand response

programs. And phase III is the quantification and evaluation of the in-

vestment that was made.

The birth of an ideaIn 2003, Xcel Energy established a ‘Utility of the Future’ utility inno-

vations advisory board: a group of partners mandated to think outside

the box in conjunction with the utility, to come up with ways of applying

technology to enhance and improve its operations.

In September 2006, the company convened a group of about 45

people – regulators, public officials, industry consultants, energy man-

agers – to brainstorm what a better managed grid would look like. From

this arose what ultimately became Smart Grid City.

Why Boulder? Carlson says that as part of the planning process,

the partners began to recognize that the utility industry is very fond of

pilots. He explains that these are usually very small pilots, and while

they often produce an answer or prove or disprove the intent they were

designed for, they are so small that they either require a large number of

assumptions to be made around them, or result in a new set of questions

that requires a new pilot.

“We wanted to envelop the entire system in testing what we feel is a

very integrated solution,” Carlson says. “Just testing demand response

without testing load control, without having advanced communications,

we didn’t feel was a value-add. The other part of our vision is to establish

a continuous living, breathing environment that allows us to iteratively

test and validate benefits and opportunities.

“Under that guise of design, we then looked at where in our system

we had the physical attributes, the architectural designs and the mix of

customers we would need to carry out such a project – mature homeown-

ers, transient residents, college students, some amount of commercial

and industrial. Where did we have a mix of customer base? Where did

we have enough size that we could statistically validate our results? And

we came up with about eight different locations within the Xcel Energy

footprint. Then we went to the next level of engagement by the state, the

city and the customers’ willingness to participate.

“After all these criteria were evaluated and assessed, we worked

with our partners on where they felt they’d get the most benefit and

confidence of results, and we ended up in Boulder.”

Carlson.indd 50 19/6/09 15:48:19

51www.nextgenpe.com

Control4 and Lixar, supplying advanced thermostat, gateway controls

and meter reading.

Landis + Gyr provides the meter technology being leveraged in just

under half of the city, and Ventyx contributes two discrete components of

technology solution load dispatch analytics for generation planning and

integration of work management paths.

Carlson explains how the technology would work in a sample sce-

nario: “Say the transformer on Feeder 69 overheats. CURRENT Group

technology monitors that, and an alert comes back through the com-

munication bus, into analytics software from Accenture, which provides

the integration of all the software points. It’s identifi ed as a fi eld event

that needs a crew dispatched to it, which is then automatically dropped

into our work management system through Ventyx’s technology. This will

ultimately end up in a fi eld dispatch of a crew with a mobile terminal in

their truck. OSIsoft provides the technology layer of real-time data man-

agement for all these data fl ows.”

Set to run and runCarlson has mixed feelings about how long the project should

continue. “Smart grid is very analogous to the internet. If in 1990 you

had sat down and tried to design the internet for what it does in 2009,

you can imagine that it would never have occurred.

Smart grid has to have the same iteratively progres-

sive expansion.

“On the other hand, we have to put a box around

it so we can get conclusion and completion. For Smart

Grid City, we are targeting the end of the year to have

completed the build-out, assessed the capabilities

and fi nalized the business case to the point of defi n-

ing what our go-forward strategies are for smart grid

at Xcel Energy.

“On a variety of levels, we want to have an articu-

lated strategy for smart grid across our service territory.

We want to have a next steps design of what we need to

do and what our technology partners need to do. There

are three legs on the stool in this model: What can tech-

nology do? What are our customers wanting and willing

to do? And the third leg is, what does the regulator want to step up to?

“With the regulator, it’s a chicken and egg situation. We point a fi nger

at the regulators needing to facilitate this, and in the regulators’ defence,

without seeing what technology can do for them, they don’t want to step

out too far in front of the cart.

“So another key objective is having a plan for how we start to part-

ner with the regulators on examining different models for an electric

utility that has been operating for 75 years and fundamentally hasn’t

changed. Long term, what I expect to see out of smart grid over a three-

to fi ve-year range is the opportunity to remake the way electric services

are consumed and paid for in this country,” Carlson concludes, as he

laughingly explains that the chance to achieve such a big goal is why he

enjoys going to work.

Whatever route we end up taking toward a more energy effi cient

future, it seems that all roads lead to – or at least through – Smart

Grid City.

Show me the moneyOne of the questions with such a large, long-term project is: where

will the money come from? Carlson describes Smart Grid City as having

an at-risk funding model. “The reason we’re at-risk is we did not want the

culture of the industry model, meaning you can’t spend money without

the confi dence that that money is going to produce value, and hence you

then start to limit your focus of spend on things you know will work. Then

because you’re only exploring things that you know will work, you’re

passing up the opportunity to give a different view of the model.

“Because of that, we wanted to take the money out of the normal

regulated process and perform the study at risk to allow us to fail, I guess

is the best way to describe it. And as such, Xcel has taken the risk, along

with its partners, to fund Boulder in the validation of value that will come

back to the customer, ultimately, in the system.”

Carlson explains that because the cost of Boulder was more than

Xcel Energy was willing to put at risk, the company solicited partners for

at-kind investment. The result of this is that the majority of the project

is funded by Xcel Energy’s partners: CURRENT Group, Accenture, Grid-

Point, Ventyx, OSIsoft and Schweitzer Engineering Laboratories. All the

partners have contributed an investment of people, money, equipment

and technology into Boulder at risk of recovery. Carlson’s expectation

is that pieces of the program will demonstrate

themselves and be eligible for that recovery. He

adds, however, that, “The predication going in

was if everything fails, we’ve all got an invest-

ment that we’ll have to write off at the end of

the day.”

With so many companies involved, there

could be the potential for confl ict, but Carlson

praises the partners for their outstanding par-

ticipation and their willingness to share. “No

one company has a full solution – a smart grid

in a box,” he points out. “So the need to bring

this various expertise together is key.

“I’m not going to say that underneath

the covers it’s not a more diffi cult model to

manage, but I can’t say enough about all the

partners and their willingness to think outside the box – their ability to

put what would be traditional competitive concerns somewhat aside.

All of our partners have had to step up and swallow occasionally. But in

that process they’ve all recognized that there is quite a bit of benefi t for

them and their businesses. More benefi t than risk would be the way I’d

describe it.”

Each of the project’s partners provides a key component of the

technology needed to make the project a success. According to Carlson,

CURRENT Group is providing broadband over power lines for communica-

tions, along with a natural monitoring and control technology embedded

into the communications system. This provides grid monitoring and grid

control along with a high speed, low latency, high bandwidth communica-

tion backbone.

Schweitzer Engineering provides substation distribution control:

from switches and capacitor bank to advanced analytics. There are

several other partners on the customer home side, including GridPoint,

“Smart grid is very analogous

to the internet; it has to have the same iteratively

progressive expansion”

Carlson.indd 51 22/6/09 10:33:18

Various definitions of smart grid exist within the utilities sector. What is

your definition?

MaeSquier-Dow.A smart grid uses high-performance communications, ad-

vanced sensing and enterprise analysis to transform the existing electric

grid into a dynamic self-healing, self-optimizing distribution system.

Because critical grid events often require real-time recognition and re-

sponse, a smart grid solution uses IP-based, open standard, low latency

communications to measure real-time events – such as load and conges-

tion, system stability, equipment health, outages and demand response

events – and to link these events with the appropriate responses to improve

the efficiency and reliability of the entire distribution grid.

A fully functional smart grid employs widely distributed intelligent sen-

sors to collect and analyze data from throughout the distribution system.

The true situational awareness of a smart grid comes from extracting mean-

ingful information that the utility or its customers can act on, such as ac-

tionable intelligence, in the time frame necessary to achieve the desired re-

sult. As the smart grid develops, many of these actions will become further

automated enabling a more dynamic, self-adjusting grid.

SharonAllan.Based on Accenture’s involvement with several dozen smart

grid projects around the world, we have developed a definition that we use

as a basis for common understanding across our client base. Our point of

view is that a smart grid is one that leverages sensing, embedded process-

ing, digital communications and software to manage network-derived in-

formation, thus helping utilities to achieve high performance. A smart

grid is: observable (able to measure the states of all grid elements), con-

trollable (able to affect the state of any grid element), automated (able

to adapt and self-heal) and integrated (fully connected to utility process-

es and systems).

These capabilities support the three major business functions of the

transmission and distribution utility: power delivery, asset management

and customer experience enablement.

Lee Ayers. ‘Smart grid’ means modernizing transmission and distribution

grids to facilitate competition between providers; to enable use of vari-

able energy sources, especially renewables; to create automation and

monitoring capabilities for bulk transmission at transcontinental dis-

tances; and to enable market forces to drive energy conservation and

compliance.

The first step to a smart grid is being able to see the grid. It involves

collecting millions of data points in real time, and analyzing and display-

ing them so they become actionable rather than overwhelming. This re-

quires integrating generation, transmission, distribution and meter data

management into a single system. The typical utility has an asset infra-

structure to handle peak loads. Rather than load-following, a smart grid

boils down to load-shaping with a dynamic, two-way market play be-

tween utility and customer. Models not embracing dynamic market inter-

action with the customer, but improved automation (better outage

detection and CAIDI, SAIDI and SAIFI numbers) are not smart grid appli-

cations. The smart grid model is similar to what we see at an ISO – a fore-

cast; costs related to production and delivery of service; to these we add

customer preferences, environmental considerations, deferred capital ex-

penses and pricing.

What benefitswill the smart grid provide, both in the short and long term?

SA. Accenture believes the smart grid is a key component in the global

quest for carbon neutrality and a more reliable, secure energy future. In

the short term, the transformation to a bi-directional flow of data from in-

telligent devices capable of remote monitoring, near real-time data and

An intelligent future


P&E talks to a panel of experts about the latest smart grid developments, and its real-lifeapplication in Boulder, Colorado.

Mae Squier-Dow is SVP of Business Solutions for

CURRENT Group. In this role, she is responsible for the

global promotion, development, delivery and support of

CURRENT’s smart grid solutions to utility customers

through its utilities solutions and professional services

groups. Prior to joining CURRENT Group, Squier-Dow

was the President of Network Services for One

Communications and the Chief Operating Officer of

Choice One Communications.

Sharon Allan is responsible for the North American

smart grid offering in Accenture’s utility transmission

and distribution practice. She has 25 years of executive

and management experience in the technology services

industry. Immediately prior to joining Accenture, Allan

was president of Elster Integrated Solutions, and she

has also held key positions at other technology and

sciences-based products companies.

Lee Ayers has 26 years of experience with an

emphasis on spatial and temporal systems. As an

Executive Consultant for OSIsoft, she acts as educator,

systems consultant, designer and industry expert for

utilities and vendors desiring to link real-time data

throughout the corporation. Her current focus is Xcel

Energy’s Smart Grid City.

THE PANEL

ROUNDTABLE

Roundtable:18oct 19/6/09 15:37 Page 52

optimized performance will help improve overall grid reliability and effi-

ciency. This, in turn, can reduce the number of customer minutes out as a

result of improvements in predicting or even avoiding potential outages.

In the long term, we believe there is compelling evidence to support

achievement of long-term benefits through reductions in residential

peak demand energy consumption by leveraging real-time pricing sig-

nals, working in combination with in-home energy management tech-

nologies. Additional reductions in peak demand can be expected

through integration of distributed generation technologies, which also

have the potential to lower carbon emissions. Another key benefit will

come through an enhanced customer experience as consumers receive

the information and tools they need to fully understand, monitor and au-

tomate their energy use.

LA. When businesses and consumers see

savings from energy efficiencies, they in-

clude energy cost into decisions. As market

forces level the load curve, this will reduce

the spinning reserve that utilities need to

keep on stand-by.

The smart grid can enable increased en-

ergy sustainability, reduced carbon intensi-

ty and encourage adoption of green energy

technologies; enable increased customer

satisfaction and customer participation in

the power delivery chain; increase effective

system capacity; bring difficult-to-quantify,

but nevertheless real strategic benefits to

Xcel Energy and other utilities/energy

providers; enable improved utility opera-

tional efficiency; support enhancement of

power quality, reliability and system perfor-

mance; and support advanced utility asset

management and system planning.

MS-D.While there are numerous benefits to a

smart grid, the threemost significant are opti-

mizing the distribution system by delivering only the power needed in the

most efficientmanner from the substation to the home, resulting in precise

dispatch of megawatts with precision and control on a persistent and crit-

ical peak basis; increased visibility to the use of renewable energy re-

sources, including the integrationof distributedgeneration into the existing

grid; and improvedoperations and reliability by automating the operations

of the electric distribution network andproviding critical information about

the condition of deployed assets.

Howdid you get involved in the Smart Grid City project in Boulder? What

technology is your company contributing?

LA. During design of Xcel Energy’s Smart Grid City it became obvious they

needed a robust, scalable,mission critical infrastructure for collecting, an-

alyzing and presenting data; Xcel Management contacted OSIsoft about

the PI System.

The PI System,with over 15,000 installs, provides utilities with a se-

cure, real-time enterprise infrastructure for smart grid operations. It

spans generation, transmission, distribution and meter data manage-

ment. Three decades of performance across millions of utility data

streams has fortified PI to meet the massive demands of smart grid ap-

plications – demand response, distributed

generation integration, renewable resource

management, advanced distribution moni-

toring and control.

UniqueatXcel,OSIsoft isdeliveringaPIop-

erational datamanagement system (PI-ODMS)

that blends validated AMI data with operating

53www.nextgenpe.com

SHARON ALLAN

LEE AYERS

“The goal is aseamless,end-to-end viewof the data –from generationto meter”

“Intelligent, actionableinformation will be the key tothe success of the energy gridof the future”


will come frommaking the grid itself more effi-

cient, whichwill ultimately result in lower costs

for the utility and its consumers, andwill bene-

fit the environment through reduced green-

house gas emissions. High performance

communications and instantaneous response

will be increasingly critical as the grid becomes

more dynamic, more intermittent renewables

areused for generationandwidespreaddistrib-

uted energy sources such as residential and

commercial solar panels, wind sources and

plug-inhybrid vehiclesgainmarket acceptance.

Much like the internet, newapplicationswill be

developedwhichwill leverage the communica-

tions and sensing to further improve the way

electricity is generated, delivered and used.

SA. Our perspective is that there will be far

greater integration of information throughout

the power grid than there is today and that this

intelligent, actionable information will be the

key to the success of the energy grid of the fu-

ture. Like industries that have evolved from a

primarily non-communicative state to a highly

networked state, the smart grid will result in

more automated analytics and control as infor-

mation and communications infrastructure fa-

cilitates the ability to not only collect

information, but also to analyze and act upon

it. Some technologies that can be leveraged to

support the characteristics of amore intelligent

grid are available today. Others are emerging

and will be developed over time to provide

higher levels of functionality at a lower cost.

What’s important, in our view, is that utili-

ties on the road to a smarter grid approach their journey with a road map

that helps ensure that whatever technologies they select are compatible

and that the evolution to new systems canbe achieved efficiently and eco-

nomically. Intelligent network technologieswill require end-to-end integra-

tion and compatibility. Having a concise picture of technology andbusiness

requirements will reduce the risk of incompatibility or obsolescence.

LA. End-to-end visibility of the business will become the norm.

Inappropriate technologies for the oldmarketmodelmay be rebranded as

smart grid offerings but the hardened project approach will be seen for

what it is – a costly endeavor usually outdated by installation.

Utilities will take less of a project approach to integration and look at

how systems can be quickly integrated with standard product like PI. Less

project, more product will become standard.

Other innovationswill be in smart grid data centers; a critical infrastruc-

ture around data management for upwards of 100 million points; and en-

hanced substation metrics to serve as report cards for how efficiently the

smart grid is functioning. �

andnon-operatingdata, plusdata sources suchas

wind, forecastdata fordistributedenergy resources

and real-time calculations.

Thegoal is a seamless, end-to-end viewof the

data – fromgeneration tometer. Xcel Energy’s SGC

PI-ODMS server will handle onemillion points – all

expected inputs.

OSIsoft isdeliveringdynamic graphics for four

area substations and working with Accenture to

deliver ourMicrosoft SharePointWebParts, includ-

ing aMicrosoft Virtual EarthWebPart for distribu-

tion graphics andmetrics. All OSIsoft graphics and

deliverables use a common Information model

(CIM) hierarchy.

SA. Accenture has beenworkingwith Xcel Energy

on this project since the initial discussions began

over two and a half years ago concerning the pos-

sibilities for reducing carbon emissions and

achieving greater sustainability. Accenture is re-

sponsible for three key components of the Smart

Grid City project. One,we are the strategic advisor

and consulting chief engineer for the overall initia-

tive. Two,weare the systems integrator, providing

the smart grid management integration platform

usingour patent-pending intelligent network data

enterprise solution set, which includes the refer-

ence architecture, data transport and storage ar-

chitecture, end-user transactional analytics and

blueprint for smart grid development. Three, we

are providing expertise to helpwith themarketing

of the program to energy consumers in the city

and country of Boulder as well as to regulators

and other key stakeholders.

MS-D. Xcel Energy’s Smart Grid City in Boulder, Colorado utilizes the fully

integrated CURRENT OpenGrid platform that combines advanced sensing

technology, two-way low-latency IPcommunications,andenterpriseanalysis

software and related services. This provides location-specific, real-time data

about the status of the city’s electric grid. CURRENT’s sensors arewidely de-

ployed inBoulder and connectedby a variety of highperformance communi-

cation technologies including fiber, DSL, 3G wireless and broadband over

power line. Xcel Energy is already benefiting fromCURRENT’s systembypre-

venting customer affecting outages and reducing outage repair times. Field

crewshaveaccess to thesystemonportable computersandhavevisibility to

theperformanceofneighboringassetswhenresponding to troublecalls.Xcel

EnergyandCURRENTarepresently implementingCURRENT’s fully integrated

Volt/VAR control to improve the utility’s regulation of voltage and power fac-

tor,while optimizing systemefficiency from the reductionof lossesanderrat-

ic voltages associatedwith reactive current flow.

How do you believe the smart grid will develop in the future?

MS-D.We believe that ultimately the high value benefits of the smart grid


MAE SQUIER-DOW

“The high valuebenefits of thesmart grid will

come frommaking the grid

itself moreefficient”


55www.nextgenpe.com

Wind power is a great renew-

able resource – the fuel is

free; environmental impact

is low; projects deploy

quickly and harmonize with

agricultural land-use. They generate power,

local jobs and tax revenue. Enter solar power,

again a great renewable resourcewithminimal

environmental impact, quick-to-build projects,

no water consumption and its significant scal-

ability from residential rooftops to mega-mart

rooftop power plants.

These two do have onemajor impediment:

they are intermittent. This can causenightmares

for the utilities responsible for reliability, and for

keeping power flowing and balanced for every-

one connected to the grid.

The smart grid will enable greater exploita-

tion of such renewables, satisfying our political

will and best interests and shifting energy con-

sumption away from imports.

Time horizons play a major role in inte-

grating renewables. Multiple forecasting tech-

niques and service providers utilize long-term

data resources in combination with statistical

and numerical prediction models to estimate

the wind and solar resources at various time

horizons, including persistence, hour-ahead,

day-ahead and so on. Augmenting these pre-

diction models are offsite real-time observa-

tions frommet stations feeding real-time data

to the utility and the forecasting model(s).

Using this information, wind and solar farms

can send forecasted production data to the

host utility. Leveraging the smart-grid, the host

utility can push this information to the trans-

mission system operator, the local utility, and

industrial and residential consumers such as

Xcel’s SmartGrid City program.

This data flows from the fuel source (wind

and weather) through the generator, the high

voltage transmission grid, the local distribu-

tion grid, the smart meter and ultimately to the

user interface, such as the smart thermostat.

Using this information flow, the end-consumer

canmake informed decisions about when and

how they use power. The host utility also has

an option to intervene if consumer behavior is

non-responsive to price and or type-of-elec-

tricity signals. When the wind blows strongly

in Wyoming, it might be time to send a signal

to charge plug-in hybrid vehicles. Inversely, if

no wind is predicted for four hours, the utility

may request/force consumers to forestall or

turn down appliances, such as adjust the ther-

mostat by one degree or delay running the

pool pump.

This data flow is not one-way. The smart

grid-enabled utility has enhanced visibility and

control comingback from the industrial and con-

sumer level. An example ismicrogrids to enable

integration of large amounts of intermittent re-

sources, both inside and outside the microgrid.

(Amicrogrid is a collection of generation sources

and loads that can be isolated seamlessly and

bumplessly from themain grid and reconnected

as needed, while being controlled internally and

sometimes generating its own energy, including

from renewable resources.)

OSIsofthasarole in tying together renewable

energy, thesmartgrid,microgridsandconsumers:

OSIsoft makes the PI System. The PI System is a

real-time information infrastructure that ties to-

gether all sources and users of real-time data,

from themeteorological data at the front-end all

the way down to the smart-meter data manage-

mentsystemsat theconsumer level.Keyelements

of thePI Systemmake it uniquely qualified.

It is secure and reliable, as well as being

provenandscalable.PIdeliversahighlyavailable

infrastructure,withmultiple levelsof redundancy

and failover, architected to satisfy evolvingNERC

CIPStandards and security requirements.

Inaddition to itsglobalpartnershipswithkey

technology vendors, such asMicrosoft and SAP,

OSIsoft maintains key relationships with leading

global integrators such as IBM and Accenture

working in smart grid and renewables. Partner

ecosystem is therefore another key element.

The PI System is also rapid and has a sus-

tained creation of value. As a packaged product,

thePISystemisquick to install, deployand imme-

diately begins collecting data and delivering

value. It consolidates real-time data from across

the utility – met data, generator, transmission,

smart-meters,microgridsandsoon– intoaction-

able information.

The system is also sustainable and flexible.

One of the core values of PI is the ability for end-

users to configure the system to present mean-

ingful (to theuser) information to the right-userat

the right time.�

Renewables and the smart gridDave Roberts explains the need for the integration of large amounts ofintermittent resources.

Dave Roberts is the Group Director

Business Development of OSIsoft.

He joined OSIsoft as Director in May

2005. Today, as OSIsoft’s Director

for Business Development, he

manages OSIsoft’s various vertical

industries, including power,

transmission & distribution, oil &

gas, metals & mining, and other

process industries.

ASK THE EXPERT

OSIsoft ATE:18oct 19/6/09 15:32 Page 55

What software tools is Itron using to help utility companies reduce ener-

gy consumption and improve energy efficiency?

Philip Mezey.We are focused on a broad solution. Our offering begins

with data creation at the meter level, then collection systems that gath-

er information out of electricity, gas, and water meters, but the founda-

tional software that we offer in the meter data management space is a

tool called Itron Enterprise Edition. It’s responsible for storing and orga-

nizing all of the energy information that Itron technology gathers out in

the field, both residential and commercial industrial data. We then vali-

date, edit and estimate that information and then store it away and or-

ganize it in a way that makes it very, very accessible for other analytic

applications that come along.

We then wrap that whole package in a service-oriented architecture

that makes it possible not only for our analytic applications to get ac-

cess to the information, but also for third party ac-

cess to that same data. On top of that we provide

a number of customer portal and customer care

applications that allow consumers access to their

energy information so they’re able to understand

how and when they’re using energy and water,

which benefits consumers by allowing them to be

more responsible. When we all understand how

and when we’re using energy and water, there’s

potential to reduce usage directly.We also provide

applications that allow our utility customers to di-

rectly control load and to send signals to cus-

tomers when energy is particularly scarce, allowing end users to actually

curtail their overall energy use.

What technologies are used to collect meter data?

PM. Itron offers a wide range of products that are used for collecting ener-

gy information: everything from our existing set of handheld computers,

which the company has been building for the past 30 years; tomobile col-

lectors in which an operator drives around in a van; to fixed networks in

which radios are placed at the top of poles, so that it’s possible to col-

lect that information on a much more rapid basis. And that technique

of radio collection, radio frequency (RF) collection, is used for our ad-

vanced metering infrastructure (AMI) product called OpenWay, which

has a collection engine associated with it so that it’s possible to collect

energy information very rapidly. In other parts of the world power line

carrier technology is used whereby we’re collecting the data through

the power lines themselves, using a broad range of technologies and

software tools. Itron’s operations in North America collect around 80 to


EXECUTIVE INTERVIEW

Using software to reduceenergy consumptionItron’s Philip Mezey examines the tools available to help utility companiesimprove their efficiency.

“The ability to collect informationhourly from customers gives the utilitya great deal of insight”

Itron EXEC INT:18oct 19/6/09 15:32 Page 56

90 percent of all of the commercial industrial electric information, and

at the residential level collect more than 50 percent of all of the residen-

tial data through its collection systems.

Why is it important for utility companies to manage data, and how can

this improve their reliability?

PM.Typically utility companies have collected consumption information

from the bulk of their customers once a month, and they have very lit-

tle information about what’s going on in their distribution network,

down to the customer level. By having the ability to collect information

hourly from customers, and even in some cases every 15 minutes, it

gives the utility a great deal of insight as to how and when customers

are using energy, as well as how their distribution network is perform-

ing. Among other things, they can identify areas of theft or diversion, or

other technical losses, making it possible for them to optimize the dis-

tribution network – there are tremendous opportunities for savings and

improvement there as well.

What is energy forecasting and what tools are you using to develop

and implement forecasting solutions?

PM. Forecasting tools allow utilities to understand what their energy

needs are going to be. Itron offers a suite of energy forecasting tools

that are used to forecast around 80 percent of the energy that flows

through independent system operators (ISOs) in North America. We

also have those tools deployed on a worldwide basis, allowing mar-

kets to function. When ISOs interact with wholesale markets, it gives

them and players in the market a better view of what’s going to be re-

quired for power purchases. Itron software has a wide variety of appli-

cations in the ISO market, providing better visibility and liquidity. Our

forecasting tools are also used at the market level in places like New

York’s ISO, which is doing day-ahead, hour-ahead and even 15-minute

power markets.

What load research services do you provide to electricity and gas

providers?

PM. Load research is the process of understanding market segments –

how to segment the utility market properly and how to understand the

usage patterns of those market segments so that better rate structures

can be designed to more fairly charge individual market segments.

Through the use of our forecasting and analytic tools, we’ve been able

to develop a next-generation load research tool that again allows our

customers to more effectively understand electricity and gas usage

profiles and segments, and to design better programs to serve those

customers.

What are the benefits of AMR readings for both customers and utility

companies?

PM. For automated meter reading (AMR) specifically, that data is col-

lected in a more accurate and timely fashion resulting in more accu-

rate billing with fewer customer complaints. The data is collected

remotely so that a meter reader does not need to enter the customer’s

property in order to access the meter itself, which is safer for the meter

reader and less disruptive to the customer, allowing data to be collect-

ed much more accurately. AMR is simply a much more cost-effective

way of reading meter data and therefore it lowers the utility’s overall

operational costs, which benefits the utility and ultimately the cus-

tomer.

How will the development of AMR contribute to AMI as a whole with-

in the next few years?

PM. As customers see the opportunities of automation – and by cus-

tomers, I mean our utility customers – and see how much money they

can save through better collection techniques, they’ll see the oppor-

tunity as they’ve seen with AMR in reducing their overall reading costs.

AMI essentially offers the same type of benefit as an automated meter

reading system, but allows the data to be collected much more fre-

quently and at a much greater degree of granularity. This means that

utilities can then provide customers with very accurate information

about how and when they’re using energy, and the utility also has a

better view, which is of tremendous operational value. AMI also, in ad-

dition to the standard AMR meter read, provides some very advanced

capabilities at the meter level allowing for home area networking, com-

munication into the home, the ability to remotely disconnect the meter

to support net metering, and a variety of other applications. �

57www.nextgenpe.com

Philip Mezey became Senior Vice President and COO for

Itron North America in April 2007. He has served as Group

Vice President and General Manager, then Senior Vice

President, for Itron’s Software Solutions group. Mezey

joined Itron in March 2003 as Managing Director of Software

Development, Energy Management Solutions Group.

Itron EXEC INT:18oct 19/6/09 15:32 Page 57

knocks


SMART GRID

OPPORTUNITY

Torchia ed:18oct 19/6/09 15:40 Page 58

Smart gridmeans different things to different people, but

to Marcus Torchia, Research Manager, Intelligent Grid

Strategies at Energy Insights, the definition is simple.

“Smart grid is an electric transmission and distribution

network that uses information and communications tech-

nology to predict and adjust to network changes au-

tonomously,” he says. “The aim is to more efficiently

integrate operational and revenue-generating business processes; for ex-

ample, generation and trading.

“At the same time, it allows utilities to connectwith end-users and the

premise-based assets that allow for improved

management of electric usage and distributed

generation and the overall customer experience.

There’s a heavy emphasis on greater use of infor-

mation and communications technology in help-

ing operate the transmission system.”

There have been rumblings about the need

for a smart grid for a while, but just lately the

issue has really come to the fore. What’s behind

the sudden glare of the spotlight? Torchia ex-

plains that there have been a couple of key dri-

vers behind the general push to establish a smart

grid. “The first is that we need tomore efficiently

produce and consume electricity,” he explains.

“We currently have a pretty inefficient system,

which is based on an architecture that was built

between 60 and 70 years ago.

“The systemhas remained, for themost part,

untouched in terms of major developments. The

four pieces to it are generation, transmission, distribution and end use,

where the consumer, be it a business or an individual, uses the electricity.

That value chain will remain in place. But the way electricity is produced,

and theway it’s transmitted, distributed andconsumed is rather inefficient.

There are number of things within that value chain that can be improved

through theuseof information technology.

“Another aim is to reduce carbon emissions, becausemuchof our pro-

duction here in theUnitedStates is basedon coal-fired plants. So there’s a

push to include more renewables and offset the use of fossil-based fuels

for more renewable-based sources of energy.

“In addition to that, there’s the goal of reducing waste in general and

increasing efficiency. Every timeapower plant is running, if the power is not

used, it’s wasted, because we don’t store electricity – there’s not a practi-

calway yet to do that. There’s a gap in knowledgeand informationbetween

what is needed andwhat is consumed at any given time during the day.

“What thismeans is that utility companies have to overproduce to ac-

commodatepeakdemand.We’re getting better atmanaging that, butwe’re

not nearly as good aswe could be and information technology can help us

close that gap between overproduction and under-consumption.”

Another reason for the recent prominence of the smart grid is the new

administration inWashington.PresidentObamahasplacedastrongempha-

sis on implementing smart grid as part of his energy efficiency program. The

Department of Energy (DOE), which has oversight for the disbursement of

funds, recentlyannounced fundingof$4.3billion for smartgrid,which issplit

between$615million forpilotprojectsandR&D-focusedprojects,andtherest

going toactual smartgrid implementation.Grants forsmartgriddeployments

will range between $500,000 and $20million and those for monitoring de-

vicesbetween from$100,000 to$5million.

“This is a very opportunistic time for theObamaadministration to focus

onspending inastimulus package to stimulate

jobs,” Torchia says. “When I say ‘opportunis-

tic,’ I mean the stars have aligned for the

Obama administration in the sense that he’s

been talking about and is a proponent of

clean energy and ran on an election platform

that included the expansion of renewable en-

ergy sources.”

Torchia points out that moving in the di-

rection of greater use of renewables dovetails

nicely with the fact that the government needs

to get the economy moving again, to make

people feel that it is on top of the situation.

If people can be put towork in a new sector

of the economy, such as renewables, if those

lost jobs canbe replaced and themanufacturing

base reset to supply essential elements such as

solar panels and wind farms, then the govern-

ment cankill twobirdswith one stone.

There is also the issue of national security. As Torchia reminds us,

PresidentObamahasalsohadthisaspect inmindforsometime.“Hewassay-

ing,before theeconomiccrisisbegan, thatweneedtogetoffofoildependen-

cy. This is mainly targeted at automobiles, which account for themajority of

oil-based consumptionwhen it comes to energy.

“There’s a great exposure to the United States at a security level, at a

supply chain level, wherewe find ourselves seeking oil supplies fromover-

seas. Canada is actually our largest supplier of oil, but when we look be-

yond that, it mostly comes from the Middle East. Canada has only

surpassed them in the past seven or eight years.

“There isnota security threat in the traditional relationship thatwehave

withCanada.Butcertainly,with theMiddleEastandall thedisruption thatcan

occur there, there’s agreat risk that somethingawful couldhappenandbring

theeconomy toahalt. So there’s the security aspect of it.

“The environmental aspect of it is thatObamahimself, aswell asmany

of the people in this government, believe that a lot of the global warming

that has been taking place has been because of fossil fuels and carbon-

based fuels in general. And there’s a lot of scientific proof to support that.

You can argue up and down about where the carbon comes from, but it’s

59www.nextgenpe.com

Marcus Torchia tells P&E why this is the ideal time for the new government to promotethe implementation of a nationwide smart grid infrastructure.

MARCUS TORCHIA


To learn more about Honeywell demand-response solutions, visitwww.honeywell.com/utility or call 1-800-345-6770, ext. 615.

© 2009 Honeywell International Inc. All rights reserved.

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hard to argue against the fact that the atmosphere is warming. It’s recog-

nized as a global problem that, hopefully, the United States is starting to

take some steps to deal with.”

Those, then are the potential benefits of smart grid implementation

and an increased focus on renewables: a reduction in our dependency on

fossil fuels, a reduction in carbon emissions and a general movement to-

wards cleaner energy sources, both of which are long-term goals. In the im-

mediate term, Torchia believes smart grid will put people to work in helping

re-diversify and re-ignite our manufacturing base.

Smart metersThis is all very well, but how do we actually go about doing this? How

do we put in place the systems that will allow us to achieve these lofty

goals? Torchia explains that the current level of smart grid implementation

among US utility companies is still primarily focused on smart metering and

on automated metering infrastructure. “Utilities have been focusing on this

because they’re trying to reduce peak demand rather than trying to bring

in new sources of renewable energy,” he says.

“Over the past few years, it has become more and more difficult for a

utility to simply add new generation. Previously, utilities would go before a

public utilities commission or they would go before zoning boards and say,

‘We want to open up a new coal-fired power plant or diesel-generated plant

or gas-fired plant.’ It didn’t matter what it was; the way they overcame

greater demand was by simply producing more energy.

“As time has gone on, it’s proven much more difficult and much more

costly to get those approvals. It’s very, very difficult today for a utility to get ap-

proval foranewgenerationplant.Soasthepopulation increasesandasusage

increases, there are more electronic devices, houses have become oversized,

we’ve got ‘McMansions,’and the load on the grid has increased, but the capa-

bility to produce more energy has not been keeping pace with demand.

“So the utilities say, ‘What we need to do is somehow make the con-

sumption of electricity more efficient.’ They are doing that by going to the

end-user and putting in place technology and programs that are helping

shift peak demand and smooth that line of consumption.”

Companiescandothisbecausethere isaverypredictablepatternofelec-

tricity consumption in any given service territory based on time of day or day

of the week. Utility companies understand exactly when there’s going to be

peak demand and they adjust for that.

Torchia says that utilities are doing this through smart metering initia-

tives, by offering incentives to the consumers to shift their demand, and

through time-of-use programs that give incentives to consumers to change

their behavior. “For example, instead of running the air conditioner very

hard from noon to 4:00 pm when the sun is at its peak, utilities are giving

customers more incentive to not run it at that time. Maybe they’ll run it

more in the morning and not so much during the day and maybe the tem-

perature increases just a little bit, an extra degree or two. But it has a vast

impact on the actual load.

“When we look at the implementations going on out there, the vast

majority of them today are about smart metering. That’s not exclusive, but

that’s certainly the majority. For example, if we look at smart metering use,

on average, 41 percent of utilities in the United States are doing some form

of smart metering.

61www.nextgenpe.com

“By going to the end-user andputting in place technology andprograms that are helping shiftpeak demand and smooth thatline of consumption”


“There are three types of utilities: cooperatives, independently owned

utilities, andmunicipal. Around 53 percent of cooperatives have implement-

ed smartmetering. The independently owned utilities are at 40 percent. The

municipals are at 34percent. So thatweightedaverageof 41percent is for all

three segments of utility types.

“That 41 percent are starting widespread deployment. But typically it

takesbetween fourandsixyearsbeforeautilitymanages togetsmartmeters

into its entire service area. If they have amillion connections tomake, they’ll

doabout200,000ayear.Sobetween2007,whenmost implementationsstart-

ed, and2011,we’re seeing thevastmajority of deploymentof smartmetering

projects.”

Different strokesImplementingasmartmeteringsystemacrossacompany’sentireservice

area isadauntingprospect,whichrequiresaslightlydifferentprocess foreach

of the three typesof utility.

“Differentutilitieshavedifferentdrivers,”Torchiasays.“Ofcourse,allutil-

ities need toprovideagreat level of reliability in termsof electricity availabili-

ty, that’sagiven.But independentlyownedutilitiesareverymuchprofitdriven.

That’s not to say thatmunicipals and cooperatives are not, but they’re not as

directly tied toprofitability as the cooperatives and themunis.

“The pain that the independently owned utilities need to go through is

that theyhave togobeforeapublic utilities commission, andmunicipals and

cooperatives don’t. They need to go before a board and they have tomake a

rate case. Typically, if they get approval for it, what they get for that approval

is rate relief.

“Forexample, if an independentlyownedutilityneeds todoabillion-dol-

lar project to roll out awidespreaddeployment ofmeters, they go before the

board and say, ‘This is going to cost us a billion dollars andwewould like to

recover some, if not all, of that cost, through increases and rates to the con-

sumers themselves.’”

The considerations that different utilities go through have an impact in

termsof timeline. Independentlyownedutilitiescan’tmoveasquicklybecause

theyhave togothrougha longerprocess,andTorchiaexplains that it can take

as longasayear ormore for them toget thenecessary approval, by contrast,

municipals and cooperatives can, for themost part, act independently and

moveasquickly as theywant to, since for them it’s an internal process.

Eachutilitymustgo throughabusinesscase. “They lookat thecostsand

they look at the benefits,” Torchia explains. “They do some sort of analysis,

typically, to ask themselves, ‘Does this make sense for us?’ It changes from

utility to utility; there’s not oneapproach to it. The reason for this is that have

someutilities that are vertically integrated. They own everything fromgener-

ation assets all theway through to themeter.

“Thereareother typesofutilities thatown justdistributionandtransmis-

sionassets,andthey’reseparated fromgeneration.Thentherearesomecom-

panies who are just retailers. They aggregate suppliers’ generators and they

leasesome time toget the transmission.Theyuse the transmission linesasa

conduit. But they’re really purchasing fromgenerators.

“Thoseareverydifferent businessmodels. Depending on the business

model of the utility, they’re going to do a different analysis. The tools that

they’re using at a business level are analyses that any business would

use to determine if the project will be profitable or worthy of their time

and effort.”

Stability neededOne potential challenge in bringing in such extensive change could

be the possibility for disruption, but Torchia says this isn’t the case. “The

utilities are held at a very high level of reliability. It’s part of the their re-

sponsibility to the regulatory authorities that they provide as much as

they can a disruption-free upgrade or replacement of their infrastruc-

ture. So the chances of extensive disruption at this particular point are

pretty minimal. As part of the fundamental building block of planning,

they need to plan to keep reliability, to keep the grid up and running.

However they go about implementing changes to the infrastructure,

they’re going to go ahead and accommodate whatever it is those limita-

tionsmight be.

“They’re not going towholesale rip somethingout, shut down the grid,

and then once they get a chance to put it back in place, they’ll turn the grid

up. They just can’t do that. They can’t do it from a regulatory perspective.

They can’t do it even fromabusiness perspective. Everyminute that they’re

down, they’re losingmoney.

“So there’s a great incentive from a revenue and profitability perspec-

tive. There’s also a great incentive in terms of complying with regulations

that they have uninterrupted service. I don’t foresee that there will be

any problems, certainly none that are obvious at this particular point.

Also, it’s important to keep in mind that a meter can go down, but it

doesn’t change the actual core grid. In other words, the electricity is still

being transmitted, even though the ability to talk to that meter gets in-

terrupted. The actual supply of electricity, for themost part, is going to re-

main stable.”

Someanalysts believe that the grants recentley announcedby theDoE

will favor municipals and cooperatives and not independently owned util-

ities, but Torchia does not agree. “The reasonpeople are saying this is that

most independently ownedutilities are runningprojects that are in thehigh

hundreds ofmillions of dollars, so a limit of $20million for an independent-

ly owned utility is pretty small.

“They’re saying that the contribution for the IOUs is relatively small, so

it disfavors them in favor of themunicipals and the cooperatives.While that

may be true, I think the reason behind it might be a practical one: the

Obama administration has said very clearly that the point of having the

stimulus in the first place is to create jobs.

“Thepublic utilities commissions, the regulatory authorities, they rule

on independently owned utility projects. They do not have authority over

themunicipals and the cooperatives. So for all practical purposes, the way

I see it is that the Obama administration with these low thresholdsmight

be, by default, favoring the cooperatives and the munis, but the reason

why they’re doing that, in my opinion, is to speed deployments, as op-

posed to having to run through the PUCs. I’m not seeing that they’re

going out of their way to not support the IOUs. They’re trying to get

faster deployments out there.”

Torchia is happy to see that smart grid implementation is progressing

across the country, with several large cities also getting in on the act. “We’re

definitelyseeingmorecities implementingsmartgridatacitywide level.There

are a number of themout there: Smart Grid City, is in Boulder, Colorado; and

there’sone inAustin,Texas, andnowMiami.Thereareanumberof cities that

are participating in trying to accelerate adoption holistically. It’s an excellent

trendoverall. It’s a very promising trend inmyopinion.” �



Millennial Ad:euro 2/2/09 10:39 Page 65


The application of intelligent moni-

toring and control does not widely

extend beyond the substation, so

utilities presently rely on engineering

models and local controls to regulate voltage

and power factor. As a result of these pres-

ent methods of regulating voltage and power

factor, the typical distribution system does

not dynamically adjust to minimize losses or

optimize delivered voltage levels to custom-

ers. System Optimization creates a dynamic

distribution grid capable of optimizing on

energy efficiency, environmental or opera-

tional targets.

To deliver System Optimization to utili-

ties, CURRENT installs intelligent sensors at

strategic locations on distribution feeders

that are connected by a high-speed, low-

latency communications network. These

sensors provide real-time information to

analytical software where it is combined with

geospatial, asset, SCADA and other opera-

tional data from capacitor banks, substations

and other distribution devices to determine

the correct actions to regulate voltage and

VAR levels dynamically throughout the day.

This enables utilities to flatten and lower

delivered voltage levels, while reducing line

losses.

Like many other industries, the chal-

lenges facing the electric utility industry will

require an evolution to a more self-healing,

self-optimizing grid. The lack of real time

monitoring and dynamic adjustments pre-

vents utilities from optimizing the amount of

power necessary on the system as it fluctu-

ates during the day. While historically this

has not mattered, in a carbon constrained

world, excess power requirements result in

excess carbon emissions and higher costs.

To address these concerns, System Optimi-

zation offers dynamic control of voltage and

reduces technical losses, enabling utilities

to serve their customers more efficiently

per kilowatt-hour generated, and lowering

the total generation and associated carbon

emissions. In addition, dynamic control of

the distribution grid can facilitate intermit-

tent renewable integration, as well as help

improve generation dispatch and transmis-

sion operations.

The result is a unique method of driving

more value from a smart grid by enabling

automated control of voltage and VAR flow

throughout the distribution system capable

of reducing the overall electricity needed to

service utility customers by up to five percent.

This is particularly helpful for utilities in states

that have energy efficiency, carbon reduction,

power factor or peak load requirements.

System Optimization can be installed on

a substation-by-substation basis and typi-

cally has a payback within a couple of years.

This solution is applicable to the entire distri-

bution system, which makes the savings pro-

vided easier to achieve than other efficiency

and control technologies. It represents a

low-cost, high-value energy efficiency solu-

tion that does not directly impact consumers

or require a change in their behavior. Utilities

can base the optimization upon minimiz-

ing losses, optimizing voltage, integrating

renewables, minimizing the environmental

impact or any combination thereof. System

Optimization can also be utilized as a virtu-

ally dispatchable generation resource be-

cause the load reduction can be measured

and verified in real-time.

However, it is important to note that

System Optimization requires high-speed,

low latency communication. By definition,

a smart grid is an advanced system that

incorporates widely distributed intelligent

sensors and employs real-time communica-

tions to sense and correct inefficiencies and

disturbances automatically on the electric

distribution system. In transitioning the dis-

tribution network to a dynamic self-healing,

self-optimizing grid with real-time feedback

control, information from sensors and points

of control (such as line capacitors, voltage

regulators and substation load tap changers)

must be provided to the analytical applica-

tions, and optimization decisions must be

made and controls must be initiated.

To get this level of control on a large scale

requires intelligent sensors that continually

pre-process measurements and only com-

municate relevant information using high

speed, low-latency communications systems

that move this information to the centralized

analytical applications and a highly scalable

analytical software platform. This informa-

tion is then combined with data from other

utility systems to initiate intelligent control

decisions – all within a few minutes or less

depending on the applications. n

ASK THE EXPERT

Dynamic distributionBrian Deaver analyses the role of System Optimization and how can it help utilities improve distribution efficiency and control.

Brian Deaver is Vice President of Product Management for

CURRENT Group, a leading provider of smart grid solutions. Deaver

spent 20 years with Baltimore Gas & Electric, and among his

accomplishments, he has led BGE’s award-winning Distribution and

Substation Automation projects. Deaver earned his BSEE from the

University of Maryland.

“System Optimization creates a dynamic

distribution grid capable of optimizing on energy

efficiency, environmental or operational targets”

Current_ATE.indd 64 22/6/09 09:17:29

CURRENT OpenGrid™ — Delivering Real Smart Grid Results Today• Modular and scalable with multiple options for sensing and low latency communications• Standards based management and integration of devices, communications and back-office applications• Advanced Smart Grid applications covering all of the distribution system as well as the customer premise

SYSTEM OPTIMIZATION Optimize power flow, reduce system losses, integrate renewables and reduce CO2 based on real-time grid conditions

dISTrIbuTION MANAgEMENTActionable grid intelligence enables, condition based maintenance, better planning, operational efficiencies and improved reliability

SENSINg & COMMuNICATIONSIntelligent sensing integrated with a variety of open IP, real-time communications solutions provide the distributed analysis necessary for a Smart Grid

OpenGridTM

www.currentgroup.com 866.427.0602

CURRENT NGPE 4-21-09.indd 1 6/4/09 3:11:21 PMCurrent.indd 1 18/6/09 14:32:20


THE CUTTING EDGE

Power & Energy catches up with Austin Energy’s Andres Carvallo to get the lowdown on the technology involved in building the smart grid, and what it really means for consumers.

Smart grid seems to be the phrase on everyone’s lips. Presi-

dent Obama’s commitment to establishing a new federal in-

frastructure seems to have everyone buzzing around smart

grid, smart meters and the environmental consequences,

and Austin Energy CIO Andres Carvallo is no exception.

“I’m in charge of the technology division, planning, development

and operations across the company,” explains Carvallo. “I’ve been

here six-and-a-half years and we have been driving a transformation

since then.”

Carvallo’s passion for smart grid began in 2006, during which he

was often found giving talks and formulating company strategy to

incorporate the innovative technology. “We have been working on it

since then and our Smart Grid 2.0 will go live in August of this year.

We’re currently managing 200,000 devices real time, and by the end

of July we’ll be managing half-a-million devices and we’ll have full cov-

erage of 440 square miles and a million consumers.”

Education Keeping consumers informed of the development of smart grid

technology is a primary focus of all utilities attempting a successful

Carvallo.indd 66 22/6/09 09:17:08

67www.nextgenpe.com

August, and a vast array of technology is needed to ensure this hap-

pens effectively. Along with hardware and software, communications

technology is highly important, with the company using fiber for the

back end and wireless technology for the last mile.

Crucially important to customer education and streamlining the

system has been the replacing of typical meters to smart meters. “We

have deployed sensors across the infrastructure to monitor all kinds

of things, from detection of faults to temperature to all kinds of har-

monics, as well as the different elements of the infrastructure,” says

Carvallo.

“All those devices are feeding information into a meter data man-

agement in a distribution management system, and those systems are

all communicating. In the case of the meter data management system

it’s communicating with the billing system, it’s communicating with

the conservation and marketing engines, it’s communicating with the

distribution management system, and the distribution management

system is interacting with the devices that it manages real time, and

then it’s integrated into our SCADA system.”

Austin Energy is at the forefront of new generation development,

having operated the first fuel cell in Texas. For many years the compa-

ny has been a big proponent of distributed generation and has been

innovative in the technologies it uses. The fuel cell operated for five

years as a tester and was decommissioned

last year.

“It was plugged into the grid for about

five years and it was a way for us to test the

viability of that technology as another solu-

tion versus central power plant generation.

We have a big appliance around distributed

generation as part of our effort on Smart

Grid 2.0,” he says.

RenewablesAs the country gears up for a federal

push on renewables, having already set the

blueprint for forward-thinking innovation,

great things are expected of Austin Energy.

In April of this year, the National Renewable

roll out of the system, and for Austin Energy the same is true. As one of

the main goals included in the program, education of all its stakehold-

ers – employees, regulators and large industrial customers, as well as

its commercial and residential customers – is vital to ensure smooth

implementation of the grid. Carvallo introduced the ‘Change your

generation’ software game, in a bid to transform the way in which

consumers use energy.

“We’ve done a very good job of putting together the game as a

day-in-the-life scenario. The tool is all about filling the gap of future

generation needed by Austin Energy, and there are some parameters

and limitations around how one goes about doing that. You’ve got to

think about availability, capacity and all the issues with time and cost

and carbon footprint and so on. When you look at the game and play

with the game, you can decide then to submit your solution to us. We

are hoping to get a significant number of cases. The game has been

played quite a bit: we’re expecting that between now and the end of

the year, we’ll probably get 50,000 or 100,000 recommendations,” he

explains.

“The game has been used by a lot of people to talk about the

issues of carbon and green energy and the portfolio mix of electric

utility,” he continues. “By only that measure it’s already been a suc-

cess. It’s a companion to a program that we have around a public par-

ticipation process where we are engaging our customers in an open

way – if you had a voice on the amount of energy usage, how would

you go about participating?

“The participation process has been going on for a while now. It

started in the fall of last year and we have been sharing with our cus-

tomers all our challenges and all the inner details of our business, and

also the goals that we have.

We have had 12 town hall

meetings and we have had all

kinds of surveys online. We’ve

reviewed in detail all aspects

of the business – from energy

efficiency to carbon offsets to

cost – and we have created a

very sophisticated handbook

that we give to customers. It’s

been very successful.”

TechnologyAustin’s smart grid system

is anticipated to go live in

“We have been sharing with our customers all our challenges and all the inner details of our business, and also the goals that we have and it’s

been very successful”

Carvallo.indd 67 19/6/09 15:40:37


megawatts over the last 25 years and having national goals is a

good thing. Obviously, part of the challenge with national goals is

that some places have an easier journey towards certain goals than

others and not all places are created equal. Some places are heavy

duty hydro, like the west coast versus the east coast, which pre-

dominantly produces coal. So if you have goals with carbon or goals

with effi ciency or goals with renewables, they can now be optimized

and be aggressive nationwide. The west and the south coast could

do better,” he says.

Austin Energy is certainly standing out as one of the big players,

and as Obama continues in his quest to give renewables a perma-

nent seat at the energy table, Carvallo is most defi nitely one man

championing the cause.

Energy Laboratory, part of the DOE, issued a press release high-

lighting the top 10 sellers of green energy. Unsurprisingly, Austin

Energy was ranked number one. As the biggest seller of absolute

megawatts of green power, Austin Energy has surpassed all other

electric utilities for seven years. Wind and other renewable energy

sources currently represent 11 percent of the company’s portfolio,

with a goal of achieving 30 percent by 2020.

“We have chosen to build a solar PV power plant across 300

acres. It’s 30 megawatts and will be the largest of its kind in the US

to date. It’ll go live in 2010 and is expected to power 5000 homes.

Earlier this year we also announced the creation of a deal to operate

a biomass plant, generating 100 megawatts which will also go live in

about a year and a half, and again that solar plant and the biomass

plant are steps towards reaching that 30 percent mix. So our total

output as an electric utility is 2700 megawatts and we are hoping

that one-third of those 2700 megawatts will come from renewable

energy by 2020.”

President Obama’s Plan for America is setting targets of 10 per-

cent of energy to be sourced from renewables by 2012, and it has

become common for utility companies to set their own individual

target of 30 percent. Austin Energy is no different. Carvallo tells me

that they have had this target for almost four years, prior to Obama

and his energy reformation proposals.

“We’re also focusing on energy effi ciency; we have a target

of reaching 700 megawatts of saved energy by 2020. We did 600

Austin Energy is planning to set aside 300 acres,

located just outside of Weberville, Travis County,

to build one of the world’s largest solar power

facilities. Through a partnership with Gemini Solar

Development Co., Austin would be the exclusive client and

pay $10 million a year for 25 years for the power generated.

The plant is due to open in 2010 and predicted to

produce enough energy annually to power up to 5000

homes.

However, there is some dispute as to whether this would

raise the monthly electricity bill of an average homeowner,

and there is also concern from some of Austin’s largest

manufacturers as to the cost of their bills.

SIGHTS ON SOLAR

Andres Carvallo is Chief

Information Offi cer at

Austin Energy, where

he is responsible for the

technology vision, planning,

development and operations

across the enterprise. Prior

to Austin Energy, he held

senior executive titles at

large companies such Philips

Electronics, Digital Equipment

Corporation and Borland.

“Obviously part of the challenge with national goals is that some places have an easier journey

towards certain goals than others and not all places are created

equal”

Carvallo.indd 68 19/6/09 15:40:41

Adica.indd 1 18/6/09 14:21:41

Sensus Ad:euro 2/2/09 10:44 Page IFC1

Sensus Ad:euro 2/2/09 10:44 Page 1

With the hype aroiund smart grid rolling out

of control, almost every utility is focusing

its efforts on smart metering and customer

operations, but what does it all really mean?

The defi nition itself seems susceptible to

change between each utility, and as for

smart grid, that’s one concept that seems to

be lacking any sort of unifi ed formulation.

Defi nition“We look at the intelligent grid, or smart grid, as a collection of

concepts, technologies and solutions that are designed to enable an

electrical power grid to be self-healing, self-monitoring and self-regu-

lating”, says Hassan Farhangi, Director of GAIT at the British Columbia

Institute of Technology in Vancouver, British Columbia, Canada. “This

resides on a convergence task form of information technologies, com-

munication technologies and power systems.

“That platform is what provides the electrical utilities with the

ability to put a layer of intelligence on top of what they have today,

transforming it from a one-way unintelligent centralized network into

In order to tear down the facade surrounding smart grid, P&E caught up with Hassan Farhangi, one man with a clear idea of what it all means.

THE TRUTH ABOUT SMART GRID

a network that is two-way, a network that is distributed, ad hoc and

adaptive, and enables utilities to do the main response and to integrate

a variety of different sources, of energy to their energy and so on.

“Academia is trying to understand what a smart grid is, and in that

you also see the kind of evolutionary past that everyone is talking

about from the existing grid to the next grid.”

BCIT is one of the largest academic institutions in British Colum-

bia, encompassing more than 60,000 students over seven different

campuses. The research into smart grid has been conducted for more

than 20 years –primarily focusing on information, organization tech-

nologies and expert systems.

“As an institution, it has done a lot of research in different areas of

energy,” explains Farhangi. “When we started looking at their issues

and the problems that utilities were confronted with, we realized that

we could bring a level of understanding, research and solution devel-

opment for our utilities that would be important to them, to their busi-

ness and to where they are heading.”

The emergence of smart grid was an effect of growing environmen-

tal concerns; as local governments began implementing green energy

plans for utilities to adhere to, Farhangi’s team realized the importance


SMART GRID

Farhangi.indd 72 19/6/09 15:49:39

73www.nextgenpe.com

real – it is not just a bench in a lab that is far from reality. This is a real

setting and the minute you build confi dence on the validity and the

correctness of technology or the approach then you can take it over

and run it, or deploy it in your actual distribution network.”

Farhangi and his team began operating the micro-grid almost two

years ago, beginning many of the approaches initially in a lab environ-

ment. Following their research, they then applied to the government of

British Columbia for funding, receiving an astonishing $2.7 million for

a two-year project. The fi rst phase of the project began in 2008, and so

it is still a relatively new development.

He explains the fi rst phase as being the basic development of the

infrastructure.

“Although on the campus we’ve had a variety of different com-

ponents we need to put networking technologies and computation

BRITISH COLUMBIA ENERGY PLAN

The new BC Energy Plan: A Vision for Clean Energy

Leadership is a combination of aggressive targets for

zero net greenhouse gas emissions, new investments

in innovation, and an ambitious target to acquire 50

percent of BC Hydro’s incremental resource needs

through conservation by 2020.

Environmental leadership:

• All new electricity projects developed in BC will have

zero net greenhouse gas emissions.

• Existing thermal generation power plants will reach

zero net greenhouse gas emissions by 2016.

• Zero greenhouse gas emissions from coal-fi red

electricity generation.

Energy conservation and effi ciency:

• An ambitious target to acquire 50 percent of BC

Hydro’s incremental resource needs through

conservation by 2020.

• New energy effi ciency standards will be determined

and implemented for buildings by 2010.

Investing in innovation:

• The new $25 million innovative clean energy fund

will encourage the development of clean energy

and energy effi cient technologies in the electricity,

alternative energy, transportation and oil and gas

sectors.

• The new BC Bioenergy Strategy will take advantage

of BC’s abundant sources of renewable energy, such

as beetle-killed timber, wood wastes and agricultural

residues.

of research on which to build these strategies. He describes British Co-

lumbia’s energy plan as being “one of the most advanced energy plans

in the country,” paving the way for a brand new era in which electricity

is generated around the grid.

BC HydroBC Hydro, the main electric utility in British Columbia, has begun

moving towards a grid in which they can allow for co-generation, a true

21st century method of energy delivery. The grid allows independent

power producers to individually generate electricity and then send it

on to the grid, combining the various sources of energy.

“The grid mandated BC Hydro to provide up to 50 percent of the

incremental load on the system by 2012 through conservation, so a

massive conservation effort has been mandated by the government.

BC Hydro then started looking around to incorporate different tech-

nologies and different solutions and looking for help, which we offered

to them. One of the primary drivers for that being that like very many

other utilities across the world, BC Hydro is quite cautious in terms of

introducing new technologies into its critical infrastructure. It needs to

have an environment in which it can develop these solutions in a near

real setting, test it, qualify it, validate it and then introduce it into its

infrastructure. BCIT’s campus is a perfect setting for that.

“We have a large campus, more than 60 buildings, including all kind

of load profi les – industrial and residential loads. We have dormitories

on the campus, as well as offi ces and classrooms, and at the same

time we do have a variety of different co-generation capabilities on the

campus. So we realized that we could actually turn around and make

this campus into an intelligent micro-grid, enabling utilities to utilize

this infrastructure as a sandbox, to develop solutions in partnership

and in collaboration with our researchers, qualify those technologies

before eroding it into their distribution system,” says Farhangi.

Micro-intelligent gridThe micro-intelligent grid, Farhangi explains, is achieved by look-

ing at an environment in which a variety of different technologies can

be tested. For the smart grid network topology, this is done in terms of

three different components: HAN, a home area network that holds a

variety of loads, appliances and terminology, as well as LAN and WAN.

“LAN, local area network, is a collection of smart meters that

work collaboratively in a network; WAN is a wide area network, which

is a network of substations” Farhangi says. “An intelligent micro-grid

enables the utilities to simulate each of these components either

individually or as an end-to-end integrated solution, and experiment

with a variety of different solutions.”

Farhangi gives an example of load shedding, and explains this is

achievable through using an intelligent micro-grid. Through installing

load control devices and networking them in a HAN, information can

be captured from a collection of smart meters, and then be aggregated

and communicated with the end servers.

“The beauty of this infrastructure is that it allows you to experi-

ment with different topologies,” he continues. “You can validate those

topologies in an environment that is not threatening and one that is

fully controlled. You have full visibility over everything you do, and it is

Farhangi.indd 73 22/6/09 09:30:57


and we can take those, engineer them and commercialize them,”

says Farhangi.

Global operationsThe operations are conducted on a global scale. The BCIT Tech

Center operates the first micro-grid in Canada, with participants from

around North America. Farhangi notes IBM and GE as their US par-

ticipants, whilst also noting BC and Canadian companies, as well as

Schneider, a European company. But how will this translate to a global

grid, and will President Obama’s hope of a more efficient grid stretch

across international borders?

“What we are hearing from our counterparts in the US and else-

where, and what we’ve also seen in terms of the developments that are

happening at the moment, is that the smart grid is not a solution or an

approach that is going to come about overnight,” he explains.

“Smart grid is going to go through an almost evolutionary path

and the developments are going to be primarily incremental. We are

dealing with such critical infrastructure that it is almost unthinkable

for any jurisdiction across the globe to try and meddle with it without

being concerned about the criticality of the services that such infra-

structure is providing.

“What we see happening is that the existing electrical grids that

we have across the globe are going through a process of improvement.

We are going to start adding different levels of intelligence, starting

from the distribution side of the network and working our way up the

chain towards the generation part of the network, adding layers of dis-

tributed command, control and intelligence to the network.

“The dominant approach that a lot of utilities across North America

are looking at is that the smart grid of the future is going to be at the in-

tegration of intelligent micro-grids. There will be a tendency of moving

towards encouraging larger neighborhoods or larger customers to set

up their own micro-grids, introduce a level of distributed generation

of electricity, and turn their micro-grids into fully visible self-heating

intelligent micro-grids.

“While they’re doing that they can start looking at integrating all

of these intelligent micro-grids into a much larger intelligence system

that would be our future smart grid. So the smart grid of the future

would be an evolution of the existing infrastructure that we have,”

he explains.

Farhagi’s definition of smart grid sounds promising – with con-

tinued research efforts and further unveiling of the two-year project,

2010 is set to be an exciting year for his team. n

technologies on top of the existing components, and experiment with

all kind of provisioning methods for termination points, and integrate

the sources of energies or cogents that we have on the campus. So the

first phase is getting the infrastructure in place.

“The second phase would then look at the resiliency, the liability

and the scalability of the solutions that we’ve put implemented. We try

and scale up our solution in terms of data collection issues, protocols,

and the distributed command and control strategy and try to make

sure that we achieve the kind of standards and efficiencies that are

required for the micro-grid. The third phase would be primarily com-

mercialization.”

Farhangi and his team are working with a variety of different

technology providers and utilities on the campus. Together they roll

out their solutions, integrate their own technologies and create the

solutions that are needed by the utilities. “We are hoping that in the

third phase we would have a number of mature solutions that are

validated, that are reliable, that are secure and that are scalable,

Hassan Farhangi is Director for Advanced Information

Technology at the British Columbia Institute of

Technology, Vancouver, British Columbia, Canada.

“The smart grid of the future is going to be at the integration of

intelligent micro-grids”

Farhangi.indd 74 19/6/09 15:49:42

DTN_AD:euro 2/2/09 10:25 Page 79


Mike Heyeck tells Natalie Brandweiner how previous mistakes help ensure the safety of the nation’s largest transmission system.

FEATURE

Heyeck.indd 76 22/6/09 09:32:09

77www.nextgenpe.com

Since the origin of nuclear fi ssion in the

1930s, many attempts have been made

to endorse nuclear as a primary source

of energy: Eisenhower’s infamous

‘Atoms for Peace’ speech in 1953 and

the US navy’s eagerness to develop

nuclear power demonstrate America’s

willingness to use this source of energy.

That is, until the 1986 Chernobyl disas-

ter and a general movement against nuclear power stopped

short the building of power plants.

As crude oil supplies continue to decline and technology

for safer waste disposal increases, the new administration in

Washington has begun re-embracing nuclear, and American

Electric Power (AEP) is cleverly devising a strategy to incor-

porate the power’s previous faults. As SVP of Transmission,

Mike Heyeck explains how nuclear energy is being used as a

platform upon which to build the company’s safety guidelines.

“Our safety program is very integrated and actually ad-

dresses the areas of human performance based upon the

model from the nuclear industry, which has been a leader

in this. We’ve adopted that from the nuclear industry to ad-

dress safety, as well as reducing operational errors.”

AEP is currently the largest transmission system in the US

and as the fi rst utility company to create an interstate trans-

mission system, it has set the bar on safety standards. The

utility operates 39,000 miles of transmission lines, including

more than 2100 miles of 765-kilovolt extra high voltage.

“We’ve been a leader in transmission, not only in tech-

nology but also in some areas of safety. We are one of the

pioneers in live-line maintenance: developing methods for

doing so in a safe way, and we also benchmark very well with

our safety statistics in the industry,” says Heyeck. “Being

geographically dispersed, we still have a local supervision

presence and rely heavily on local supervisors to help imple-

ment and execute the safety aspects of our business.”

Modeled on Eisenhower’s interstate highway network,

AEP’s nationwide transmission system began in 2006 in an

attempt to eliminate the transmission bottlenecks believed

to be dominating the current power infrastructure, particu-

larly within the eastern grid. The plan is to build a transmis-

sion line that spans the 550 miles between West Virginia and

New Jersey, improving transfer capability by approximately

5000 megawatts and reducing transmission line losses by

approximately 280 megawatts.

President Obama’s call for 10 percent of electricity to

be sourced from renewables by 2012 will inevitably require

a change in the current operations of the electric grid. If re-

newables are to increase, the transference of wind and solar

energy from the east coast to the west is going to need a more

effi cient operation to ensure the energy being used does not

create a loss. It certainly seems that AEP is already well aware

of this, and is seizing the gap in the interstate market.

“Energy effi ciency is the cheapest

resource we can get for our

energy future”

Lessons learned

Heyeck.indd 77 19/6/09 16:17:23


Interstate transmissionSince 2006 AEP has expanded its interstate project to

become many, using new technologies in a bid to create

the most efficient transmission system in the US. “We’re

using conductor configurations and metals that are lower

loss and therefore more efficient in transmitting power. In

fact, the efficiency is well over 99 percent, and we have

line losses of less than one percent if we use our new

design,” says Heyeck.

However, being the first to set the standard, par-

ticularly in safety, does not come without its challenges,

Heyeck notes. “One challenge when you have a large

workforce is implementing any new practice in a consis-

tent manner, but we’ve been very successful in doing that.

Again, learning from the nuclear industry, we have a large

body of knowledge to leverage in order to a program such

as human performance.”

AEP intends to reduce new generation by facilitating the

optimal economic dispatch of existing generation assets.

Heyeck believes the current state of the transmission to be

“a hodgepodge grid with a lot of constraints,” and that this

is largely the problem facing the US energy sector.

“The system cannot reach the most economic genera-

tion; in some cases there are pockets of uneconomic gen-

eration that has to run. If you build a robust grid without

constraints, you can reach the lowest cost generation, or if

you desire to access renewable generation, transmission

is the enabler to do that.”

To expand its interstate transmission system, AEP is

working in partnership with the American Wind Energy

Association to develop a conceptual grid that is capable

of connecting 300,000 to 400,000 megawatts of wind

generation across the US.

“Most of our wind potential on land is in the midsec-

tion of the country, and most of our people are along the

coastlines. Connecting that wind requires a grid that is

nationwide. Through the partnership, not only are you

able to do that but you also have a new grid that enhances

economic dispatch, and as a result we could save at least

“If you build a nationwide grid, it’s more efficient –

you have a greater reach of supply resources, and you’re able to reduce supply need”

PartnershIP

aeP and Duke energy have formed a

joint venture to build and own new electric

transmission assets. The equal partners

are looking to build 240 miles of extra-high

voltage, 765-kilovolt, transmission lines,

linking Greentown Station with Rockport

Station, across Indiana.

Operating a 765-kilovolt transmission

line provides both economic and

environmental benefits to both parties. The

line requires less land to carry more power

than lower voltage lines, and would also

cost less than half as much to build.

Heyeck.indd 78 19/6/09 15:50:38

79www.nextgenpe.com

straints of wind developers themselves. So, the goal is achievable.

“The only debate would be whether it’s achievable by the 2012

target. When you’re rising from one to two percent wind and solar

energy production to 10 percent, that does require an extraordinary

amount of transmission being built, as well as wind farms and solar

installations.

“However, many gains could be made with energy efficiency with

federal help on the standards for appliances and so on. But energy

efficiency is, as some say, the cheapest resource we can get for our

energy future.”

As for bringing back nuclear as a reliable renewable source, Heyeck

explains that although there are advantages to learning from our previ-

ous mistakes, reinstallation is not necessarily an easy process.

“Transmission ought to be neutral to what the fuel source is,

whether it’s renewable or nuclear, but nuclear’s going to take some

time. Not just because of the permitting process, but also because of

the cost uncertainty.” n

20,000 megawatts in supply because of reduction of

constraints and greater efficiencies. In other words, if

you build a nationwide grid, it’s more efficient – you

have a greater reach of supply resources, and you’re

able to reduce supply need.

“We have a number of ongoing projects. One of them

emanates from West Virginia into Maryland, and we’re

going to file an application to site that transmission

line in the next month or two. Another project is in the

middle west of the country, in Oklahoma and Kansas,

where we are in the process of getting permission from

the state planning authorities to build those lines. We

have an order from the regulators in Texas to build

around one billion dollars of transmission connecting

West Texas wind to load centers, and we’re beginning

the siting process for those lines,” says Heyeck.

Obama’s proposalThe new administration is heavily focusing on

bringing transition to a new digital electricity grid

through a series of smart grid features, such as smart

meters, distributed generations and demand response.

With AEP already installing an interstate system,

Heyeck explains that if they as one utility company can

successfully instigate such a system, there is no need

for federal involvement to establish it.

“We need to be clear when we talk about a ‘federal

grid’. We, at AEP, do not believe that you need federal

dollars to build an interstate transmission grid. Private

investment can be attracted to build transmission.

What we need is help with the impediments – a siting

process for interstate transmission lines. We would like

that to be under a federal authority.

The second impediment is allocating costs for

those facilities. We believe costs should be broadly

allocated based on energy usage. Once you get those

impediments removed, you do not need federal stimu-

lus dollars to build transmission as private investment will be at-

tracted,” he explains.

However, Heyeck does not think the sameof all the stipulations

regarded in the energy plan, and explains how if energy is affectively

coordinated, the federal targets for renewables can be achieved.

“In the US, there’s very little penetration of wind and solar

energy, although we do now have more nameplate capacity than

Germany, which is the second highest penetration of wind sources.

But, if you include hydro capability in the US already, we’re some-

where in the neighborhood of less than 10 percent.

“When the Obama Administration talks about 10 percent, they

are talking about wind, solar, geothermal and biomass. Hydro cer-

tainly ought to be in the mix because we do have a good amount of

hydro generation in this country – more than five percent. The im-

pediments to achieving this 10 percent renewable goal are building

the transmission fast enough, and the financial and economic con-

Michael Heyeck is Senior Vice President,Transmission for American Electric

Power. He was previously Vice President, Transmission Asset Management. Prior

to that, he held a leadership position in Corporate Planning and Budgeting for

corporate budgeting and economic forecasting and has held various engineering

and leadership positions in Transmission Planning and Transmission Operations.

He joined AEP in 1976.

Heyeck.indd 79 19/6/09 16:23:12

What kind of market size do you see for a community storage

approach for load management?

Ali Nourai. One way of measuring the trend is to look at con-

ferences. In energy storage, as far as the conferences are con-

cerned, a few years ago you could barely fi nd one to go to. Now

you get too many invitations. Two years ago, we had under 100

people coming to the Electricity Storage Association’s annual

meeting on energy storage. This year we had 300 and we ran

out of everything.

Another indication of the growth in this fi eld is that a year

or a year and a half ago, we had to go to some effort to reach

congressmen and congresswomen and talk to them about

energy storage. Now members of the ESA are routinely getting

invitations to go to congressional briefi ngs and talk to them

about energy storage.

An interesting change we’ve noticed in energy storage is

that up until about fi ve months ago, smart grid had its buzz-

words and energy storage was doing its own thing. Now these

two groups are talking together. There is conference after con-

ference about how energy storage is at the heart of smart grid.

A lot of changes have happened. A lot of waking up has

happened. One level where this is very, very clear is at the

congressional level. I talked to a congressman just the other

day, and there is another congressional briefi ng coming up.

We keep being invited to these things – we were just dreaming

about that a year ago.

The biggest barriers to deployment of energy storage

were regulatory and legislative. Those people are waking up.

In Texas, we are putting four megawatts of energy storage. We

were blocked by legislative rules that you cannot own storage

because storage is generation. After six months of talking, the

Store and deliverBulk storage vs community energy storage vs compressed air storage: what are the benefi ts and drawbacks of each? Ali Nourai, Manager of Distributed Energy Resources for American Electric Power, helps P&E fi ll in the blanks.


ENERGY STORAGE

nourai.indd 80 19/6/09 15:52:32

81www.nextgenpe.com

rules changed. Now we have the approval of the Public Utility Commis-

sion to go ahead and do that. So a lot is happening and these are the

indicators that determine the market.

When will AEP and other utilities include the community energy stor-

age concept in their planning and commercial deployment?

AN. When we started with the NaS battery in 2005, we went after that

as an R&D project and installed it. It was operational in 2006. In 2007,

our planning people ordered six more megawatts and our transmission

ordered another four megawatts. They did that on their own. In other

words, they bought into it. Once the storage is functional, they see the

value – they pick it up. Planning departments have picked it up. When

you look at other utilities, a lot of them look at the storage as an R&D

thing. Just put it in the lab and see what happens.

What AEP did was say, “We’ll go right to the field. We’ll put it on

the real circuit serving real people.” And we saw the results. Planning

bought into it within a year because planning goes in a yearly cycle.

From this experience we say that once it’s on the ground and people see

that, it just goes by the cycle of the planning.

Another factor to consider is when it comes to big storage like a

substation, it takes a lot of high-level management decision-making

to go into a multimillion-dollar project to start one. With community

energy storage, you can start it with as little as $56,000. It doesn’t

need a high-level management decision to get started, which means

we expect a lot faster and broader acceptance of community energy

storage once the first one is installed and operating, and the results

are shown, which is going to be the case next summer.

AEP has gone after a proposal in the State of Michigan. If we win

that proposal – and we expect to win – that will be one megawatt in

Michigan of community energy storage. That one megawatt will be in-

stalled next March. As soon as it’s available, we’ll start talking about it

and share the results.

How do centralized fast response energy storage and decentralized

fast response storage coexist?

AN. In terms of frequency regulation, for the time being it would primar-

ily be done at substation level – it needs a few years to establish itself

to that point. Altairnano has a trailer of batteries that will be operational

and be leaders in the next two or three years. Community energy storage

may pick up sooner, because it is not the little box run locally.

A control hub isn’t a substation. The control hub sees a minimum of

one megawatt, so for all practical purposes it can do the same thing as a

substation battery. The only difference is that substation batteries exist

today. AEP has about seven megawatts running right now, and we’ll

have 11 megawatts before the end of the year, and lithium ion-based

ones are just being added. So they’re just about a year or two years

ahead of distributed energy storage, but once distributed is in place,

there is no difference.

Whichever storage you have, you’ll use it for that purpose. One of

the key things AEP is trying to promote is that energy storage is very,

very cost effective if, and only if, we learn how to have multiple benefits

on each installation. This is the way to go. That means I’m not going to

put one kind of storage and say, “This is only for backup,” and put in

another storage and say, “This is only for frequency regulation.” Storage

is too expensive for that.

Whatever storage we put down, we try to use it as many ways as

we can. We’re going to use it for frequency regulation. We’re going to

use it for backup. We’re going to use it for deferred capital, for all of the

above, for as many uses as we can – our intelligence allows us to do

this because it takes some thinking to have multiple use and multiple

functions, and we are going through that exercise. With that kind of

thinking to justify storage, I don’t see any reason

to say that I’m not going to use this storage for

frequency regulation just because I don’t like it.

I have to.

This is the most efficient way of doing things,

especially with the high cost. If you look at what

AEP is doing, the first storage we put in was capital

deferral only. The one we put in 2008 was capital

deferral and islanding, which is backup power at

the substation level. What we’re going to do with

community energy storage is all of them plus fre-

quency regulation. We have a frequency regula-

tion project going on to be able to learn how to do

it. Learning how to do multiples takes some time,

but that is the target. Any storage we put down,

we’re going to try to use it for at least two or three

different benefits, including frequency regulation.

“One of the key things AEP is trying to promote is that energy

storage is very, very cost effective if, and

only if, we learn how to have multiple benefits

on each installation”

COmPrEssEd Air EnErgy stOrAgE

Compressed air energy storage refers to the

compression of air to be used later as energy source.

At utility scale, it can be stored during periods of low

energy demand (off-peak), for use in meeting periods of

higher demand (peak load). Alternatively it can be used

to power tools, or even vehicles.

nourai.indd 81 22/6/09 09:50:49

Air

GT Air

Vent Air

COMPRESSOR

Compressed Air

Storage

Intercoolers

EXPANDER

Exhaust

RECUPERATOR

MOTOE

Fuel

GAS TURBINE

SECOND GENERATION COMPRESSED AIR ENERGY STORAGE (“CAES2”) TECHNOLOGIES ARE PATENTED BY DR. NAKHAMKIN AND LICENSED BY ES&P.

ES&P PARTICIPATES IN ALL STAGES OF CAES2 PROJECTS EXECUTION FROM CONCEPTUAL

ENGINEERING AND OPTIMIZATION TO DELIVERY OF PLANTS ON TURNKEY BASIS.

ES&P IS THE ONLY

COMPANY THAT

WAS INVOLVED

IN ALL STAGES OF

EXECUTION OF THE

110 MW CAES

PROJECT- THE ONLY

CAES PROJECT IN

THE US.

SECOND GENERATION CAES2 PRIME FEATURES:

• Provides Load Management of Renewable Energy and Optimization of Smart Grid

• Totally Green Energy Storage Cycle with ~ 90% Efficiency

• Scalable from 15 MW to 430 MW

• Total energy delivered with Heat Rate Less than 3,800 Btu/kWh

• Bottoming Cycle Green Power is ~ 150-200% of CT Capacity

• Above- and Below-Ground Compressed Air Storage

• Less Expensive than Combined Cycle (CC) Power Plant

CONTACTS:

ROY DANIEL (Chief Operating Officer)

[email protected]

DR. MICHAEL NAKHAMKIN (Chief Technology

Officer)

MNakhamkin@energystorageandpower

MAIN OFFICE NUMBER: 908-393-7177

www.EnergyStorageAndPower.com

infoEnergyStorageAndPower.com

ES&P.indd 1 19/6/09 14:26:01

83www.nextgenpe.com

Utilities are struggling to quantify the return on investment for

energy storage, specifically energy storage devices supporting good

stability, because standard economic models don’t exist for energy

storage. How can utilities and storage providers overcome this chal-

lenge?

AN. That is a very interesting challenge and AEP has developed its

own model. We hired an external provider to develop the financial

model because internally people found it hard to imagine we could

do so many things in storage. The key answer to that question when it

comes to justification is multiple benefits on each application. If you

say, “I’m going to put in storage just to handle wind,” it’s not justifi-

able. It’s too expensive.

If you say, “I have a solar system here. I’m going to put in a battery

just to buffer, to handle when the cloud comes in,” it’s difficult to justify

that. What we try to do with the community energy storage, it has a DC

input. That means if a customer has solar, we’ll take it. If a customer

has wind, we’ll take it. At the same time, we do provide backup power

– we level out the load of the substation and defer capital. We’re doing

frequency regulation which is the only way we can justify it.

AEP has a two-tier approach towards cost and economics. One is

multiple use. The other one is that community energy storage does not

have any chemistry. It could be any storage. It’s a platform to take ad-

vantage of the synergy of electric transportation. We are going after the

market size to help us. We believe that in a few years, once the electric

cars start to roll on the roads, and especially being able to use a used

electric car battery, we can master the economics, but without the elec-

tric transportation, without multiple benefits, no way. It won’t happen

for years to come.

What’s on the horizon in terms of the wide-scale deployment of bulk

electric storage technologies?

AN. We started in the 1980s as a leader in bulk storage. We put a lot of

that there. The problem is it did not spread as fast as we wanted it to

for several reasons. Number one, there’s not enough competition, and

it takes a long time before competition comes to life. If we want to put in

another substation battery in the next two months, for example, we have

no choice but to use an NaS battery. And because there’s not enough

competition; the price is high. The price went up instead of down.

The second problem is if another utility wants to do it, they have to

put in some good money to get started. These are the two disadvantag-

es in bulk storage the way it is formatted today. That is why we designed

this new bulk storage called community energy storage. It appears not

to be bulk, but the control is designed to be at least one megawatt. We

tried to solve the challenge of the bulk storage through the system for

those two reasons I mentioned.

One, there’s no competition in bulk. There’s too much competition

on electric transportation. Everybody in the world is trying to come up

with a car battery. The second issue is it’s difficult to justify the next

project. With little boxes, you’ll gradually phase it in. You don’t have to

justify it all in one year.

There is one thing I see in bulk that I don’t see in CES. Utilities have

their temporary transformers on trailers or wheels. When disaster hits,

they move these transformers around the system. We need batteries on

wheels for disasters. You cannot unplug the battery from the backyard

of people and move them around.

You may say that with electric cars you can just send a signal out on

the radio: “Hey, people, we need your cars plugged in at such and such

nas bAttEry

A sodium-sulfur (NaS) battery is a type of battery

constructed from sodium (Na) and sulfur (S). This type

of battery has a high energy density, high efficiency

of charge/discharge (89-92%) and long cycle life, and

is fabricated from inexpensive materials. Because of

the operating temperatures of 300 to 350 °C and the

highly corrosive nature of the sodium polysulfides, such

cells are primarily suitable for large-scale non-mobile

applications such as grid energy storage.

Terminal

Electrical insulation

Sodium chamber

Metal insert

Sodium electrode

Solid electrolyte

Sulfur electrode

Cell container

Sodium sulfur battery schematic

nourai.indd 83 22/6/09 09:35:43


battery on it. Once batteries hit 100 megawatts in one place, or more

or less in one place, or controlled collectively in one place, which in

my opinion is a matter of a few years, it will be difficult to justify com-

pressed air, which is a special site that

needs gas, that needs a power plant,

that needs crew to run it, and the effi-

ciency is not that exciting compared to

electricity. The efficiency of an electric

transportation battery today is 90 plus

percent. The efficiency of compressed

air is far below that. But yes, if some-

body needs 100 megawatts of storage

six months from now, compressed air is

the solution.

The reason AEP jumped ahead

and put money into storage is we see

the strategic value. The amount of

customer-owned and operated gen-

eration connected to the AEP system is

doubling every year. We cannot let it go

without a storage buffer and pretty soon we will lose control of our

generation because these guys all of a sudden will have 20 percent

or 30 percent of our generation and they generate whenever they feel

like it or whenever the sun is shining. We cannot run a business like

that. We have to have a buffer. That strategic value is what got AEP

to get started. When it comes to economics, it’s very difficult to put a

dollar figure in front of it. n

hour because of an emergency.” Maybe we can do it that way; I don’t

know. The transformers on wheels are ideal for emergencies, and they

can beat community energy storage in their transportability, so quick

transportability is one of the features of

bulk that is not quite there with community

energy storage.

How does compressed air storage work

and what are its advantages?

AN. There are two types of compressed air.

For the type that does exist today, there’s

only one plant in Germany and one plant

in the US. This is a gas-burning power

plant that on the side takes advantage of

compressing the air in a cavern. This is

more than just storage. It’s a power plant.

It needs fuel and it needs staff. It needs a

crew to run. If you look at it on a cost per

unit of stored energy overall, it’s one of the

least expensive and one of the best, but

the one drawback is that there’s a power plant next to it.

The other thing is you cannot just put it anywhere you want. There

are quite a few sites where we could do it but it has to happen to be the

place you also need it. All these things negative aside, if somebody

asked me, “I have a wind farm and I need storage and I need to install

it within the next six months. What should I do?” I would tell them

go to compressed air. That’s the only solution. But given time, I don’t

think how it can compete with batteries.

Once the batteries hit the 100-megawatt level, compressed air

will be seriously challenged because batteries of 100 megawatts and

above don’t have the issues that compressed air has. The largest

wind farm that I’m aware of with batteries running at this point is a

52-megawatt wind farm in Japan and has about a 30 megawatt NaS

Ali Nourai is Manager of Distributed Energy Resources

for American Electric Power and Chairman of the

Electricity Storage Association.

“the amount of customer-owned and operated generation connected to the AEP

system is doubling every year”

nourai.indd 84 22/6/09 09:35:45

85www.nextgenpe.com

Energy storage isn’t just about stor-

age capacity. It’s about power. And

a new breed of fast response, high-

power energy storage systems,

like those introduced by energy and power

management company Altairnano, is helping

solve some tough challenges.

Take the renewable portfolio standards

for example. twenty-nine states, including

the District of Columbia, have adopted ag-

gressive mandates for integrating renewable

generation. Illinois, Minnesota, Nevada, Ohio

and Oregon, each with relatively low levels

of renewable generation, are all shooting to

have 25 percent renewable integration with

the grid by 2025.

Those are aggressive goals, especially

when considering that renewable generation

currently represents a little more than two

percent of total US electricity generation.

As the penetration of wind and solar gen-

eration deepens, energy storage systems like

the Altairnano Energy Storage System (ALTI-

ESS) will be needed to help stabilize the elec-

tric grid and mitigate the unpredictability

associated with renewable generation.

In the US today, the relatively small

amount of non-dispatchable energy in a bal-

ancing area rarely has significant impact on

system operations. This is because the natu-

ral variability of the load is still greater than

the uncertainty of utility-connected renew-

able energy resources. But this is changing,

and it’s changing fast.

In fact, FERC recently announced a

$500,000 study to determine whether the

existing US power grid can handle the ad-

dition of substantial amounts of renewable

resources by 2012. Results are expected to

be released in late 2009. And the California

Independent System Operator (CAISO) an-

ticipates by 2012 regulation capacity could

increase by 250 MW for up regulation and up

to 500 MW for down regulation for a total of

750 MW.

Of all renewable generation resources,

wind and photovoltaic solar are most likely

to contribute to grid instability. In a report

published in April 2009, NERC predicted

“at higher levels of variable generation, the

operation and characteristics of the [system]

can be significantly altered.” The study cites

the potential for wind generation to increase

ramping requirements of conventional gen-

eration as much as 45 percent to maintain

grid stability.

Utility-scale PV systems have experi-

enced substantial ramps, as well. According

to the NERC study, PV systems may experi-

ence variations in output of +/- 50 percent

in a 30 to 90 second timeframe and +/- 70

percent in a five to 10 minute time frame.

The problem with conventional gen-

eration is that it can not dispatch in the time

required to respond to sudden variations in

renewable generation output. Ramp rates for

diesel engines require up to three minutes

Renewable storageJeff Brunings explains the challenges of mitigating the unpredictable and rapid changes of renewable generation.

for achieving full power. Gas engines require

up to seven minutes. Industrial gas turbines

may take up to 20 minutes. The ALTI-ESS

achieves full power in milliseconds.

Based on advanced lithium-titanate

technologies, ALTI-ESS responds to these

fluctuations by releasing or absorbing power

from the electricity grid. This helps improve

equipment and capacity utilization, strength-

en operational efficiencies and reduce carbon

emissions. Current solutions in commercial

operation include a 1 MW/250 kWh system at

the PJM Interconnection, which runs nearly

continuous operation throughout the day for

The AES Corporation.

The ALTI-ESS features a power module

and power control system module. The power

module has a 1 MW lithium titanate battery

stack and a battery management system.

Power modules can be added for multiple MW

configurations. The power control system

module features necessary electronics to

convert from DC to AC and communications

software required for receiving and respond-

ing to grid signals, including PLC, SCADA,

and data service unit.

Additionally, the ALTI-ESS is transport-

able, scalable to multi-megawatt configu-

rations, achieves greater than 90 percent

roundtrip efficiency and has an expected

calendar life exceeding 20 years. A basic

configuration is a 1 MW/250kWh system,

but it’s capable of supplying different

power and energy requirements depending

on system.

As states move toward achieving renew-

able portfolio standards no one knows the

increased costs utilities will incur for manag-

ing grid stability. No one really knows the

full mega-watt potential for fast response,

energy storage systems, either. But, if Cali-

fornia is any indication, with an anticipated

increase of 750 MW total regulation capacity

required by 2012, both the cost and opportu-

nity are significant. n

Jeff Brunings serves as director, strategic

marketing for Altairnano, a leading provider

of energy storage systems for clean, efficient

power and energy management.

INDUSTRY INSIGHT

Alternano.indd 85 19/6/09 15:39:55


As grids become more intelligent, they

have to be supported by even more so-

phisticated IT systems. That demands

platforms that can ramp up and ramp down

rapidly according to the dictates of market

forces.

In such a world, IT tends to suffer from

two major challenges – under-provisioning

and over-provisioning. Both can be solved

via automated capacity planning and perfor-

mance management software that contains

enough fl exibility to accurately predict traffi c

patterns and growth trends while being able

to detect unexpected peaks and troughs and

make the necessary adjustments.

Right-sizing capacityCapacity planning makes it possible to

know if the current infrastructure is adequate

to cope with the addition of new applications

or a greatly increased traffi c volume. If more

resources are called for, capacity planning

highlights how much extra equipment needs

to be deployed. And with so much top man-

agement attention on smart grid initiatives,

such automated tools enable IT to load up ex-

isting systems with greater workloads with-

out causing a bottleneck. Thus it becomes

possible to maximize the ability of systems

to respond to market volatility.

Capacity planning also reaps big rewards

by revealing what IT assets are already in

place. There is hardly an energy company in

the nation that can honestly say it knows the

location and role of every server in its midst.

By conducting such an inventory automati-

cally, capacity planning software permits

optimization of what is currently in place. In

many cases, this action reveals large pockets

of unharnessed resources that can be cor-

ralled to cope with ongoing expansion.

Performance managementWhile capacity planning could be char-

acterized as a crystal ball, performance man-

agement is the troubleshooter. Despite the

most meticulous planning, unforeseen cir-

cumstances sometimes result. Whether due

to massive spikes in demand, a local blackout

or the impact of uncontrolled application roll

out, IT departments must occasionally deal

with performance degradation. The challenge

is to quickly isolate the source so the proper

remedial actions can be executed. With the

right tools in place, energy companies can

stay one step ahead of trouble.

It is advisable, for instance, to always

monitor metrics concerning the utilization of

processing power, memory and the network.

Thus when an issue shows up, it is relatively

easy to drill down into the affected area to

discover the application, server or business

unit responsible.

This directly correlates to the bottom

line. Instead of throwing more servers, more

disk capacity, more bandwidth or more pow-

erful processors at the issue, performance

management often reveals specifi c areas of

bottleneck that can be reorganized for opti-

mum throughput and availability.

Ongoing process Once conducted, capacity plans should

be repeated annually to take into account

growth rates and changes in the environ-

ment. Further, in an organization that has to

deal with huge traffi c volumes or rapidly fl uc-

tuating loads, interim capacity plans should

be done at least every three months. Ad-hoc

reports should also be carried out to verify

all is well and to investigate unusual occur-

rences or to follow up on unusual patterns.

This should be carried out in tandem with

ongoing performance management to detect

and prevent bottlenecks from materially af-

fecting system performance.

Further, in an era of smart meters and

smart grids, it is essential that ongoing

initiatives to add more intelligence to the

energy infrastructure are backed up by

IT tools that provide enough flexibility to

cope with rapid change and enough pre-

diction about future trends to prevent

system bottlenecks. It is only a matter of

time before we begin to see news stories

about state-of-the-art energy infrastruc-

ture being constrained due to inadequate

or overloaded IT resources. The way to

avoid this fate is to include proven capac-

ity planning and performance management

techniques and technologies as part of any

smart grid implementation.

INDUSTRY INSIGHT

SMART GRID DEMANDS SMARTER ITBy Ron Potter

Ron Potter is IT best practice

manager at TeamQuest, and has been

involved in IT for 30 years, working in a

number of industries including gaming,

banking, IT service and healthcare.

Prior to TeamQuest, he was involved

with a multi-year IT improvement

initiative at a major healthcare

company that embraced ITIL.

For more information please visit www.teamquest.com

“It is essential that ongoing initiatives to add more

intelligence to the energy infrastructure are backed up by IT tools that provide

enough fl exibility to cope with rapid change”

Teamquest.indd 86 19/6/09 15:43:05

TeamQuest.indd 1 18/6/09 14:31:00


The recent Administration’s commitment to increased usage of

renewable energy sources has certainly made easier the strate-

gies of those companies already implementing energy effi cient

programs. As VP of Renewable and Energy Solutions for PSE&G,

Alfredo Matos is one man committed to raising the profi le of energy ef-

fi ciency and serving its ever-growing ‘green’ customer base.

Obama’s energy strategy has stated a goal of ensuring 10 percent

of America’s electricity comes from renewable sources by 2012, setting

the precedent for energy usage now, and in the future. But Matos has

been one step ahead –

formulating renewable

strategies since being

named VP in January

2008, and ensuring the

consistency of these

with the overall corpo-

rate strategy.

Across the corpora-

tion, PSEG’s family of companies are committed to renewable energy,

be it Matos’ arena within PSE&G or its sister company PSE&G Global,

which is currently implementing a program of wind turbines. “That

project is being done outside of the regulated utility and they were

successful in placing a bid with the state in order to command with the

partner that they have to operate offshore turbines,” says Matos.

Matos’ concentration focuses on strategy making for energy

efficiency, within the utility’s proposal, including its phenomenal

$190 million investment plan, which is currently seeking approval

from the Board of Public Utility. “We anticipate that this will happen

soon and we’ll invest that money over an 18-24 month period. That

was in response to a call from our governor for the utilities to come

up with a stimulus package that provided and created jobs within

New Jersey, as well as providing the energy efficiency measures to

our customers.

“It contains several

programs within that

filing. Many of those pro-

grams are already being

implemented within the

smaller program that

we started back in Janu-

ary: we simply took the

program, enhanced it

and scaled it up in order to come up with $190 million to be spent

over the next 18 months. It’s an innovative program where it looks

at providing homes at residential customers with an energy audit,

and then it follows up with implementing the various measures

that the audit says one should do in order to become much more

energy efficient, such as placing insulation, caulking and so on.

That’s on the residential side.

“Nuclear does have an important role in the overall energy infrastructure here in New Jersey and in the US”

he recent Administration’s commitment to increased usage of

renewable energy sources has certainly made easier the strate-

gies of those companies already implementing energy effi cient

programs. As VP of Renewable and Energy Solutions for PSE&G,

Alfredo Matos is one man committed to raising the profi le of energy ef-

fi ciency and serving its ever-growing ‘green’ customer base.

Matos’ concentration focuses on strategy making for energy

efficiency, within the utility’s proposal, including its phenomenal

$190 million investment plan, which is currently seeking approval

from the Board of Public Utility. “We anticipate that this will happen

soon and we’ll invest that money over an 18-24 month period. That

was in response to a call from our governor for the utilities to come

RELIABLE SOURCES

RENEWABLES

AlMatos.indd 88 22/6/09 09:15:15

89www.nextgenpe.com

the benefi t of our hard to reach customer base. Solar, for the longest

time, has been implemented in more wealthy areas, but if we provide

gas and electric to everyone, we believe that as an energy company

we should also be providing solar and energy effi ciency measures to

everyone,” says Matos.

Green collar The implementation of such strategies promises an increase

in the amount of required workers to carry out these changes –

from creating and constructing the solar poles, to the installation

of individual customer grids. Obama’s statistical commitment to

renewable sources is firmly

backed up with the creation of a

new workforce – a deployment of

five million ‘green collar’ work-

ers, through an investment of

$100 billion dollars, to install

clean energy, and with PSE&G’s

renewable strategy, the utility

certainly is one of those across

America endorsing the new Ad-

ministration’s goals.

“It takes a real commitment

on the part of the American

people, as well as businesses

and utilities, to play an impor-

tant role in achieving those tar-

gets. The utilities industry is in the business of energy and we are

regulated just like everywhere else in the world, but regulators,

utilities and customers need to work together to recognize that

the utility plays an extremely important part in providing solar and

energy efficiency measures, whilst still being fair to the utility’s

shareholders. In doing this we can reach those targets of creating

jobs as an initial byproduct of this effort. The longer term would be

to improve the economy and become more energy independent.”

In PSE&G’s deployed state of New Jersey, there is a 30 percent

target of supply to be sourced from renewable energy by 2020, with

“We have similar programs for small businesses, hospitals and

warehouses – we’re trying to cover the various segments within our

customer base in order to provide them with an avenue to become

much more energy efficient, essentially by buying down the invest-

ments or the costs they would normally make. Utility would then

make those investments in those homes and businesses, in order

for those customers to recognize or realize the energy savings.

That’s a very high level view of the energy efficiency filing,” he

explains.

Solar strategiesAnother aspect of the Janu-

ary program is a focus on solar

energy sources, with a com-

mitment to providing complete

consumer-wide access. The

current filing sitting in front of

the board is a proposal for $773

million over five years, which

will install those solar systems

owned by the utility on its utility

poles and on schools throughout

its service territory, as well as

municipal buildings. It also plans

to provide solar resources for its

low-income housing that typically would not enjoy the advantages

of solar energy along with installing solar farms on certain proper-

ties that the utility owns.

“We call it ‘Solar for All’, because we fi rmly believe that through

this approach we will be placing solar for all of our customers. The

best example of this would be the pole attached solar which goes

into every neighborhood, and power which that solar panel is gen-

erating will be directly connected to the customer’s grid, going into

their homes.

“So it truly is a solar project for all. It has various segments for

Alfredo Matos joined

PSEG in 1981 and was

named Vice President of

Renewables and Energy

Solutions of Public Service

Electric and Gas Company

(PSE&G), in January 2008.

Prior to this, Matos had

been VP of Distribution

Operations and EHS of

PSEG Global since 2004.

the benefi t of our hard to reach customer base. Solar, for the longest

time, has been implemented in more wealthy areas, but if we provide

gas and electric to everyone, we believe that as an energy company

we should also be providing solar and energy effi ciency measures to

everyone,” says Matos.

Green collar The implementation of such strategies promises an increase

in the amount of required workers to carry out these changes –

“We have similar programs for small businesses, hospitals and

warehouses – we’re trying to cover the various segments within our

customer base in order to provide them with an avenue to become

much more energy efficient, essentially by buying down the invest-

ments or the costs they would normally make. Utility would then

make those investments in those homes and businesses, in order

for those customers to recognize or realize the energy savings. RELIABLE SOURCES

AlMatos.indd 89 22/6/09 09:15:20


Attempting to seize the opportunities that nuclear brings, PSEG

is currently looking at the viability of building a new nuclear plant

at the site of its Hope Creek and Salem units, and as far as Matos is

concerned, the utility’s consumers are very excited for nuclear.

“We haven’t seen any negative feedback. It seems to be pretty

quiet. People seem to recognize that nuclear does play an im-

portant, clean role. For the most part people have learned more

about nuclear over the years, and over the past 25 years nuclear

has worked well. People are more accustomed to it than they were

before.”

Matos’ strategies for PSEG’s renewable

future seem promising. “The key is to quickly

implement those strategies that we’ve laid out

over the past 12 months, so that the custom-

ers can see and touch those strategies and

make them real , instead of something that’s

hypothetical or theoretical.

“We’re now doing that here in New Jersey

with some of our programs whereby we’re

going into people’s homes and doing the

audits, we’re doing some of the energy measures and once we get

the solar approved we’ll start installing those on the top of our util-

ity poles. When people see them, they’ll see that it’s technology

that does work, so implementation over the next 12 months of the

strategies we’ve laid out is important. That will breed additional

success.” n

two percent of this target being solar. Matos explains that despite

this being only 1800 megawatts, a very small amount of the total

energy consumed in the state, it is a huge stepping stone for the

future of renewables.

“It’s an enabling initiative that will show the world that this

type of technology is something that is very much achievable, that

we can implement it. It has positive qualities, such as job creation

and helping the economy, and also contributes to a reduction in

foreign sources of energy.”

InfrastructureHowever, before utility companies or its consumers can dream

of a 100 percent renewable empowered world, there is still the old

infrastructure to consider. Ranked as number one in the nation for

reliability, PSEG is keen to ensure that the amalgamation of the old

with the new does not disrupt its dependable energy delivery.

“As we move towards a new 21st century infrastructure, there

will have to be a continuation of investments in our systems to

maintain the level of reliability that PSEG is noted for. As we con-

tinue to put distributed systems throughout our territory, it’s going

to require additional smart grid and more intelligent communica-

tions.

“Also as we start introducing plug-in vehicles, this is going to

alter and change the way utilities have done things on a go-forward

basis. A plug-in vehicle will take energy from the grid, but will also

give energy to the grid if that area requires it. So metering technol-

ogy is extremely important and smart grid again plays a vital role

in this view of the utility of the future,” notes Matos.

Renewables does not simply stop after wind, hydro and solar,

however. As utilities are becoming increasingly aware of the ben-

efits of nuclear power, and consumers become educated on the

validity of nuclear as a safe energy source that can be deliverable

to their homes, nuclear is re-emerging as a viable, clean source

of energy, and PSEG are certainly keen to include it within their

strategy.

“We have a three-prong approach of energy efficiency, renew-

ables and nuclear being the third leg of that three-legged chair.

Nuclear plays an important role. I consider it to be green and the

technologies have obviously improved over the past 20 years since

the last plant was built. There are good examples around the world

of where current nuclear has occurred and nuclear does have an

important role in the overall energy infrastructure here in New

Jersey and in the States,” Matos says.

“Regulators, utilities and customers need to work together to recognize that the utility plays an extremely important

part in providing solar and energy efficiency measures”

Hope Creek Generating Station is a 1220 megawatt

nuclear power plant located in Lower Alloways Creek,

NJ, adjacent to the Salem Nuclear Generating Station.

PSEG originally proposed the plant in the early 1970s and

received a construction permit in November of 1974.

The Salem Generating Station consists of two nuclear

generation reactors with 2304 total megawatts of electrical

capacity located in Lower Alloways Creek, NJ. It sits

next to the Hope Creek Generating Station, also owned

and operated by PSEG. Salem Unit 1 began producing

electricity in December 1976.

PSEG’S nuclEar PlantS

AlMatos.indd 90 19/6/09 15:39:22

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South San Joaquin Irrigation District, 2MW, CA10Conergy

years of

Conergy.indd 1 18/6/09 14:23:55


Explain what this new partnership between

REC and Summit Power is about.

Dana Zentz. We are very excited about team-

ing up to promote solar as a resource for US

utilities. REC is a major global player in the

solar industry that possesses the most ver-

tically integrated value chain. As a result it

is able to systematically reduce costs across

all of REC’s business lines – silicon, wafers,

cells and modules. The REC-Summit Power

partnership combines this with Summit

Power’s extensive development experience

– in total 6000 MW of traditional and renew-

able energy technology – giving the partner-

ship powerful capabilities in responding to

utilities’ needs as they want to go solar.

Why is now the time for utilities to go solar?

DZ. During the last six to nine months in

particular, a confl uence of events is push-

ing solar energy to the forefront. Utilities

increasingly face hurdles to the implemen-

tation of non-renewable energy sources,

as well as calls from both governments and

customers to promote renewable energy.

At the same time, the costs of solar

energy are coming down at an accelerated

rate. The solar industry has, over the last

three to four years, also reached a greater

level of maturity, which means both greater

technology performance and lower execution

risks. All of these things make now a great

time to go solar.

How are solar costs coming down?

DZ. Since the demand for renewable energy

is here to stay, the challenge for solar

is to become as cost-effective as other

clean energy choices. This is happening

already as the price and performance of

PV modules rapidly improve. Indeed, PV is

already in the cost range of conventional

generation options in many instances. It

also is notable that as much as 50 per-

cent of solar system costs can arise from

Balance-of-System (BOS) components,

which we are focused on driving down sig-

nif icantly through replicating and scaling

proven solutions. Finally, Summit has pio-

neered a low-cost project-f inancing model

for wind development that can lower costs

further.

What do you think utilities want to see in a

solar resource?

DZ. In addition to lower costs, utilities cer-

tainly want to see reliability and minimized

project execution risk. For this, utilities

need experienced project development

professionals that understand the utility

business model and focus on scalability and

standardization. Our team, which has devel-

oped 6000 MW of generation projects in the

US using traditional and renewable genera-

tion technology, is very close to fi nalizing

development of a standardized reference PV

power plant, which can be replicated quickly

and cost effectively.

We also intend to employ an ‘urban

infi ll’ strategy for project siting, which will

move power generation to relatively small

sites close to loads and thereby increase

reliability benefi ts to utilities while minimiz-

ing transmission costs and development

risks associated with massive central sta-

tion power projects. This approach has clear

environmental as well as cost reduction

advantages.

Lastly, utilities need load-matched

resources. Solar can provide a more predict-

able and peak load shaped generation profi le

than wind, for example.

What are your prospects for long-term

growth?

DZ. We are optimistic. The 80 percent growth

in demand we saw in 2008 can only continue

to result in the dropping of market prices and

structural changes in the industry as com-

petition intensifi es. We are confi dent to suc-

ceed through our REC-Summit partnership,

and we have already received very promising

feedback from utilities with which we have

discussed project opportunities.

REC and Summit Power recently partnered to develop utility-scale photovoltaic projects in the US market. Dana Zentz joins us to discuss their ambitions for providing solar systems to utilities.

For more information contact us at 1.877.687.7786 or atwww.summitpower.com/solar.

Dana Zentz is Vice President of Summit Power and has over 25

years of active involvement in the energy industry. He founded and

managed Inland Energy Consulting, Inc. Inland Energy assisted

utilities, independent power producers and energy merchant

fi rms with strategic and commercial matters related to power and

natural gas supplies and energy project management. He leads

marketing efforts for the REC-Summit partnership to western US

utilities.

Solar partnership

EXECUTIVE INTERVIEW

REC.indd 92 19/6/09 15:42:47

C

M

Y

CM

MY

CY

CMY

K

Summit_REC_final3.pdf 1 6/11/09 7:58 PM

Current.indd 1 18/6/09 14:29:09


The massive deployment of renewable generation envisioned by

the Obama Administration cannot occur without a renewed invest-

ment in our country’s transmission infrastructure. The US Depart-

ment of Energy (DOE) has identifi ed transmission limitations as the

greatest obstacle to realizing the enormous economic, environmen-

tal and energy security benefi ts of obtaining at least 20 percent of

our electricity from the wind. Currently, almost 300,000 megawatts

(MW) of wind projects, more than enough to meet 20 percent of our

electricity needs, are waiting in line to connect to the grid because

there is not enough transmission capacity to carry the electricity

they would produce.

To promote the expansion of renewable energy, the transmis-

sion grid should be built to link areas with vast potential to generate

clean electricity to the areas that have signifi cant demand for electric

power. ‘Green Power Superhighways’ is a term used to describe the

power lines that would be carrying electricity from remote to populat-

ed areas. While different build-out plans can be envisioned for green

power superhighways, the key to any cost-effective plan is the use

of high-voltage transmission lines in place of the low-voltage lines

common in the US today.

Effi ciencyOutdated policies – not technical or economic barriers – are the

chief factors impeding the construction of green power superhighways.

However, some grid operational reforms could make better use of our

infrastructure. The present patchwork transmission system makes it

very diffi cult to move large amounts of renewable power around the

country. A solution is to use the existing grid more effi ciently through

technology and new operating protocols. This is not a replacement for

green power superhighways, but undertaking a set of reforms would

allow more wind and solar energy to be integrated with the grid at lower

cost. Increased effi ciency would provide greater fl exibility for changes

in electricity supply and demand, and would improve economic perfor-

mance of the grid even without renewable energy.

Building a new transmission infrastructure will save consumers

money. A robust transmission grid will give consumers access to

lower-cost electricity. On a severely constrained transmission grid, as

now exists in many parts of the United States, consumers are forced

to rely on local power plants even though plants in other regions can

produce power more effi ciently and at a lower cost. The effect of this

squeeze goes beyond fi nancial hardship for residential consumers:

businesses pass higher electricity costs on to their customers, and

electricity-intensive industries have a strong incentive to relocate

to regions with lower electricity costs, taking jobs with them. New

transmission infrastructure would increase competition in wholesale

power markets. Just as consumers in a region with a single retailer and

without high-quality roads to other regions would be at the mercy of

the prices charged by that retailer, a weak grid makes it possible for

The United States is home to vast quantities of clean

energy resources – wind, solar, geothermal and hydro-

power. Yet it lacks a modern interstate transmission

grid to deliver carbon-free electricity to customers

in highly populated areas of the country. The Obama

Administration has called for a national energy policy

that calls for the United States to double the produc-

tion of renewable energy in three years and to obtain 25 percent of

its electricity from renewable resources by 2025. Achieving this

objective will require a cohesive effort from local, state and federal

offi cials – including Congress – and signifi cant new investment in our

transmission infrastructure. But it is necessary.

TRANSMISSION PROPOSITIONAmerican Wind Energy Association CEO Denise Bode offers the case for new transmission infrastructure.

RENEWABLES


Transmission proposition.indd 94 22/6/09 09:29:52

95www.nextgenpe.com

power generation owners in constrained sections of the grid to raise

prices beyond what they would be in a competitive market.

Recovering costStudies have consistently found that the costs of transmission in-

vestments needed to integrate wind power and other renewables are

significantly outweighed by these consumer savings. For example, ac-

cording to a recent study, a $50-60 billion investment to significantly

reduce congestion and integrate 240 gigawatts (GW) of wind in the

Eastern US would reduce electricity costs by enough to fully offset the

cost of the investment; Meanwhile, according to studies by the Elec-

tric Reliability Council of Texas (ERCOT), the benefits of an investment

in new transmission infrastructure for renewables in Texas would

grow to be larger than the costs of the investment in less than three

years; and, according to a recent analysis by Charles River Associates,

International, an investment in a high-voltage transmission overlay to

access wind resources in Kansas, Oklahoma, and Texas would provide

economic savings of around $1 billion per year, more than twice the

$400-500 million annual cost of the transmission investment.

Although the benefits of transmission easily exceed its costs,

few private firms have stepped forward to invest in transmission in-

frastructure. Why? Because the benefits are not adequately reflected

in the incentive structure offered to transmission investors. In other

words, the existing regulatory structure often gives companies little

or no economic incentive to invest in transmission that will make

consumers and society as a whole better off. State regulators, who

in many areas have primary jurisdiction over what transmission gets

built and who pays for it, are often required to weigh only the benefits

that will accrue to residents of that state, thus ignoring a major por-

tion of the benefits of a new system that also serves other states.

Most state regulators have little authority or incentive to require

ratepayers to help pay for an interstate network. Another major

obstacle is that regulators in a single state can effectively veto a

multi-state transmission network by refusing to grant the permits

needed if they feel that their state would not receive an adequate

share of the benefits.

ReformThese regulatory barriers to new transmission can and must be

overcome if we are to undertake a major investment in a new trans-

mission infrastructure. Federal legislation is needed to provide new

mission statements, adequate resources and specific timelines for

action for federal agencies, such as DOE, the Federal Energy Regu-

latory Commission (FERC) and federal lands agencies. In particular,

reform is needed in three broad areas.

The first step in building green power superhighways is to develop

a comprehensive plan. This requires both the Western Interconnec-

tion and the Eastern Interconnection to develop regional transmission

plans that identify where new or expanded transmission capacity is

necessary to connect renewable energy resources to the grid and,

ultimately, to load centers.

Facilities identified in the interconnection-wide plan as necessary

for the development of green power superhighways should be eligible

for broad, regional cost allocation. Specifically, FERC should allocate,

based on electricity usage, the capital and operating costs of these

transmission lines across all load-serving entities on an interconnec-

tion-wide basis. In regulatory terms, the “determination of need”

would be made in the regional plan, approved by FERC.

In addition to regional planning and cost allocation, substantial

reform of the transmission siting process is required to meet national

renewable energy goals. The most effective model is the siting author-

ity that was given to FERC over interstate natural gas pipelines. For

green power superhighways, the extra-high-voltage facilities defined

in the regional plans would be subject to FERC approval and permit-

ting. Separate siting approval at the state level would not be required.

FERC would act as the lead agency for purposes of coordinating all ap-

plicable federal authorizations and environmental reviews with other

affected agencies.

The road forward Modernizing America’s outdated transmission infrastructure

will not be easy. It will require bold, forward-looking action from

leaders who recognize that addressing America’s economic, energy

and climate challenges must be a top priority in the coming years. All

three require new, innovative ways of thinking about energy policy at

the local, state and federal level. And all three will require a modern

transmission system that is able to deliver clean, abundant renewable

energy to homes and businesses efficiently and reliably. These are

challenges that we can and must address now. n

Transmission proposition.indd 95 19/6/09 15:34:31


Among President Obama’s plans for a cleaner, green-

er America, quietly tucked away behind renewable

increases and carbon decreases, is the plan to

transform the US transportation structure. With an

estimated number of 700 million cars on the road

globally, producing 2.8 billion tons of carbon diox-

ide, the new administration is in a desperate bid to

dramatically change the way Americans travel. Obama’s launch of

the Plan for America upon his election displayed his commitment to

ELECTRIC RENAISSANCE

reducing the number of emissions produced by America’s notorious

SUVs. As oil prices continue to rise across the globe, the US is just

one of many countries attempting to make themselves more self suf-

fi cient through increased use of renewables, and cutting down on the

amount of imports that make it so dependent on its volatile relations

with the Middle East.

Whether it’s due to unpredictable international politics or a genu-

ine desire to save the planet and reduce the amount of carbon dioxide

emitted in the US, Obama is now attempting to conceptualize plug-in

hybrid cars (PHUVs) as a realistic form of transport for all Americans,

not just a fancy spend for the rich.

The targets for the initiative are to see one million PHUVs operat-

ing on US roads by 2015, with a number of ‘green’ consequences to

Why plug-in hybrid cars are on the rise again. By Natalie Brandweiner

HYBRID VEHICLES

Plug in-obama.indd 96 19/6/09 16:13:22

97www.nextgenpe.com

Electric vehicles gradually died out glob-

ally, although minor usage in Europe

and the US occasionally graced the in-

dustry with a slight nod; for example,

with the General Motors’ ‘Electrovair’

in 1966 and ‘Electrovette’ in 1976.

It has only been during the past

decade that the concept of electric-

powered cars has steadily returned,

infl uenced by the desire to cut usage

of imported oil. In response to the

California Air Resources Board’s

mandate on electric car usage,

major American car manufactur-

ers developed electric vehicles

(EVs), but understanding the

limited market for them, refused

to properly promote them, re-

sulting in the withdrawal of EVs

from the market.

That is, until now. Growing

awareness of the deteriorat-

ing global climate has seen a

rise in membership for lobbying groups campaign-

ing for climate change, from both the American public

and from leading businesses.

Plan for AmericaWith pressure on to meet Obama’s demands, major US carmakers

are now gearing themselves up to unleash their new and improved

lines of EVs. During a speech in March, Obama unveiled a plan to

increase public interest in EVs through

tax incentives. By encouraging people

to trade in old cars for newer, more

fuel-effi cient vehicles, Obama is also

hoping to increase car sales and rescue

Detroit’s car industry, following a $17.4

billion bailout by the administration in

December 2008.

Obama has pointed out that such

fl eet modernization programs, which

provide a generous credit to consumers

who turn in old, less fuel-effi cient cars

and purchase cleaner cars, have been

successful in boosting auto sales in a

number of European countries.

Having already attempted to solve

the economic and power generation

crisis with a commitment to creating

a new ‘green collar’ jobs industry, he seems to be extending his

method into the automotive industry. In a bid to revive the US car

industry with an “unending fl ow of tax dollars”, Obama and his ad-

ministration appear to be hoping that an investment in EVs will both

GENERAL MOTORSIn a partnership with Segway,

General Motors unveiled in April its

prototype two-seat electric scooter,

named Puma – Personal Urban

Mobility and Accessibility. The vehicle

can hit up to 35mph in the city

before needing to be recharged. GM

has not yet begun mass producing

the vehicle, instead describing it as

a demonstration to show the world

what it can do in terms of green

technology. As the pendulum for public

support of EVs has only begun to

lightly swing, it casts doubt as to

whether Obama is truly confi dent of

his plug-in proposals.

Electric vehicles gradually died out glob-

ally, although minor usage in Europe

and the US occasionally graced the in-

dustry with a slight nod; for example,

with the General Motors’ ‘Electrovair’

in 1966 and ‘Electrovette’ in 1976.

It has only been during the past

decade that the concept of electric-

powered cars has steadily returned,

infl uenced by the desire to cut usage

of imported oil. In response to the

California Air Resources Board’s

mandate on electric car usage,

major American car manufactur-

ers developed electric vehicles

(EVs), but understanding the

limited market for them, refused

to properly promote them, re-

sulting in the withdrawal of EVs

rise in membership for lobbying groups campaign-

technology. As the pendulum for public technology. As the pendulum for public

whether Obama is truly confi dent of whether Obama is truly confi dent of

Obama’s target for the initiative

is to see 1,000,000

PHUVs operating on US roads by

2015

derive from this aim. However, Obama’s proposal, which he claims is

based on environmental concerns, is hardly a revolutionary invention.

An electric eraDesigns of electric cars date back

almost two centuries: in 1835, Scots-

man Robert Anderson invented the

fi rst crude electronic carriage, which

failed due to the inability to recharge

the battery. The concept of electric

transport was formulated mainly in

Europe; the US didn’t begin such a

program until 1897, when Electric Car-

riage built a fl eet of NYC taxis.

The electric era reached its peak

in the early 20th century with an

excited upper class buying into the

novelty of ‘city cars’. The arrival of the

Detroit Electric in 1912, and the belief

that electric cars were the easiest and

cleanest for women, saw them outsell-

ing gasoline-powered vehicles for a short period of time.

However, the lack of transistor-based electronic technology

meant that the golden era of electric cars ended almost before it had

begun, as America became prosperous in other sources of energy.



boost his target of one million PHUVs on the road by 2015 and save

the market.

In March, Obama endorsed his proposal with a tour of the Edison

electric car plant in California and declared a 2.4 billion program

would be used to develop plug-in hybrids.

“We can remain one of the world’s leading importers of foreign

oil, or we can make the investments that will allow us to become the

world’s leading exporter of renewable energy. We can let climate

change continue to go unchecked, or we can help stem it,” he said.

He has pledged an investment of $15 billion dollars a year for re-

search on green energy and transportation, in an effort to understand

more about EVs and meet those long-term goals of carbon reduction

promised in his Plan for America.

“The problem is not a lack of technology – you’re producing the

technology right here – the problem is, for decades we’ve avoided

what we must do as a nation to turn challenge into opportunity,”

Obama said at the time.

He certainly seems to be setting a trend. Across the pond, UK

Chancellor Alistair Darling unveiled the 2009 UK budget on April

22, in which he committed his support for research into EVs. The UK

government announced a £250 ($366) plan with a similar strategy

of incentive – although the British version is without tax – providing

consumers with £5000 ($7327) each to buy low-carbon or electric

cars from 2011. It seems as though the trend is catching on.

However, despite these gallant efforts, it remains to be seen if

Obama can put his money where his mouth is, and even if he does

stand by his word, is this really the most energy effi cient plan, and

will it be able to fi t in with the current infrastructure?

The major component needed to make effi cient use of electricity

is storage: using storage effectively is crucial to providing seamless

TOYOTAToyota is on its way to emerging as the new EV manufacturing super power,

well ahead of schedule. Their Toyota Prius hybrid, known as a DIY plug-in

hybrid, operates on a mixture of both petrol and nickel-metal battery, and a

few hundred Americans have begun testing the car to see

if it is not only benefi cial to the environment, but also benefi cial to the

driver’s pocket.

There are now six Prius dealerships across the US that are converting

the original Toyota model to the plug-in technology, following a rise in interest

after oil prices jumped to $4 a gallon in mid-2008. However, at a cost of

$10,900 for conversion to a hybrid plug-in, it remains to be seen if this is an

accurate indicator of current trends, or whether EVs still remain a novelty

unlikely to enter the lower-class market.

TESLAFollowing an original

partnership with utility

company PG&E in

2007, Tesla Motors

is committed to the

production of an EV.

The motor company

is now taking orders

for the Model S, an

electric family sedan that can travel up

to 300 miles per charge. The Model S is rechargeable

from 120V, 240V or 480V outlets, with the latter

taking only 45 minutes to charge. The real asset of

the Model S is not its chargeability, however great

Tesla have emphasized it, but on its ability to become

the fi rst car to ride the highway. Its capabilities of

reaching a speed of 0-60 mph in 3.9 seconds certainly

seem to leave all the previous connotations of the slow-

but-steady electric car at the starting line. However,

with an estimated price tag of $49,900, this is in no

doubt still a toy for the rich to play with.

partnership with utility

electric family sedan that can travel up

the original Toyota model to the plug-in technology, following a rise in interest the original Toyota model to the plug-in technology, following a rise in interest

$10,900 for conversion to a hybrid plug-in, it remains to be seen if this is an $10,900 for conversion to a hybrid plug-in, it remains to be seen if this is an


99www.nextgenpe.com

energy transmission to a battery, fuel cells create electricity through

a chemical reaction between hydrogen and oxygen, with water being

the only by-product.

The advantages hydrogen fuel cells have over EVs combats the

problem that notoriously dissuades so many from investing into

one: mileage. Obama’s plan is to

have vehicles that can get up to 150

miles per gallon, but Honda’s latest

fuel cell car, the FCX Clarity, has the

ability to travel 380 miles before

needing to be charged, taking only

three to four minutes when it does

need charging. With 12 hydrogen

stations nationwide and a plan to

build more for commercial use, it

seems likely that hydrogen fuel cell

vehicles may overtake EVs as the

people’s choice in Japan.

Before any decisions can be

made as to which model of EV to

promote or how to even fuel the

battery cell, the new administration

must persuade the public that the

idea makes sense. With the func-

tion of these cars dependent on the

national grid, changes in the grid’s

infrastructure are also needed to

cope with the huge potential demand. But more so than any other

challenges, Obama now faces the greater task of conceptualizing

EVs as the norm, and convincing traditionally big-car loving Ameri-

cans that a battery-operated car is not a glorifi ed

golf buggy.

FORDAs electric utility company with the largest EV fl eet, Southern

California Edison is partnering with Ford Motor Company to complete

the link between powering the vehicle and the electric grid. Both CEOs,

Alan Mulally and John Bryson, have advised that the partnership is

an attempt to make progress on energy security and climate change

with a solution that consumers can tangibly use to produce energy

conservation results.

Ford is due to produce a fl eet of Escape Hybrid SUVs that will be

engineered by its team to become fully PHEV capable, although it is yet to

name its battery partner. However, the fl eet will only be the fi rst of its

kind, and as a demonstration fl eet, this initial version is unlikely to result

into the fi nal model.

supply during peak hours of demand. There is already much promise

and speculation over the arrival of EVs, but integrating them into the

national grid is not going to be easy, or successful, without clever

manipulation of distributed power storage.

The numbers of EVs are expected to rise gradually, and currently

fewer than 50 million garages are

suited to store and charge the cars

overnight, so it seems unlikely that

this will translate into all 50 million

being on the grid at the same time.

Even so, charging the cars is likely to

place great strain on the existing grid,

which was not originally built with the

servicing of plug-in hybrids in mind.

The major US manufacturers are pre-

dicting to have their EVs on the road

by 2012, and if the grid system doesn’t

evolve at a similar rate, there is sure to

be an increasing gap between supply

and demand, again highlighting the

importance of energy storage.

It follows that it is not only elec-

tric car models that need developing,

but also our already fragile electric-

ity grid. It has also been a noted that

there is a huge timing issue involved:

with the EVs needing most energy for

the commute to or from work at the tail end of peak usage hours,

most of the battery capacity that is provided by these vehicles is

going to be unavailable when it is needed.

One alternative to the problems posed by lithium-ion batteries

found in EVs is Japan’s answer: hydrogen fuel cell cars. Rather than

kind, and as a demonstration fl eet, this initial version is unlikely to result kind, and as a demonstration fl eet, this initial version is unlikely to result

“It is not only electric car

models that need developing, but also our already fragile

electricity grid”


Our nuclear FUTURE

Emphasis on renewable energy is increasing and as other viable energy sources are explored, nuclear energy has emerged once again as a solution. David Hill of Idaho National Laboratory tells Power & Energy of the importance of nuclear in helping us to become carbon-free.

Only a third of total energy consumption in the US is ac-

counted for by the electricity used by individual house-

holds. There are many who champion nuclear power as a

carbon-free energy source and a way of reducing the CO2

produced by electricity generation, but what about the other two-

thirds of the total?

Idaho National Laboratory’s David Hill’s main venture is taking

nuclear energy beyond electricity, in an attempt to create a more

effi cient means of energy usage across the board. “If you consider

nuclear energy just as a source of heat – in particular, high tempera-

ture heat – you can apply that to conversion of biomass, or other

forms of carbon bearing materials, to convert them into liquid fuels

in a much more advantageous way,” Hill explains.

“In taking biomass or coal and converting it into a liquid fuel –

and in the case of coal it is through a process called Fischer Tropsch,

a German method of retrieving diesel from coal – it requires a lot

of energy, and that energy is usually provided by burning coal or

gas, or something which emits CO2. If you can substitute nuclear

produced heat for that, you can lower or remove the carbon dioxide

in the production of the liquid fuel.

Carbon-free “So if you start from coal, you can end up with any long chain

hydrocarbon; you’ve still got diesel fuel, but you’ve done it in an es-

sentially carbon free way. If you start with biomass, then you reduce

the carbon dioxide effect of the whole process and have the liquid

fuel produced in a much lower, although not carbon free, way,” he

says.

Hill and his team are taking advantage of the carbon-free prop-

erties of nuclear, and producing electricity, or any other form of

non-carbon produced heat, to create transportation fuels – another

third of total energy usage. The industry sector accounts for the fi nal

portion, directly using energy within refi neries or chemical process-

ing plants.

Burning natural gas usually derives this energy, Hill explains.

“Again, if you have a high temperature reactor, you can substitute


RENEWABLES

Hill.indd 100 19/6/09 15:41:21

101www.nextgenpe.com

and Congress, or the public, can turn to for

well founded, factual information about

what nuclear energy can and can’t do and

what its limitations are. We can identify

problems that need to be solved, and set

about solving them. Nuclear energy can be

such a political subject, so we try and avoid

that and just focus on the scientifi c facts

and in the engineering demonstrations of

what’s possible.”

Nuclear has always been a political

issue, and the reputation it gained in the

past was the cause of the slow phase out

of nuclear research. Hill advises that in no

way do they criticize the decisions or situa-

tions that may have taken place previously,

they are simply attempting to change at-

titudes towards nuclear.

One of the problems prominent in nuclear’s past was waste man-

agement. Hill explains that this is still very much an issue here in the

US, and across the world. “We are depending again on government

funding on waste in the sense of spent nuclear fuel – how to store it,

how to ship it, different processing schemes, different waste forms,

robust wastes forms for actinides or other vision products in the

context of the US program.”

that heat directly in, and thereby

reduce the carbon footprint of the

processes.

“Another factor in this is many of

these processes require either hydro-

gen or oxygen. So you can either use

the heat directly, or in conjunction with

hydrogen and oxygen, which also can

be produced beginning with nuclear

energy through high temperature elec-

trolysis, for example.”

INL is one of the 17 larger national

labs located around the country, and

is designated as the nation’s leading

laboratory for nuclear energy research.

Most of the labs were created in the

post-war environment to expand on the

discovery of fi ssion and research into

atomic energy, and even for the development of nuclear weapons.

As development progressed and nuclear energy became a com-

mercial business, the labs broadened their horizons and became

science labs and the focus on nuclear was lost, as all labs special-

izing in nuclear were slowly phased out. Then a few years ago the

government announced its intent to take parts of two existing orga-

nizations in Idaho and merge them, creating the Idaho National Lab,

which was made the center for nuclear energy research, develop-

ment and demonstration.

“We’ve been operating like that for over four years now,” says

Hill. “It’s important because it provides a focal point for nuclear

energy research in the US rather than thinking of it as a distributed

activity. There are many reasons why Idaho was chosen for it, but

the primary reason is because of the history of the place – we have

many of the research nuclear facilities that are still operating in the

US. Not all of them, but many, and that concentration of research

facilities makes it a logical place to do this work.

“The site itself began in 1949 as the National Reactor Testing

Station when the US was developing nuclear energy. This is the

place where the government chose to test its reactors.”

Toeing the lineINL is funded by the government, like all other federal institu-

tions, and therefore must steer its research to coincide what the US

as a whole wants to achieve, as well as the politics of the country.

“The way we work to achieve that is by doing world class research,

and the majority of our work goes to nuclear energy in some form or

another – nuclear reactor development, waste management, looking

at fuels development, processing and so on,” he explains.

“We try to do it without advocacy. In the past, we’ve found that

institutions have evolved their own thoughts of what the right path

forward was and it evolved into advocating particular systems. We

seek to be the place where knowledge is brought together, because

other labs don’t conduct nuclear work, and where the government

David Hill is the Deputy Laboratory Director for Idaho National Laboratory.

In 2009, the Idaho National Laboratory celebrates its 60th anniversary.

Naval proving groundThe area was fi rst used by the US government in the 1940s to test

artillery. In 1949, the newly formed Atomic Energy Commission

established the National Reactor Testing Station. In the 1970s, the

site was designated a national laboratory.

First peaceful use of nuclear powerIn 1951, one of the most signifi cant 20th century events took place

nearby – the fi rst usable amounts of electricity were generated by

nuclear power.

Dawn of the nuclear navyThe technology for the world’s fi rst nuclear-powered submarine

was pioneered in Idaho. From 1953 to 1994, thousands of sailors

trained here using full-scale submarine prototype reactors.

Largest concentration of reactorsMore than 50 nuclear reactors have been built and operated at INL –

the largest concentration of reactors in the world.

INL HISTORY

Hill.indd 101 19/6/09 15:41:24

Personal predictionIn regards to America’s future needs, Hill’s personal opinion is

that nuclear energy will play a very large role. “I believe that the

energy problem is suffi ciently severe, and I’ve believed my whole

life that the solution is the famous answer to the multi-choice ques-

tion, all of the above.

“We have to develop every form of energy source in a way that

it is environmentally and socially responsible. And then the public,

either directly or through the electric representatives, decide on

what energy they’re willing to pay for in the country. Nuclear rep-

resents about 20 percent of the US’s electricity, and any sustain-

able quantitative model of how the we proceed to limit our carbon

dioxide emissions starts from the premise that that fraction will

almost certainly be retained, if not expanded, because it’s here –

it’s today. You can build reactors and they are essentially carbon

free.

“Overall, I expect nuclear to hold itself as a fraction of the US

electricity supply, maybe increase, depending on what the econo-

my does. I expect over a slightly longer run, the medium term, for

nuclear energy to be seen in a broader context than just electricity.

How that will work out in the US and around the world becomes

increasingly uncertain. But it’ll have a strong

role – it’s inevitable because of the merits it

brings, which is carbon free electricity suit-

able for base load application, and it can be

combined with other sources down the road,”

he explains.

“There are limitations, mostly of industrial

infrastructure: a lack of welders, for example,

or a lack of the ability to manufacture large

vessels, and simply the time it takes to build a

nuclear plant will inherently limit the amount

that nuclear can contribute in the short term.

But that, in my opinion, is not a reason not to

pursue it aggressively. The best nuclear plant

is the one you started last year, not the one

you’re thinking about now. Just because it

takes a long time should not be a reason not

to start.”

Accelerating technological breakthroughs

• Promotes licensing of new nuclear

plants and researches an advanced

nuclear fuel cycle.

• $242 million for Nuclear Power 2010,

an industry cost-shared effort to

bring new nuclear plant technologies

to market and demonstrate

streamlined regulatory processes.

• $302 million focuses the Advanced

Fuel Cycle Initiative on innovative

transmutation and separations

research and development.

Advancing nuclear waste management

• Clean up the environmental legacy of

the Cold War.

• $5.5 billion to protect public health

and safety by cleaning up nuclear

research and weapons production

sites.

• Finish cleanup projects at Sandia

National Laboratory and Argonne

National Laboratory in 2009.

Continuing essential engineering design

• $495 million to continue development

of the nuclear waste repository

and support defense of the license

application while under Nuclear

Regulatory Commission review.

• The Administration will work with the

Congress to provide a stable source

of funding for the repository

• Establish a budget-neutral

mechanism for the Department

to receive appropriations equal to

annual Nuclear Waste Fund receipts

from utilities.

US FISCAL BUDGET 2009: MONEY FOR NUCLEAR


“The best nuclear plant is the one you started last year, not the one you’re

thinking about now”

In operation since 1949, INL is a science-based, applied engineering national

laboratory dedicated to supporting the DOE’s missions in nuclear and energy

research, science and national defense.

Mission

Ensure the nation’s

energy security with safe,

competitive and sustainable

energy systems and unique

national and homeland

security capabilities.

Vision

By 2015, INL will be the

pre-eminent nuclear energy

laboratory with synergistic,

world-class, multi-program

capabilities and partner-

ships.

Safety

The health and safety of

every employee, both on and

off-the-job, is critical to our

mission, and we demon-

strate world-leading safety

behavior, safety perfor-

mance and environmental

stewardship.

ABOUT INL

Hill.indd 102 19/6/09 15:41:26


pacity, incorporating different concentrator

technologies, which are becoming available

in the market. It is a commercial power plant

providing energy to the local community, as

well as a research site for the implementation

of the technology. ISFOC has become a world-

recognized reference in CPV.

“Our ISFOC project has been critical in

moving CPV forward at industrial scale,” ex-

plains Dr. Pedro Banda, Director General of

ISFOC. “After a year of deployment, we have

no doubt that CPV is the most promising

energy resource for the future.”

SolFocus was the first company to in-

stall its CPV technology in the project and

has had 0.5 MW on site for a year. After

nearly a year, energy output has been above

projected levels.

“We chose SolFocus’ CPV arrays as part

of the ISFOC project because we believed

their non-imaging optical design would pro-

vide efficient and reliable systems,” says Dr.

Banda. “We had confidence that they would

be able to meet not just the design chal-

lenges, but the manufacturing challenges for

volume deployment as well; we could not be

more pleased with the results.”

While Puertollano, Spain has a good solar

resource, the energy generation capability

of this type of power plant in a high solar re-

source region such as the southwest US will be

exceptional. CPV systems are being deployed

in numerous places around the world and have

the potential to deliver hundreds of megawatts

of electricity in the near future. n

The challenge that has been facing

solar for over a decade in its drive

to become a mainstream renew-

able technology has been cost.

The most important element in

determining the levelized cost of energy is

the efficiency of the panels; in other words,

the amount of sunlight that can be converted

to electricity. The second important element

is manufacturability of technology. If new

technologies are going to become mainstream

energy sources, they must be designed for

low-cost, high-volume manufacturability.

Concentrator photovoltaic (CPV) systems

are the newest entrant into the commercial

solar market. CPV technology has just moved

into commercialization, yet already these

systems are proving their ability to provide

the lowest cost solar energy and the highest

energy harvesting capability in the high solar

resource regions of the world.

CPV systems convert light energy into elec-

trical energy the same way that conventional

photovoltaic technology does. The difference

with concentrator PV is the addition of an opti-

cal system that focuses a large area of sunlight

onto each cell. Also, the cells used in CPV sys-

tems are different from silicon PV cells, and are

capable of converting very large amounts of

sunlight into energy at high efficiency, which

allows the optical systems to be used. With

high concentration systems such as SolFocus’

SF-1100S, a multi-junction cell of 1 cm squared

is illuminated by the sun, magnified 650 times.

The result is that the cell, per unit of energy,

costs dramatically less than that of conven-

tional photovoltaic technologies.

Even with advances in traditional silicon PV

where today you can find best-in-class panels

with 19 percent efficiency (average of 15 per-

cent), CPV panels have reached efficiency levels

above 25 percent, with significant headroom

for accelerating improvements in efficiency in

the near future. These CPV panels are mounted

on dual-axis trackers, which keep the panels in

direct alignment with the sun. The combination

of high-performance optics, high-efficiency

cells and precise tracking allows CPV systems

to deliver advantages not available with other

solar technology approaches. CPV technology

also provides environmental sustainability.

Land use is optimized, there is no permanent

shadowing, no water is consumed in the pro-

duction of electricity and systems are highly

recyclable, with a small carbon footprint.

CPV case studyThe first true case study in CPV technol-

ogy was established last year by The Insti-

tute of Concentration Photovoltaic Systems

(ISFOC) in Puertollano, Spain – a public-

private partnership promoted by the Castilla

La Mancha government and the Universidad

Politécnica de Madrid. Within this project,

ISFOC is executing 3 MW of power plant ca-

Efficient technologyNancy Hartsoch explains how concentrator photovoltics systems bring high-energy yield and low energy cost.

Nancy Hartsoch is the Vice

President of Marketing for

SolFocus, Inc. Prior to joining the

company she was CEO of Pacific

Technology Group and COO/VP of

Acer Labs USA. In 2008 Hartsoch

was instrumental in forming

the CPV Consortium, a global

industry organization for which she

currently is the Chairperson.

ASK THE EXPERT

“CPV panels have reached efficiency levels above

25 percent, with significant headroom for

accelerating improvements in efficiency”

SolFocus.indd 103 22/6/09 10:46:08

TeamworkHow Northwestern University is helping energy andsustainability to work together.

SUSTAINABILITY

One of the fundamental human

needs is the energy required to

power society. The issue of energy

in the 21st century has germinated

a great deal of attention, economic

thoughtandplanning,governmentpolicyand in-

ternationalstrife.Energysecurity feeds thenight-

mares throughout society and government. The

rapid increase inenergyneeds forecasted for the

next50years isproblematic, and the rise inener-

gy’s cost is bringing about inflation in the devel-

opedworld andhardship in developingnations.

Northwestern is tackling the twin issues of

energy and sustainability – encompassing glob-

al issues such as energy, water, materials, food

and waste – by consolidating the university’s

existing strengths and fostering new efforts in

these areas. The Initiative for Sustainability and

Energy at Northwestern (ISEN)was announced

in October.

Strategy“Underlying the challenge of sustainability

and energy is one issue that universities unique-

ly cansolve: todevelop the fundamental scientif-

ic understanding to provide sustainable (and at

reasonablecost)energyrequiredbyallpeopleon

earth. Gaining and disseminating this under-

standing is the core of the ISEN mission,” said

PresidentHenryS. Bienen.

“ISEN is an umbrella organization designed

to create, advance and communicate new sci-

ence, technologyandpolicy forsustainabilityand

energy. Itsparticular focus isonsustainableener-

gy supply, demand and use,” saysMark Ratner,

ISEN’s co-directorwithDavidDunand.

Ratner citesRalphCicerone,Presidentof the

NationalAcademyofScience,who, inhis remarks

to that group’s 2008 Annual Meeting, listed five

points addressing how scientists and engineers

couldhelpsolve theproblemofsustainabilityand

energy. They are to perform research relevant to

energy supplies andusage; to formulate andan-

alyzeopinions fordecisionmakers; to inform the

public about research and policy options; to ad-

vise and help government officials and business

leaders; and to develop scientific and engineer-

inghuman resources.

“While ISEN’s program takes on this

Cicerone challenge, ISEN’smost important goal

is to integrate the university’s efforts in energy,

sustainability and outreach,” Ratner says.

CenterPiece ED:18oct 19/6/09 15:27 Page 104

“We do not limit ISEN to scientists and engineers alone,” adds

Dunand. “We draw on the intellectual and programmatic capabilities of

all of Northwestern’s schools and centers to provide a new integrated

direction for the University, focusing on the many aspects of the chal-

lenge of sustainability and energy.” ISEN directs that focus on the sup-

ply, demand, conservation, storage, transmission and optimization of

energy; the policy, programs, economics, management, metrics, edu-

cation and outreach of sustainability; and disseminates this informa-

tion by reaching out through public information, web site, teaching,

lectures and consulting.

“ISEN will catalyze and conduct research and education, the two fun-

damental products of the university through supporting and drawing to-

gether the capabilities that Northwestern already has,” says Ratner. “We

sponsor anddevelop new capabilities for addressing the issues of sustain-

ability and energy.” ISEN provides funds for stipends of postdoctoral fel-

lows andundergraduate students, aswell as graduate fellowships through

a cluster funded by the graduate school. The initiative also organizes con-

ferences at Northwestern on the issues of energy and sustainability.

HistoryNorthwestern has a substantial history in the areaof sustainability and

energy. Charles David Keeling, the scientist who first alerted the world to

the dangers of carbon dioxide and temperature change, was a

Northwestern graduate (PhD, chemistry, 1954). The Keeling Curve is still

used tomeasure theprogressivebuildupof carbondioxide, themain green-

house gas driving climate change, in the atmosphere. Northwestern’s ef-

forts in areas such as catalysis and new materials have long provided

abilities toproduceanduseenergymore efficiently, andevenaddress some

parts of the sustainability problem.

“ISEN focuses on the two major strengths that universities can con-

tribute: ideas and teaching,” says JayWalsh, Vice President for Research.

“Northwestern’s strong culture of interdisciplinarity across our schools

gives ISEN a breadth of vision that few research universities canmatch.”

Argonne National Laboratory is ISEN’s primary research partner.

Northwestern and Argonne in collaboration are developing an integrated

research platform in this area. The partnership with Argonne will encour-

age the partnership andpromotion of other energy activities, including the

Argonne-Northwestern Solar Energy Research Center (ANSER), the Center

for Energy Efficient Transportation (CEET) and the Institute for Sustainable

Practices (ISP), aswell as variousNUcenters on catalysis, nanoscience and

technology, and transportation.

Working through ISEN,Northwestern faculty partnerswith people and

capabilities within the university with industry and government, interna-

tional organizations, other educational institutions and informationanded-

ucation resources, including television stations, elementary schools,

churches and libraries. ISEN isworking to establish corporatepartnerships,

as well as reaching out to the larger

community, partly for identifying

funding opportunities, but mostly for

increasing awareness and building

Northwestern’s programs in energy

and sustainability.

Educational goalsISEN’s first step educationally is

to develop four campus-wide under-

graduate and graduate courses on

global issues related to energy and

sustainability. The first of thesewill be

offered in Spring 2009. Among ISEN’s

longer-term educational goals is the

establishment of an energy minor

across several schools and to create a

five-year master’s degree program in

energy studies. The initiative plans to

offer a summer program, including in-

ternships, for students from K-12

through post-graduate education.

“It’s our students as much as our researchers who are driving us to

seek solutions in the areas of energy and sustainability,” says McCormick

Dean Julio Ottino, who initiated the planning nearly three years ago with

Tobin Marks which resulted in ISEN. “They realize they will need this edu-

cation and experience to become the workforce of the future.”

In order to seed and support these activities, ISEN is working with

Northwestern’s administration to raise funds locally and globally. “We

are helping people both within and outside the university to teach and

to learn, and to address and solve the problems of energy and sustain-

ability,” says Ratner. “Through ISEN, we hope to transform the area of

energy and sustainability from a challenge to an accomplishment for all

the people of the planet.” �


For more information about ISEN, view the ISEN web site at www.ISEN.northwestern.edu, a one-stopsource for information and sustainability at Northwestern.

© Northwestern University Office for Research. Reprinted with permission from CenterPiece Fall 2008.

Mark Ratner and David Dunand

CenterPiece ED:18oct 19/6/09 15:28 Page 105


Contrary to just a decade ago, there is virtually unani-

mous agreement in the scientifi c community that human

activities are a primary cause of climate change. Man-

made causes, such as operating power plants and motor

vehicles, have increased the concentration of greenhouse

gases in the atmosphere, resulting in global warming. Eleven of the

past 12 years have been the hottest since 1850 and 2006 was the

warmest on record. Sea levels are rising, and Category 4 and 5 hur-

ricanes are becoming more frequent around the globe. Mitigating the

negative effects of climate change will require comprehensive plan-

ning and aggressive, cooperative action worldwide.

Although this is a global problem, the United States must take the

lead in remedying a wide range of adverse climate impacts, because

our nation is the largest consumer of energy in the world. In 2020,

US energy consumption is projected to grow by 23 percent, and in

2025, the Energy Information Administration projects that worldwide

energy use will grow by 57 percent. There is no way to avoid it, the

Federal government must harness its energy use to reverse the global

warming trend, before it is too late.

We should take the view that the challenge before us is an

opportunity for positive change. By taking meaningful steps to ad-

dress climate change, we can simultaneously tackle our nation’s

increasing energy needs and reduce our dependence on foreign oil.

New laws and regulations promoting increased energy effi ciency

and alternative energy sources across various sectors will result in

lower carbon emissions and reduce America’s dependence on fossil

fuels.

It is logical that Federal government buildings are a good place to

start when implementing alternative sources of energy, because the

Federal government is the largest consumer of energy in the world.

In fact, the Federal government owns 333,000 buildings worldwide,

comprising just over 2.5 billion square feet. In the United States, the

asset count is 293,651 buildings comprising approximately 2.4 billion

square feet of space. Worldwide, the Federal government leases ap-

proximately 57,000 buildings, comprising 557 million square feet of

space. In the US, the Federal government leases 23,000 buildings,

just under 291.2 million square feet of space.

A systematic policy of ‘greening’ Federal buildings, or integrat-

ing construction practices that signifi cantly reduce the environmental

footprint of a building in comparison to standard practices, will result

in a reduction of our net environmental impact. However, without

signifi cant transformation of building construction and operations,

adverse impacts on the environment will increase with population

growth and changes in other demographic and economic factors.

Red, white and green

The federal government has a major role to play in making America more energy effi cient and environmentally responsible, says Rep. James L. Oberstar, Chairman of the House Committee on Transportation and Infrastructure.

ENERGY EFFICIENCY

Oberstar.indd 106 19/6/09 15:42:28


The American Recovery and Reinvestment Act of 2009 (P.L. 111-5),

which was signed into law on February 17, 2009, makes an historic

investment in promoting energy efficiency. The law provides $6 bil-

lion to upgrade and improve energy efficiency in GSA’s inventory of

Federal buildings, including the construction of border stations on

the northern and southern borders of the US. The goal is to save tax-

payers $2 billion every year by modernizing more than 75 percent of

Federal building space. The Recovery Act also invests $4.2 billion in

energy efficiency and modernizing projects at Department of Defense

facilities, including military medical facilities and Army barracks.

Although some features of ‘greening,’ such as high-efficiency ap-

pliances and lighting, can be more expensive and design costs may be

higher, the operational cost savings will eventually recoup any initially

higher investment. Green initiatives and energy efficient repair and al-

teration projects for Federal buildings will save money on energy costs

long term. However, making Federal buildings more energy efficient not

only saves taxpayer money in lower energy bills, it also creates jobs

and increases the value of the Federal inventory. The Associated Gen-

eral Contractors of America testified before the T&I Committee that $1

billion in nonresidential construction creates or sustains 28,500 jobs.

Further, deteriorating conditions of Federal buildings have caused the

GSA, which provides facilities for approximately 60 Federal agencies,

to abandon Federally-owned facilities for leased space. GSA’s annual

lease bill, which is paid by American taxpayers, is approximately $4

billion every year. Repairing, altering and upgrading Federally-owned

facilities makes good fiscal sense all around.

The Federal government is also studying the installation of plant-

ings on rooftops, called ‘green roofs,’ on new Federally constructed

buildings. Although this practice is more common in Europe than in

the United States, it has several benefits, including increasing roof

longevity and reducing the need for heating and cooling by acting as

an insulating barrier.

The scientific evidence is crystal clear – Planet Earth is warming.

But climate change, as well as America’s corollary need for greater

energy independence, is not just an environmental issue – it’s a na-

tional security issue, an economic issue, an humanitarian issue. It’s

an issue we cannot afford to ignore any longer. n

I have advocated that the Federal government play a central role

in supporting and stimulating applied research in alternative energy

systems for nearly 30 years. In fact, in 1977, I introduced legislation

calling for accelerated procurement of photovoltaic solar electric

systems (PV), which convert solar energy into electricity, in new and

existing Federal facilities. That provision was incorporated into a com-

prehensive national energy bill, the National Energy Conservation

Policy Act (PL 95-619). Unfortunately, the PV provision in the law was

not funded, so we have no way of knowing how effective it would have

been and how much progress our nation could have made in reducing

our dependence on foreign fossil fuels.

When I became Chairman of the Committee on Transportation

and Infrastructure in 2007, one of the first pieces of legislation that

my Committee passed directed the General Services Administration

(GSA) to install a PV system at the Department of Energy’s (DOE)

headquarters. DOE’s overarching mission is to advance the country’s

national, economic, and energy security and to promote scientific

and technological innovation. Consequently, it is only appropriate

that DOE headquarters serve as a model for the entire nation to save

energy by utilizing cutting-edge photovoltaic technology.

The photovoltaic system is an important energy technology that

is environmentally sensitive and contributes to the nation’s energy se-

curity. Because it generates electricity from sunlight, PV produces no

air pollution or hazardous waste. It doesn’t require liquid or gaseous

fuels to be transported or combusted. Because its energy source,

sunlight, is free and abundant, PV systems can guarantee access to

electric power year round, and they are virtually maintenance free.

This is just one opportunity where the Federal Government can make

a dent in global warming.

In addition to installing

and implementing alternative

energy sources, we can cur-

tail energy use through such

means as energy-efficient

appliances, lighting and

weatherization. The Energy In-

dependence and Security Act

of 2007 (P.L. 110-140), which

passed in 2007, set the bar

higher by requiring that each

Federal agency reduce energy

consumption from 20 percent

(relative to 2003 levels) to 30

percent by 2015. The require-

ments are more stringent

for new construction and major alterations by requiring them to

reach a 65 percent reduction of energy usage by 2015, and zero-

net energy use by 2030. Agencies will be evaluated twice a year

on performance of their energy and water management. The law

also accelerates the use of energy efficient lighting in buildings

leased by the GSA and reduces negative impacts on the environ-

ment throughout the lifecycle of the building, including air and

water pollution.

“We should take the view that the challenge before us is an opportunity for positive change”

Oberstar.indd 107 19/6/09 15:42:31


In an interview with Power & Energy, ComEd’s Vice President of Marketing and Environmental Programs, Val Jensen, explains the future of customer relationships and how the company has adopted a sociological approach to understanding its customers’ behavior.

Keeping up appearances

Exelon’s goal is to reduce more than 15 million metric tons of green-

house gas emissions by 2020. What is ComEd’s strategy to partici-

pate in this target?

Val Jensen. The Commonwealth Edison energy efficiency portfolio

represents a fairly significant wedge in the overall Exelon carbon

reduction goal, so our responsibility is to be able to execute on the

customer programs to ensure that those carbon reductions are real-

ized. It’s not a set of reductions that the company is claiming for its

own account, but it is part of the overall strategy to help our

customers reduce their carbon footprint. The energy ef-

ficiency programs represent approximately a quarter

of the total Exelon carbon wedge, and so we play

a relatively important part, along with our

sister company, PECO, in Philadelphia.

We offer a broad portfolio of

energy efficiency programs con-

sistent with what you will tend to see

across the US from utilities. We’ve tried

to bundle all of these programs under the

moniker Smart Ideas, and our ultimate intent

is to simply offer a range of prescriptive and

customized solutions, whatever the customer’s

energy management needs might be.

But in the short term, we break our port-

folio into two pieces. One is the commercial

industrial offering and under that offering we

have four principal program elements. The first is

a set of what we call ‘prescriptive incentive programs’,

so we will offer fixed financial incentives for a wide range

of standard commercial industrial technology – motors, light-

ing, refrigeration systems and so on.

CUSTOMER FOCUS

Jenesen.indd 108 22/6/09 09:39:55


We also

offer a custom

rebate element, so

for any energy effi ciency

project, as we can establish that

it is cost effective, we will provide a

customized incentive which is based on the

energy savings. We are also offering a building

retro-commissioning program where we will fund a

building professional to go into an existing building and

help the building managers tune up existing energy systems

to achieve their specifi ed performance. Finally, we’ve just begun to

offer a commercial industrial new construction program where we

provide design assistance and some design incentives to try and

encourage customers to design and build buildings that exceed the

building codes.

On the residential side, we have a number of programs.

One is the ubiquitous compact fl uorescent light bulb buy-

down program. We work with a variety of manufacturers

and retailers to buy down the cost of CFLs at retail and

that program is the single largest program in terms of

energy savings that we have in the portfolio, which

is consistent with every other utility.

Secondly, we have a program to collect and

recycle second refrigerators. We also have

a direct installation program for all electric

multifamily buildings, so we send crews into

these buildings and go through each unit

and do the low-cost, no-cost energy ef-

fi ciency measures.

We have also just begun a resi-

dential central air conditioning pro-

gram that has a couple of different

elements, including incentives for

the purchase of new, very high effi -

ciency units, and we also subsidize

an advanced air conditioner diag-

nostic and tune-up program. We put

switches on people’s central air conditioners and in exchange

for either $20 or $40 per summer season, we are able to control the

customer’s air conditioner on really hot or high-demand days.

We also offer a residential real time electricity-pricing program,

which is still the only program of its kind in the country. For custom-

ers who wish to join the program, we put them on a tariff that fl ows

through the wholesale hourly market price and allows customers to

make their own decisions about how to alter their load shape to try

and benefi t from that price profi le.

How are your residential customers reacting to these programs? Is

ComEd playing a role in in educating them in terms of energy effi -

ciency?

VJ. That’s the critical issue for us, and it’s extremely diffi cult for us,

at least early in the program, to feel like we’re accomplishing that

broader market transformation objective to get customers to think

differently about energy use. We have a service territory of 3.8 mil-

lion customers in one of the most expensive and dense media mar-

kets in the country, so it’s very diffi cult to reach individual residential

customers without spending a lot of money. The strategy that we’ve

taken early on is a more direct marketing approach where we try and

“Keeping up with the Joneses is a pretty powerful

behavioral motivator”

Jenesen.indd 109 19/6/09 15:51:28


Overall, the customer satisfaction with that program is very high

and when we do customer surveys we find that that program in par-

ticular is the one that most intrigues customers. On the other hand,

it’s been very, very hard to recruit customers into that program, which

is an interesting phenomenon and hard to understand why. Our cus-

tomer acquisition cost is very high for that real time pricing program,

yet at the same time, everyone says they like the idea of it.

There is one other program that we’re about ready to launch that is

pretty exciting and actually quite pedestrian in its concept. We’re going

to be providing a home energy report to a set of 50,000 customers on

a quarterly basis which compares that customer’s energy consump-

tion to an average neighbor, and

also to the best neighbor in terms of

how much energy they use. This is

all calibrated to like customers – so

same type of housing, same square

footage – who generally display the

same demographic characteristics.

There’s been some interesting be-

havioral economics research that

suggests that simply by providing

this comparison of your consump-

tion to your neighbor’s consumption

you can drive changes on the order of

three to five percent in overall energy

consumption, just through a form of

peer pressure. We’re among a hand-

ful of utilities in the US that are start-

ing to pilot this program.

In addition to providing this

comparative information on a quar-

terly basis, we couple that with spe-

cific energy saving tips given who

the customer is, so if the customer’s

performing poorly relative to their

neighbors, we give them the whole

slew of energy efficiency options.

If they’re doing better than their

neighbors, we give them some tips

for how they might do even better

than they currently are, and so we’re

hoping that this provides the vehicle

for reaching customers with our message in a fairly simple way that

can motivate behavioral change.

There has been some interesting research that compared a couple

of tactics: telling customers how much money they could save, telling

them how green they would be if they took a particular action, tell-

ing them they would be more energy efficient if they took a particular

action and telling them how they compare to their neighbors. The only

thing that motivated these customers in this pilot study was the com-

parison to their neighbors, which was fascinating to us, and it went to

the extent of actually putting a little smiley face or frownie face on the

information that was sent to the customers, which the research found

get information out to our customers to get them to act on specific

energy efficiency incentives, such as the lighting program or the re-

frigeration program. We do have a limited advertising budget that

we’re using to try and start to build awareness among our customers

of what we offer and what their general energy efficiency opportuni-

ties are, but it’s very difficult for us to work in the mass market in this

area because it’s so large and expensive, so we’re continuing to look

for solutions that would help us get more traction there.

We run a summer ad campaign designed to spark customer in-

terest and awareness in some of our basic residential programs. We

similarly conduct limited advertising for specific energy efficiency

programs to try and boost our uptake on

those programs. We offer bill stuffers to

our customers on a fairly regular basis,

some of which are targeted at specific

energy efficiency opportunities and some

of which are designed to simply build

customer awareness of energy efficiency

opportunities generally. Then certainly

like everybody else in the world, we have

a website which is intended not only to

convey information about our programs,

but to offer customers a wide variety of

tools and tips should they be so inclined

to take charge of their energy consump-

tion. So in terms of customer outreach

and education, we’re not particularly

innovative or successful yet, but we are

just entering the second year of our large

program portfolio implementation. We

still have a way to go and are certainly

hoping we can get a little bit more cre-

ative and effective.

Do you think initiatives such as the real-

time response program attract new cus-

tomers who are more energy efficiency

conscious?

VJ. It’s an interesting phenomenon. We

get both ends of the spectrum. We have

a group of customers on that particular

real time pricing program who are very

energy aware and like the challenge of being able to try and beat the

price, and so they’ve become very creative in how they manage their

energy use.

On the other end of the spectrum is another set of customers who

are attracted to the program by the implied promise of being able to

save money on their energy bill. These customers tend not to be as

sophisticated, and they have an expectation that they can simply save

money by doing nothing, which is sometimes the case but not often,

and so we find those customers will tend to be more dissatisfied with

the program because they’re not really buying into the change and

behavior that is necessary.

Val Jensen is Vice President of Marketing and

Environmental Programs. He joined ComEd after eight years

at ICF Consulting, where he served as senior vice president.

Prior to this, Jensen worked for the US Department of

Energy from 1994 to 1999.

Jenesen.indd 110 19/6/09 15:51:29


world, we’re embarking on an implementation of smart grid technol-

ogy and in particular smart metering systems. We have a pilot project

that we now have in front of our regulator for approval that will involve

140,000 customers in our service territory, and we believe we’ve

designed the most comprehensive study of consumer behavior with

respect to the smart meters that anyone has put together.

We’ve designed 24 specific experiments to test how different

combinations of behind-the-meter technology, rate structures and

education will resonate with customers and our objective is two-fold.

One, to see which of these combinations elicits the largest response

in terms of demand reduction, but we are also trying to figure out

what the combination of those things that resonates most with the

customer may be – which product makes the most sense, which is the

most likely to be used and embraced by customers and so on – and

we’re very excited about that. We see this not so much as a standard

utility technology project, but as a project in customer-centric product

design where our ultimate objective is to figure out how we can create

some additional value for customers, as opposed to just throwing

boxes on houses.

The second thing we’re doing, which is related to that, is a

relatively small pilot program with a set of low-income customers

in Chicago. Operating a smart grid and having the ability to retrieve

this real-time data depends on a customer being technologically so-

phisticated, having a broadband connection and so on. A lot of our

customers are not in that position, so we’ve designed a pilot program

to place relatively simple devices in up to 300 homes that will show

at any given time how much is being consumed and how much the

customer has spent that month. We’re also simultaneously provid-

ing a home energy audit and some focused but simple instructions

on how customers can manage their energy costs. Again, these are

quite low-income customers, and our objective is to evaluate that if

by providing a customer contemporaneous information on how much

they’re spending, relative to what their budget might be, we can influ-

ence their level of energy consumption.

Our ultimate objective is two-fold. One is to give some tools to

these low-income customers in this new technological age that will

allow them to benefit as much as their more well-to-do neighbors, but

the second idea is if we can get people to focus on how much they’re

spending at any time, we think they’ll be able to better manage their

bill, and the hypothesis is that they will be less likely to fall into ar-

rears and defaults, and less likely to be subject to disconnection. That

pilot is just rolling out, but from my perspective, that’s one of the most

important things because it’s an investigation into how we can deliver

these promised benefits of the smart grid to a segment of our popula-

tion that typically is left behind in such arenas. n

to be motivating. Some of the early pilots that have been done to test

this concept with utilities have found that customers react very badly

to the frownie face, but very much like the smiley face; it sounds very

elementary, but in fact the keeping up with the Joneses is a pretty

powerful behavioral motivator.

Do you think the media surrounding Obama’s Plan for America is

having an impact and starting to change the way your residential

customers are operating?

VJ. I think it is. The Administration, as well as a number of global lead-

ers, is talking about the importance of climate change which is finally

starting to penetrate this mass media consciousness. Our customers

haven’t yet completely figured it out, but they understand that energy

usage is changing and they know they want to be on the right side of it,

and they’re starting to now look for more information about this. So it

clearly has had important impact, but it will take a lot more than that to

get customers to really understand this on more than a superficial level.

Do you think saving money is the only real motivator?

VJ. I don’t and that’s why this behavioral pilot program that we’re un-

dertaking is so interesting because we’re not providing anybody with

any money on our end, and the customers are not motivated so much

by saving money as they are by the attitude of not wanting to look

worse than their neighbors. Business customers, to a much greater

extent, are motivated by money, but that doesn’t seem to be the right

motivator for all of our customers. We have to get much more sophis-

ticated in segmenting them and figuring out what messages motivate.

Some are motivated entirely by environmental concerns and their

neighbors, some by money and some by other forms of moral beliefs

about stewardship. It’s been part of our struggle over the past 20

years where previously we tried one message for everyone, and we

know that doesn’t work.

How are you setting yourself apart from other utilities energy-saving

programs?

VJ. Most of the utilities in the US, as part of their energy efficiency

portfolio, rely on compact fluorescent light bulbs for anywhere be-

tween 30 and 50 percent of the overall portfolio savings. There is

federal legislation which by 2012 will set the consumer lighting stan-

dard essentially at the level of a CFL, which means that by promoting

CFL through a utility program we’re not saving any energy as it would

become compulsory for customers to buy these anyway. So we’re

going to lose 30 to 50 percent of our energy efficiency portfolio due to

the standard, and we need to find other low-cost ways to save energy.

By exploring these behavioral methods we’re realizing cost-effective

solutions to energy savings, and so we’re both interested from a con-

ceptual basis in seeing how people respond, but we’re also looking for

that silver bullet that gives us energy savings that is sustainable and

low cost at the same time.

What are your future plans, both short and long term?

VJ. We have two things that we’re very excited about and they both

fall on the behavioral side of the ledger. Like many utilities across the

“A number of global leaders are talking about the importance of climate change

which is finally starting to penetrate this mass media consciousness”

Jenesen.indd 111 22/6/09 09:39:57

The combination of the poor economy and

the push to get customers to conserve

has severely restricted the ability of utili-

ties to increase their revenues. In our recent sur-

vey and conversationswith our utility clients,we

found that most utilities are under pressure to

find ways to enhance their bottom line without

increasing their top line.

One of the swiftest ways to improve prof-

itability without increasing revenue or slash-

ing budgets is to reduce your bad debt

expense. Based on actual results and analysis

at over 100 utilities, a typical utility can ex-

pect, in less than three months, to reduce this

year’s write-off by 10-20 percent. How much

top line revenue would you have to produce to

get this much bottom line impact?

Geographic mobility statistics indicate 14

percent of the population and 33 percent of

apartment dwellersmoveevery year; 60percent

of movers relocate within the same county, 80

percent within the same state. The implications

of these findings illustrate that the majority of

the people initiating and terminating service are

coming from and going to a location still in your

service territory. If you can properly identify all

the responsible parties on an account, then

there is a greater likelihood that you can turn

their write-off into a current receivable on an ac-

tive account. Because a utility has more tools

and leverage, it ismuch easier and faster to col-

lect on an active account than an inactive one.

Skip tracingAlmost every utility is already successfully

skip tracing andperformingbalance transfers on

a regular basis with very positive results. The key

is to recognize that you can improve upon your

current processes and that there is still an abun-

danceof lost revenueavailable tocollect.Because

youalreadyutilize theseprocesseseveryday, very

little has to change. Skip tracingmore efficiently

andeffectivelyand transferringbalancesmore in-

telligently, will allow you to quickly reduce your

write-off.Whenyouenhanceyour customer iden-

tification on the front end, you can also perma-

nently reduce yourwrite-off going forward.

To fully leveragethisbestpracticesprocess,a

utilityneedsto identify,match, transferandcollect.

To identify, use your CIS system to capture

and store asmany identifying attributes on your

customers as you can – such as full name, SSN,

DL#, birth date, phone numbers, email address

andemployer. Identify all responsible parties, in-

cluding spouses and roommates.Verify and up-

date these identifying attributes regularly.

Matching involves finding active customers

who also have write-off balances. Use all the

identifying attributes available for all responsi-

ble parties to match written off accounts to an

active account. You should look at all relation-

ships between the accounts, including the non-

obvious ones. Utilities should recognize that

most ofwhat is found is probably not fraudor in-

tent to hide. It is name changes, misspellings,

transposed digits and data entry errors.

Transferring is moving the written off bal-

ance to an active account taking into account all

your rules and regulations (for example, you can

not transfer balances across state lines, statutes

of limitation on old balances and so on). You

should only transfer balances you can reason-

ably expect to collect.

Once thebalancehasbeen transferred, nor-

mal collection procedures will apply. Our analy-

sis shows that most utilities collect between

80-95 percent of transferred balances.

With the understanding that there is lost

revenue slipping through the cracks, a reviewof

your current processes can pay big dividends

and have a real bottom line impact. There are

simple things you can do to recover more lost

revenue and there are experts who can help. �

The bottom line


Patrick Carberry explains how to quickly enhance yourbottom line without revenue growth.

Patrick Carberry is Co-Founder

and President of Bottom Line

Impact. Mr. Carberry has spent

the last 20 years consulting with

over 125 utilities. He is the

architect of the Automated

Revenue Miner that has recently

assisted utilities with the

identification and recovery of over

$50,000,000 of lost revenue.

ASK THE EXPERT

• One of the swiftest ways to

improve the bottom line is to

reduce your bad debt expense.

• A significant portion of your

write-off is right under your nose

and is very collectable.

• A typical utility can expect, in less

than three months, to reduce this

year’s bad debt by 10-20 percent.

“Utilities are under pressure to find ways to enhancetheir bottom line without increasing their top line”

The bottom line impact ATE:18oct 22/6/09 10:31 Page 112

We Just Identified $75,000,000.00

in Lost Revenue For Utilities!

Our Clients Are VERY Excited

For more information, see this month’s issue of Ask the Expert on the opposite page or contact

www.blicorp.com | [email protected]: 412-441-1083

BottomLine.indd 1 19/6/09 14:00:38


Coordinating its customers is no easy task for Hydro One.

As a large Canadian province, Ontario incorporates a wide

spread of both urban and rural areas, and must adapt itself

to the issues facing the different groups of customers.

SVP of Customer Operations Myles D’Arcey explains that

it is the demographic shift that determines what group its customers

fi t into. For example, Windsor is a region heavily impacted by forest

products, so customers within the area are heavily impacted by the pri-

mary industry, to which Hydro One must respond to accordingly with

programs that are suitable and fi t this group of customers’ needs.

ChallengesD’Arcey is also President and CEO of Hydro One Remote Communi-

ties, and in this role he faces challenges very different from those of

large utilities in big cities. “Part of the issue for us there is that these

communities are fl y-in, and there are a lot of them,” he says. “They’re

not easily accessible, and they’re First Nation communities. Fourteen

of the 18 that we serve are at or below the poverty level. A lot of people

rely on social assistance to sustain their day-to-day lives and they’re

diesel communities – it’s a high cost which is heavily subsidized by the

people of Ontario.”

NORTHERNEXPOSURE

Hydro One’s understanding of its customers’ needs extends far beyond simply providing them with an energy supply. Myles D’Arcey tells Power & Energy of the company’s responsibility for instilling a sense of community within its service territories.

CUSTOMER OPERATIONS


D'arcy.indd 114 22/6/09 09:30:33


D’Arcey has fi rsthand experience of remote

communities, traveling to them himself in order

to achieve a greater sense of understanding of

his customers and know how to provide to them

with the energy that they need. He explains how

a number of the company’s senior executives vis-

ited these communities last year; most of them

had never been further north than Highway 7,

which runs along Toronto’s northern boundary

As he explains, “Unless you’ve had an oppor-

tunity to see it fi rsthand, to meet with the people

and understand their issues, it’s hard to put it into

a white paper. We had the opportunity to meet

with the chiefs’ council in the local communities,

and it was a great opportunity for them to share

with us what their goals and aspirations were too.

“Many equate it to going into what they’ve

seen in pictures of a third world country, so it’s

a very different lifestyle, very impoverished. But

there’s still a lot of pride within the community. They want to succeed;

they want to fi nd ways in which to be successful.

We try to work with them and build upon that, and look for op-

portunities in which we can generate win-win types of scenarios.”

RelationshipsHe explains that having one-to-one meetings with local people

makes all the difference in their relationship

with those who service the community. The

challenges for those providing the services are

numerous, due to the disparities in the commu-

nities. But a sense of community spirit lies at the

heart of Hydro One’s focus. Many of the compa-

ny’s community programs, such as Community

Citizenship and Powerplay, are not even related

to electricity, but their aim instead is simply to

build up the relationship of the communities.

“We provide electricity to 1.3 million custom-

ers in the province of Ontario, predominately rural

Ontario, so we have a presence in these communities where our staff

live and work,” explains D’Arcey. “From our perspective, it’s an oppor-

tunity to help the community that we service. The focus with Powerplay,

for example, is linked back into the fact that for most rural Ontario com-

munities, the local arena or community center is the focal point.

“It’s an opportunity to upgrade, modernize or get new equipment

that the community relies upon for entertainment or sporting events.

We live and work in those communities and it’s just giving a little

something back.

“The other part that goes along with the citizenship program is the

stewardship of assets. We defi nitely feel that we’ve been entrusted

with these assets, and it’s up to us to make sure that we operate them

safely and effi ciently on behalf of the people of Ontario,” he says.

Hydro One has committed itself to its customers from the outset

– its strategic objective is to, “Satisfy our customers with affordable,

reliable and clean power.” Community is key, but

as a utility, providing a reliable source of energy

is its primary role. Providing energy to dispersed

customers to ensure a constant and reliable

source of energy is not as easy as it sounds, and

certainly not when this is joined with a commit-

ment to ensuring that the energy that is delivered

is as environmentally sourced as possible.

In May, it was announced that Hydro One

customers across Ontario had achieved annual

energy savings of more than 400 million kilo-

watt hours – a huge saving that speaks volumes

for the company’s success.

D’Arcey advises that the savings are due to a

combination of programs currently being imple-

mented by Hydro One. “One is directly related

back into the conservation demand manage-

ment plans that were put in place by the local

distribution companies in conjunction with the

Ontario Power Authority,” he says. “Those are everything from fridge

roundup programs distribution of compact fl uorescents, rebates on

timers and switches, dimmer switches and so on, all of which can

reduce the overall consumption from individuals.

“From my perspective, the key is making those programs available

to your customers and giving the customers a choice to have access

to them or creating an incentive for them to look at them or making

it easier for them to take advantage of it. We

support a number of those – the OPA funds the

programs, the distribution companies put them

together, and we work with the programs we be-

lieve to be conducive. We then provide access to

our customers to all of those programs.

“In Canada, there are federal programs and

provincial programs, and there are also the ones

that are provided to by the local distribution

companies. We’ve put together a group we call

our Green Team, and if customers require indi-

vidual assistance with that, we’ll help them walk

through it and navigate some of that. There are a myriad of opportuni-

ties out there for customers to take advantage of programs, but they

may not necessarily always be aware of which ones are applicable to

their particular situation,” he says.

Hydro One remains sensitive to its customers’ needs. For those

low-income customers who face diffi culties paying their electricity

bills and who may be in arrears, the company induces a number of op-

tions to alleviate the stress. “The fi rst part is just communication, so

that’s making sure that people are aware of what their bill is and where

they stand, so that they can take effective steps,” D’Arcey explains.

“We provide them with different options for payment programs so

that they can help to manage the bill. If they get behind we do try to work

with them to set up a payment plan. We also provide programs for those

on low incomes, which helps us to provide customers access to funding

from social programs to help offset some of their energy costs.”

14 of the18 remote communities

Hydro One serves are at or below the

poverty level

Myles D’Arcey is SVP Customer

Operations at Hydro One, and

President and CEO of Hydro One

Remote Communities, which offers

generation and distribution services

in Ontario’s far north.


D'arcy.indd 115 22/6/09 09:30:47

Cyveilllnace AD:euro 2/2/09 10:24 Page 10

Cyveilllnace AD:euro 2/2/09 10:24 Page 11


The gathering of 20 of the world’s greatest and

most powerful leaders, or so proclaimed, to agree

on the direction of the $1.1 trillion dollar stimulus

package certainly appears to be a washout for

those championing environmental concerns. If

the discussion of the world’s high carbon econo-

my was ever a priority of the G20 leaders, they most definitely

managed to sell themselves short.

Statements by UK Prime Minister, Gordon Brown, at the

summit regarding climate change were vague and non-commit-

tal – lacking any sort of qualitative data or measurable targets,

for which he could be held accountable. He made sure to make

several references in support of low-carbon economic growth

though, and pledged his commitment to tackling climate change,

but none of these have in any way satisfied the thousands of

protestors and environmental groups wanting change.

Peering through the façade, it is clear that Brown’s stance

was nothing more than a nod to those gathered on the streets

of London, attempting to make known their environmental

concerns. His statement of commitment to climate change

bears more resemblance to an afterthought rather than a

detailed proposal: “In mobilizing the world’s economies to

fight back against recession we are resolved to [...] promote

low-carbon growth and to create the green jobs on which our

future prosperity depends.”

Protestor group Climate Camp believes world leaders view

carbon-trading policies as nothing more than moneymaking

attractions for the creation of get more bureaucrat-serving

markets. They propose that a change in attitude will produce

the sort of policies environmental campaigners are wanting:

for solutions to be based on a moral imperative, rather than a

business opportunity.

Instead of seizing the misfortunes of the global recession

and using a very rare chance to reshape even the smallest piece

of the economic structure, and this time actually factoring envi-

ronmental concerns into the political equation, the G20 summit

118COMMENTG20Natalie Brandweiner explains why a gathering of the world’s leaders amounts to nothing more than corporate handshakes and shirked responsibilities.

President Obama’s address at the G20 Summit

comment back.indd 118 22/6/09 09:41:37

was not much more than an exercise of

bureaucratic smiles and a showcase of

fi rst-lady fashion shoots.

The G20 communique shows the

leaders to make only a minute reference

to climate change and does not refer to

any responsibility to be apportioned to

any leaders. It appears that the world’s

leaders are too busy papering over

the cracks of the recession to lend a

thought to environmental concerns.

Even the UK government’s former

climate change advisor, Lord Stern, criti-

cized the summit leaders for not seizing

the opportunity for change. He argued

that the recession has created the per-

fect sphere in which great reform can be

made to the way in which the economy

currently operates, creating an inter-

changing set of economic and climate changing policies.

As he explains, “This is an opportunity to have a green

recovery that lays the foundations of growth for the next two

to three decades.”

Obama’s New Energy for America plan is committed to

ensuring 10 percent of electricity to come from renewable

sources by 2012, and while simultaneously repairing the dam-

aged economy by creating fi ve million new ‘green collar’ jobs.

But, if he does not produce the funds to support these plans, it

will be unlikely that any changes will be made.

The sweeping aside of environmental concerns at the

G20 summit certainly brings into question Obama’s commit-

ment to carbon reduction on his home turf. In the same plan,

the Administration have claimed a stance of reducing green

house gas emissions by 80 percent, but more importantly

Obama and Biden are attempting to make the US a leader on

climate change.

In a feeble attempt to appease the public cries for climate

change, Brown and his political companions insisted that en-

vironmental issues are all set to be addressed in the United

Nations Climate Change Conference in Copenhagen in Decem-

ber, when the UN hopes

a number of agreements

will be made to replace

the Kyoto agreement.

“We are committed

to [...] working together

to seek agreement on a

post-2012 climate change

regime at the UN confer-

ence in Copenhagen in

December,” says Brown,

displaying a lack of seri-

ous commitment to any

concrete statistics.

But whether Copenhagen will actu-

ally produce climate-changing policies

remains to be seen. Going on the lead-

ers’ past attitude to environmental

issues, the conference looks only to be

another platform in which to pay lip ser-

vice to those placing pressure on global

governments. It seems contradictory

that the thousands of miles in air travel

for each of the leaders and their too-

many-people-deep entourages, along

with the energy needed to facilitate the

conference, is sure to create a carbon

footprint itself worthy of environmental

campaigner demonstrations.

But is this derogatory attitude that’s

portioned to environmental concerns

true of not only political leaders, but also

of those major players responsible for

delivering the energy and privately funding the transmission? Is

carbon reduction simply a business venture of the utilities indus-

try to attract more consumers through shiny, ‘greener’ policies?

It seems that if the foundations of a carbon-shaped busi-

ness enterprise begins with the leaders themselves, then the

industry is destined to follow suit. It can be argued that moral-

ity of these ‘green’ policies is irrelevant, providing that carbon

emissions are decreasing, energy is sourced from renewables;

and energy usage is made more effi cient. But, if fat cats chasing

dollar signs formulate the ideology behind these policies, long

term sustainability for a fi nite world is certain to be jeopardized

by short-term gains.

Policies fuelled by money, rather than concerns for the

planet, are likely to be short-term and without a substantial

basis. It is questionable that if campaigners did not place pres-

sure on those in power, and if world leaders and utility provid-

ers did not see the potential revenue intakes from a new vertical

of business, a change in energy usage would not be high on the

agenda of those in power.

It seems that Brown and his companions are reluctant to put

their governmental budgets where their non-committal policies

are regarding climate change, and it remains to be seen if Copen-

hagen will actually achieve anything in terms of climate change

action, or whether if, once again, restoring the banks of the West

will bleed dry the limited funds of global tax incomes.

“It appears that the world’s leaders are too busy papering over the cracks of the recession to lend a thought to environmental concerns”


comment back.indd 119 22/6/09 09:41:41


120UPCOMING

International eventsA roundup of upcoming utility and environment workshops and conferences around the world.

CEE ENERGY 2009Sep. 24, 2009

Hotel Ramada Istanbul Old City, Istanbul, Turkey

http://www.cee-energy.easteurolink.co.uk/Upcoming.html

3RD ANNUAL CUSTOMER EXPERIENCE AND RELATIONSHIP MANAGEMENT FOR UTILITIESSep. 21, 2009

Prague, Czech Republic

RENEXPO 2009Sep. 24-27, 2009

Augsburg, Germany

http://www.renexpo.de

ENERSOLAR+ THE INTERNATIONAL SOLAR ENERGY EXHIBITIONNov. 25-28, 2009

Rho (Milan), Italy

http://www.enersolarplus.com

HYDRO 2009Oct. 26-28, 2009

Lyon, France

http://www.hydropower-dams.com

EVENTS ED P120-121.indd 120 22/6/09 10:00:54


THE BUSINESS OF PLUGGING IN – ELECTRIC VEHICLE CONFERENCEOct. 19, 2009

Motor City Hotel & Conference Center,

Detroit, MI, US

http://www.pev2009.com

POWER-GEN ASIA

Oct. 7-9, 2009

Bangkok, Thailand

WATERPOWER XVIJul. 27-30, 2009

Spokane, WA, US

http://www.waterpowerconference.com

ESSENTIALS OF UTILITY FINANCEJul. 23, 2009

Washington Marriott, Washington, DC, US

http://www.snlcenter.com/euf

CLEAN ENERGY EXPO ASIA 2009

Nov. 18-20, 2009

Singapore, Malaysia

http://www.cleanenergyexpoasia.com

EVENTS ED P120-121.indd 121 22/6/09 10:01:02


122EUROPEAN FOCUSEU energy developmentsAhead of the UN Climate Change Conference in December, Power & Energy assesses what the US can learn from European countries and their attitude towards energy usage.

NorwayOil and gas has predominantly been Norway’s source of energy, fol-

lowing the discovery of the North Sea oil in Norwegian waters in the

late 1960s, but this has led to disagreements regarding exploration and

growing international concern over global warming, resulting in Nor-

way’s energy usage receiving meticulous attention. To follow the

trend, Norway’s electricity generation is almost entirely from

hydroelectric power plants, and was the fi rst country to gen-

erate electricity commercially using seabed tidal power.

way’s energy usage receiving meticulous attention. To follow the

trend, Norway’s electricity generation is almost entirely from

hydroelectric power plants, and was the fi rst country to gen-

BelgiumFormally known as the Kingdom of Belgium, the country

produces over half of its electricity through nuclear energy.

Since 2007, it has focused heavily on the use of renewable ener-

gies, and there are currently more than 200 onshore wind turbines

throughout the region. However, the principal sources of primary

energy for conventional power production are low-grade coal and by-

products of the oil industry, making the country heavily dependent on

imports of crude oil; it exports refi ned oil products.

Formally known as the Kingdom of Belgium, the country


Since 2007, it has focused heavily on the use of renewable ener-

Formally known as the Kingdom of Belgium, the country


EU Energy.indd 122 22/6/09 09:28:54


FranceSince 2002, the country’s main electricity generation, as powered

by Électricité de France (EDF) is sourced from nuclear power from

the country’s 59 nuclear power plants. It is the world’s largest net

exporter of electric power and exports 18 percent of its total pro-

duction. It is predicted that in 2009 and 2010,

France will be a key driver in solar, partly

due to an expected decline in the price of

solar panels and also due to the subsidies

introduced in 2006.

UKThe British Government is another European nation that committed them-

selves to energy standards according to the Kyoto protocol. In March 2007,

the government published a Climate Change bill requiring a mandatory

cut of 60 percent in the UK’s CO2 emissions by 2050. Due to its large

coal and gas reserves, the UK was largely self-suffi cient until the early

2000s, but due to the need for greener energy, it is now reliant on

imports. It is feared that this may cause a future ‘energy gap’ as the

remaining coal plants close due to stricter CO2 standards.

GermanyAs one of the world’s largest consumers of electric-

ity per year, government policy is now emphasizing

the importance of conservation and development of

renewable sources, such as solar, wind, biomass and

geothermal. However, the main source of energy still

remains as coal and in a bid to curb emissions, the gov-

ernment has set a goal to meet half the country’s energy demands

from alternative energy by 2050. With its status as the world’s

largest operator of wind generation, hitting those targets certainly

looks to be an achievable goal.

geothermal. However, the main source of energy still

cut of 60 percent in the UK’s CO2 emissions by 2050. Due to its large

coal and gas reserves, the UK was largely self-suffi cient until the early

2000s, but due to the need for greener energy, it is now reliant on

imports. It is feared that this may cause a future ‘energy gap’ as the

remaining coal plants close due to stricter CO2 standards.

EU Energy.indd 123 19/6/09 15:44:03


Located in Central Europe,

Germany holds 82 mil-

lion inhabitants and is

the largest populated

state within the European

Union. A country known

for its environmental consciousness,

it is committed to the Kyoto protocol

and other green treaties to support low

emission standards, recycling and the

use of renewable energy. The Govern-

ment strongly endorses such environ-

mental principles with a large number

of emission reducing initiatives, and

as a result, the overall emissions of the

country are falling.

Since 1990, Germany has reduced

its greenhouse gas emissions to almost

20 percent, and has nearly achieved the

124TRAVEL FEATURE

German effi ciencyA champion of greener, cleaner fuel, Germany is the leader in Europe’s renewable race.

targets outlined in the Kyoto protocol of a

21 percent reduction by 2012. The country

claimed second place in the global Cli-

mate Change Performance Index in 2008,

which it has done through an increase in

energy and resource effi ciency, whilst

simultaneously developing renewable

energies and raw material– making both

the supply and demand requirements

upon energy in the state more green.

However, fossil fuels still remain as

the backbone of the energy infrastruc-

ture; petroleum takes a 36 percent share

in the overall energy intake, followed

closely by natural gas and coal. Nuclear

power is gradually being phased out fol-

lowing a ‘nuclear consensus’ between

the government and electric utilities in

2002.

ENERGY STATISTICS

Coal production

28,018,000 tons

Electric power consumption

579,979,000,000 kWh

Nuclear electricity generation

162.3 terawatt-hours

Oil imports

2,600,000 barrels per day

Stats taken from http://www.nationmaster.com/country/

gm-germany/ene-energy

A photovoltaic power plant on a fi eld in Hergershausen.

Travel back.indd 124 19/6/09 16:27:06


GREEN CITY GUIDE: BERLIN

The capital city, Berlin holds a population

of 3.4 million, and as the centre of

the Berlin-Brandenburg metropolitan

area, is leading the way with green

initiatives. When traveling through the

city, cars must meet strict emission

standards, which are proposed to

become even more stringent in 2010.

Only cars displaying green badges will

be permitted in these central areas.

Berlin’s public transport system, Berliner

Verkehrsbetriebe, or BVG as it’s known,

is highly effi cient.

For a green stay when in Berlin,

head to Martim Hotel Berlin and Maritim

proArte Hotel. The Maritim Hotel chain

has extensive policies focusing on the

environment and energy conservation,

ensuring all heating is done on energy friendly natural gas or district heating. In certain places, the hotels produce their own

energy via thermal power stations or solar collectors.

The seat of the German Parliament, the Bundestag, is located in Berlin. A synthesis of pre and post-war architecture, the

historic dome most recently went green, and now runs completely on renewable energy from wind, water and solar sources.

GREEN CITY GUIDE: FREIBURG IM BREISGAU

A stronghold for the German Green Party, Freiburg has been implementing and

extending carbon-reducing initiatives since the early 1970s. Cycle lanes have

been established, the city’s train network improved and the entire city centre

turned into a pedestrian zone. In 1991, a fl at-rate Regional Environment Card

was launched, offering unlimited use of public transport in the city.

Freiburg is mostly recognized as being Germany’s ‘Solar City’, following its

heavy investments in renewables. Currently, almost fi ve percent of the city’s

electricity comes from sustainable energy sources, with the city on track to

reach a fi gure of 10 percent by 2010.

The Bundestag

Germany has

pledged that

almost a third

of its energy

will come

from green

sources by

2020. At a press

conference

in Berlin on

February 12,

Matthias Machnig,

a senior offi cial in Germany’s

Environment Ministry, advised

that the state will generate

30 percent of energy from

renewables, maintaining its

position as head of the EU in

renewable sources.

This new target places it

on schedule for reaching its

long-term aim of supplying

half of its energy demand with

wind, sun and other sources of

natural energy by 2050.

GREEN FOCUS

Travel back.indd 125 19/6/09 15:54:17


126IN REVIEWOn the shelfPower & Energy takes a look at the resourcefulness of the latest offerings of renewables-related books.

Renewable Energy: Sustainable Energy Concepts for the Futureby Roland Wengenmayr and Thomas Bührke

Written by science journalists, the book shapes his creative thinking into formulative chapters, documenting

20 major categories of those sustainable concepts currently being used. The information is aided with a

combination of pictures and diagrams, and offers solid solutions for energy conservation.

POWER & ENERGY SAYS: A more formative account and critical overview of the recent technologies for the

energy conscious public.

Energy Systems and Sustainabilityby Godfrey Boyle

As the emphasis on renewables increases globally, a new section of society is attempting to understand

the need for change in energy systems. Senior lecturer in the UK’s Department of Design & Innovation

(DDI), Godfrey Boyle gives informative information for this new class of the true forms of renewables.

POWER & ENERGY SAYS: A practical guide for those wanting to know more about renewables, without

needing a BSc to understand. Great reference tool of energy systems and generation technologies.

Sustainable Energy – Without the hot air by David MacKay

With all the talk currently surrounding sustainability, sometimes only the facts will do. David MacKay

sets out the quantitative results of energy usage – for heating, electricity, food, transport and so on –

per individual, per day. He also reviews the actuality of energy usage, bleakly concluding that we use

about ten times our plausible local resources. He then proposes a menu of sensible solutions to rectify

these problems.

POWER & ENERGY SAYS: A well written account and some well proposed ideas displaying the need for major

change through major actions.

book review.indd 126 22/6/09 09:42:30

200,000 Challenges 100,000 ExecutivesOne Community

Dedicated to business

Join now: www.meettheboss.com

If your network isn’t focused on your business, change it.

MeettheBoss.com membership reads like an industry who’s who. CEOs, CIOs and other senior executives from leading organizations are just two clicks away.

But there’s more. Weekly interviews with industry leaders are webcast on the site’s dedicated channels. These are combined with live, moderated discussion groups, video conferencing, IM and secure e-mail in one easy-to-use app that’s dedicated to business.

New York 8:50 a.m.John is upgrading some core business functions. He wants to know how to ensure a smooth transition, so he video calls…

London 1:50 p.m.Paul, who has seen the benefi ts of an upgrade and is now sharing project management tips with…

Dubai 4:50 p.m.Georgina, the turnaround expert who’s moving on to a new project in Japan, where…

Tokyo 9:50 p.m.Ringo has the local knowledge. But he’s also planning for tomorrow, and that’s all about core business...

MeettheBoss.com is simple, intuitive, unintrusive and secure. It’s also free to use. Membership restrictions apply.

MTB AD (Full page B2B Mag).indd 127 19/6/09 16:25:03


128Final wordCorn beefis ethanol really the answer to america’s fuel worries? Huw Thomas takes issue.

let me be clear: I’m a card-carrying tree-hugger. I

religiously recycle each scrap of suitable material,

conserve every drop of water and compost my kitchen

waste, albeit with limited success. Given all this,

it might be expected that I would be a big supporter of corn

ethanol, which makes up the bulk of biofuel in the US. After

all, ethanol is naturally produced from raw materials that grow

straight out of the ground with no messy drilling required. As

they grow, crops absorb the CO2 that is produced when they

are burned. We reduce our dependence on foreign oil and sup-

port our economy by ‘buying American’. What’s not to like?

However, once you look more closely at corn ethanol, its

environmental credentials begin to appear a little shaky. Refin-

ing ethanol is not some bucolic activity where a ruddy-faced

farmer squeezes the juice out of ears of corn. Rather it is a labor-

intensive – and energy-intensive – industrial process. Nitrogen

fertilizer is produced using natural gas, while many pesticides

and herbicides are derived from oil. In addition to that, the ma-

chinery used on farms and in transportation gulps down diesel,

further tarnishing ethanol’s claim to green status.

According to the National Renewable Energy Laboratory,

it takes around one British Thermal Unit (BTU) of fossil fuel

to produce 1.3 BTU of usable bio-energy. That exchange rate

doesn’t seem particularly impressive or sustainable, yet there

are those who dispute even this level of efficiency. Research

by David Pimentel of Cornell University suggests that it takes

roughly 1.3 gallons of oil to produce a single gallon of ethanol.

Even ethanol’s characterization as a cleaner fuel than existing

fossil sources is decidedly unstable. Burning ethanol actually

produces more smog than burning oil, a fact conceded by the

EPA in the Third Circuit Court of Appeals in 1995.

But even disregarding corn ethanol’s environmental bona

fides, the deciding factor in the success or failure of any product

comes down to dollars and cents. This reality makes ethanol’s

longevity even more perplexing. It takes 450 pounds of corn to

fill an SUV, so producing enough ethanol to replace the oil we

currently use would require 95 percent of available farmland to

be turned over to corn cultivation. Ethanol might be able to cure

us of our addiction to foreign oil, but only by replacing it with an

addiction to foreign food.

In fact the only people who seem likely to profit from the

proposed plan to increase corn ethanol usage to 15 million gal-

lons a year by 2015 are the corn farmers and ethanol producers.

Subsidies and tariffs discourage the import of cheaper ethanol

from places like Brazil. This keeps prices high and pumps cash

into the coffers of big agribusinesses who are the key indus-

trial players in the big farm states. Given the disproportionate

political influence of these states and the healthy streams of

lobbyist cash flowing from them, don’t expect the denizens of

Washington to change things too soon.

The single-minded boosting of ethanol actually works to

the detriment of developing a truly sustainable and affordable

alternative to oil. There are a number of options currently being

explored, including hydrogen, hybrid electric vehicles and even

ethanol made from non-food crops. The premature coronation

of corn ethanol as the de facto winner in the alternative fuel

race prevents serious investment in other approaches that

might yet yield significant results.

For the average eco-warrior it’s a deeply frustrating situ-

ation. We seem to be on the verge of trading one expensive,

polluting and unsustainable source of energy for another with

many of the same attributes. Cutting out the special interests

and approaching corn ethanol along more realistic lines is a

choice that needs to be made without delay. Corn may well be

part of the recipe for future energy, but until some other ingre-

dients are incorporated it is going to leave a pretty sour taste. n

Final word.indd 128 19/6/09 15:33:35

TeamQuest.indd 1 19/6/09 15:05:05

Accenture.indd 1 19/6/09 13:52:01

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