There’s an interesting thought exercise titled Renewable Energy: Shifting Sources of Power initially published in the Government Gazette and reprinted in the Energy Post about the role that renewables can play in global energy policies. This article triggered some thoughts about what renewables do and should mean to energy policies in the USA.
We should think about a day when most of our energy sources for electricity and transportation are renewable sources rather than fossil fuels. Why? Because this is an achievable goal. R&D in solar continues to push the harvest efficiencies of materials upwards so we can expect to see more bang for the buck in equipment. The pace of improvements in solar technologies and decreases in manufacturing and deployment costs is impressive. Other innovative technologies offer new ways to harvest energy from water, providing generation opportunities beyond big dams and other traditionally centralized infrastructure. R&D in energy storage will increase solution options and decrease prices – so the trends that we’ve seen in solar will occur in energy storage – sooner and faster than most projections. And fortunately, we are now seeing financial innovations that are also accelerating the pace of adoption of renewable generation amongst residential, commercial, industrial, and agricultural customer categories.
Continuing with that thought exercise, the establishment of renewables as the majority source of energy for electricity production has major implications on politics – from the local to the global levels. In the USA, it has profound implications on today’s political power infrastructure, national and state energy policies, and our centrally-sourced electricity generation business models.
But all this begs a more fundamental question – why does so much of US energy policy still fixate on fossil fuels? Why not plan an orderly transition to clean renewables, which guarantee energy, economic, and environmental security?
From an energy security perspective, here’s a quick compare and contrast:
- Renewable energy sources like solar and wind are free and freely available around the globe. Fossil fuels have extraction and transportation costs, plus costs associated with military protection*.
- Renewable energy sources have stable extraction costs – once the equipment is installed, the costs of operating and maintaining the equipment is very predictable. In contrast, fossil fuels have always demonstrated extreme price volatility that jeopardizes economies and countries. In the USA, electric utilities are cautioned against assuming that natural gas prices will always be as low as they are today.
- Renewable energy sources like solar and wind do not emit CO2 gases. All fossil fuels do – even natural gas. Efforts to capture or sequester carbon create additional external costs that must be factored into fossil fuel prices.
- Renewable energy sources (with the exception of hydro) do not require large quantities of water that then has to be expensively treated to make it potable again. In hydro’s case, the water use is a “pass-through” that doesn’t alter its quality. There’s plenty of concern with fracking – it consumes water, and the lack of transparency from the extractors about the chemicals injected into the earth raise legitimate concerns about the potential for polluting ground sources of water.
The reasons for the fossil fuel fixation include the usual political gridlock and out-sized influence of campaign contributions, but we also have too many stakeholders in the USA who can’t think bigger than the mere substitution of one expensively extracted fossil fuel for another.
We have an opportunity to re-imagine and re-engineer our energy infrastructure into clean sources that are widely available and offer wide market participation. It won’t always be the easy path, but it is the logical one to deliver energy, economic, and environmental security.
* Imagine what it means for the USA if the Navy’s Fifth Fleet is no longer needed to protect Middle East shipping lanes for oil transportation. Wouldn’t American taxpayers be delighted to no longer foot the $60-80 Billion annual cost for that?
Natural gas seems to invoke a win/win perspective as the solution to all problems in some discussions about energy policy and the best fuels for electricity generation and transportation. In these scenarios, the only downside is the pressure it puts on renewable energy technologies. Yes, natural gas is cleaner than goal. It exhausts about half the carbon dioxide or CO2produced by coal. It does not have a nasty byproduct called coal ash, which can have toxic consequences of its own – both environmentally and financially – as we lack good answers to disposal of its waste.
However, the natural gas supply chain of drilling, production, processing, and distribution produces leaks of methane, which is 25 times more damaging to our atmosphere than carbon dioxide. We don’t even have a good handle on how much methane is leaking into the atmosphere today from our drilling boom, but given the propensity of leaks, spills, and explosions in existing pipeline infrastructure, its safe to extrapolate that an unhealthy amount is already contributing to our atmospheric warming. That’s not a good thing as we just crossed the boundary of 400 parts per million (ppm) of CO2. Are we just jumping from the frying pan into the fire in considering natural gas the answer to all our energy problems?
There are a few other caveats for consideration as we make decisions about the future of the electricity fuel mix in the USA. First, natural gas requires an interstate/intrastate pipeline infrastructure. Just like electricity has transmission and distribution grids, natural gas requires pipelines for transport. Many existing pipelines are already at full capacity – particularly during peak demand periods. Pipelines are prone to congestion points, just like highways or transmission lines. The current costs to construct a large diameter, 120 mile pipeline in the Marcellus Shale region average around $500M. Pipelines don’t magically appear overnight. It can take time to engineer, secure permits, and complete construction. How much time and money should we invest in building natural gas pipelines versus investment in more energy storage and renewables like wind and solar? It’s an important question that needs to be answered.
A second caveat is that any fuel that is transportable is also exportable. The funny thing about capitalism is that the laws of supply and demand dictate that where demand (price) is highest, that’s where natural gas supply will flow. Utility executives surveyed in a recent study provided some insights into industry concerns about the stability of natural gas prices. While a majority of them expect that their utilities will increase their use of natural gas by 2020, they are worried about its inherent price volatility. Natural gas experiences peaks in price that correspond to demand – just like electricity. Utilities in the Northeast learned that lesson this past winter when a winter cold snap increased increased demand for natural gas. The outcome? Utilities were forced to purchase at peak prices. That’s an unwelcome risk factor for utilities planning long term energy portfolios.
Finally, consider energy security. Natural gas pipeline infrastructure mirrors the existing electricity supply chain of centralized production, transmission and distribution. It has the same brittle characteristics of today’s electricity grid. Break it close to a production source or along a transmission pipeline, and potentially millions of people can be impacted at a cost of billions to the economy. Does a focus on natural gas really deliver energy security are we merely investing in big fat targets for physical or cyber destruction?
Contrast this to domestic renewables like wind and solar. They are intermittent sources, but energy storage technologies are advancing, and the latest round of innovations could start a trend of increasing value coupled with decreasing prices like we’ve seen with the solar industry. Renewables will always be free, and from a price volatility perspective, you can’t find lower risk strategy for energy than that. Renewables are also conducive to highly distributed generation – most of the 44M rooftops in the USA could hold a solar panel to produce at least some electricity. More distributed generation offers some resiliency to the electric grid, because widely distributed sources of generation reduce the risks of catastrophic outages.
Natural gas is a fuel for electricity generation that serves as a bridge to a Smart Grid that fully integrates renewables and energy storage into the energy portfolio. It is better (in some ways) than coal. But keep in mind that simply transitioning from coal to natural gas is like going from heroin to methadone. Better yes, but not by much. You’re still using a fossil fuel that isn’t healthy for the planet, needs its own costly infrastructure buildout, exhibits significant price volatility, and is not guaranteed to remain onshore in the future.
The USA could learn a number of valuable lessons from Sweden about energy policy. The Swedish Trade delegation recently sponsored a Smart Grid roundtable in San Francisco with Anna-Karin Hatt, Minister for Information Technology and Energy in the government of Sweden’s Ministry of Enterprise, Energy and Communications. Several Silicon Valley Smart Grid organizations, including resources from Oracle, Silver Springs Networks, EPRI, and the Smart Grid Library participated with moderation by Lars Friberg, the Swedish attaché for Climate and Energy.
Ms. Hatt set the knowledge foundation for the roundtable by describing Sweden’s energy policy targets for 2020:
- Achieve 50% renewables. This is the highest target in the European Union, and they are on track to achieve it as they were at 48.9% in 2010.
- Deliver 20% more savings through energy efficiency measures than today – and Sweden already scores well here too
- Reduce emissions 40% from 1990 levels, and by 2030, eliminate fossil fuels from their vehicle fleets.
By 2050, the country aims to be carbon neutral. These are serious energy policy goals that starkly contrast to the conflicted USA energy policy. The Swedish government understands that 80% of the world’s current energy consumption is fossil fuels, and that’s a significant problem for energy security, environmental balance, and economic competitiveness. The leadership concluded that they don’t need to remain part of the problem. With the support of their citizens, Sweden intends to become part of the solution – which is to achieve independence from fossil fuels. Sweden plans to be in the forefront of the energy market evolution – and indeed they already have been.
There are three cornerstones for their policy objectives that cover economic competitiveness, economic sustainability, and security of energy supplies. To do that will require increasing renewables at utility-scale and through distributed generation with renewables in the distribution grid. The Minister acknowledged that renewables create a challenge for grid operations insofar as their variabilities need to be managed, but that isn’t impeding their planning. They are careful to structure policy goals and conditions for actions, but not dictate how the transitions to more renewables should occur. As Ms. Hatt noted, “we’re only at the beginning of a truly transformative period world wide, in which there will be enormous investments in energy efficiency and renewables technologies and services.”
The government in Sweden recently established a Smart Grid Council and charged its appointees with establishing a national knowledge platform for its citizens that would raise awareness of Smart Grid benefits for all stakeholders and create an action plan that identified evolving business models and research gaps. The minister indicated that there is much to learn about consumer reactions to electricity price variations and detailed consumption data.
Sweden is making significant advances to modernize their electrical grid and integrate clean energy sources into it and transportation infrastructures. So why did this forward-thinking government ministry convene with Silicon Valley Smart Grid players? To collaborate on technology development, business and financial model innovations, and consumer/prosumer transformations. This roundtable was just the first step to exchange ideas and information, such as the Property Assessed Clean Energy (PACE) programs and other creative approaches to finance renewables in the distribution grid for residential and commercial customers. One key takeaway for us American participants – we shouldn’t limit our thinking in terms of the ambitious goals we could and should set for an energy policy that promotes energy independence from fossil fuels, and therefore delivers energy, economic, and environmental security.
The Swedish Trade delegation is planning a seminar in the San Francisco Bay Area in the first half of 2013 to continue this discussion, so stay tuned for more information and inspiration.
Today is Labor Day – the holiday that celebrates workers. We should all say thank you to the utility workers who are toiling this weekend – and sometimes in very unpleasant conditions – to restore power anywhere experiencing an outage. Let’s hope their hard work is supported by technologies that let them work smarter too. Grid modernization projects can accelerate response to outages and restoration of power. Smart Grid technologies that help monitor and control equipment in the distribution grid – the low voltage grid that includes substations, poles and wires, transformers, and smart meters – can provide data that helps pinpoint damages and even determine which crews have the skills and supplies to conduct repairs. Some of these technologies are revolutionary, but more often they are evolutionary improvements to how things are currently done.
September 3 is also the anniversary of the Treaty of Paris that formally ended hostilities between the brand new United States of America and Great Britain in 1783. The Battle of Yorktown was the last major engagement that resulted in the British Army’s surrender on October 19, 1781. The British Army – the most formidable military force on the planet at that time – was so stunned at this defeat that their band played “The World Turned Upside Down” at the formal surrender ceremony.
So what does a mention about the Revolutionary War have to do with the Smart Grid? A lot, actually. Smart Grid technologies integrate domestic, renewable energy sources like solar and wind into the power grid. Grid modernization enables the displacement of one fuel source – oil – for multiple domestic renewable fuel sources to power electric vehicle transportation. This is revolutionary thinking, and its time has come.
Gasoline prices have never been higher than they are this Labor Day. And in addition to this pain at the pump, when you add up the subsidies and tax breaks for oil (passed on to American taxpayers); along with the costs of pollution from extraction to consumption (also passed on to American taxpayers); and the military costs of the defense of shipping lanes to protect the transport of oil to countries other than the USA (and of course also passed on to American taxpayers); we’ve got a lot of taxation with little representation in energy security. The US military suffers the human casualty costs of attempting to ensure energy security built on oil. That is why it is moving to alternative forms of energy to reduce dependence on oil both onshore and offshore.
Some Americans argue for increased oil drilling within the USA borders. It’s part of the Republican party platform. But this “drill baby drill” crowd ignores two inescapable facts. Oil is a conveniently transportable fuel. In a free market system, North American oil will flow to the highest bidder – on- or offshore. Most likely, American taxpayers will continue to pay the costs noted above. There is no energy security with oil. The truly revolutionary strategy is to invest in Smart Grid projects and restructure our economy on energy sources that remain onshore, like solar and wind. This strategy will produce economic and energy security for Americans, and we’ll once again turn the world upside down.
The Smart Grid increases our energy security by reducing dependence on oil that only gets more costly to extract or protect. The Smart Grid improves our economic security with a 21st century energy infrastructure that allows us to cost-effectively participate in competitive global markets. The Smart Grid also creates new domestic white collar and blue collar jobs. Building the Smart Grid benefits us at local, state and national levels in the USA, but the effort will require workforce education, employee reskilling, and services to assist job seekers in finding their best career transition points.
The National Commission on Energy Policy (NCEP), part of the Bipartisan Policy Center, a think tank focused on national challenges, issued a study from the Task Force on America’s Future Energy Jobs that highlights the magnitude of the challenges we face as we transition to the future Smart Grid. According to the report summary, “transforming our nation’s energy systems represents an enormous undertaking. It will require not only new, low-carbon technologies and systems, but people with the expertise to create those technologies and to plan, design, build, operate, and maintain those technologies and systems.” In other words, it’s time to roll up our sleeves and put America back to work.
There are other reports and plenty of anecdotal evidence that highlight the fact that the Smart Grid offers numerous job opportunities. In some cases, these opportunities are replacements of existing positions vacated by a retiring workforce. Back in 2005, the American Public Power Association (APPA), which represents municipal power entities released a report that identified the significant losses that functions such as electricians, line workers, equipment installers, maintenance workers, plumbers, pipefitters, heating/ventilation/air conditioning (HVAC) technicians and construction workers would incur due to natural workforce attrition or lack of educational opportunities. These are traditional jobs, but will have to accommodate new Smart Grid technologies and services. For instance, HVAC technicians may need new training as more buildings migrate to continuous commissioning to maintain optimized energy efficiency. Other functional changes in meter operations and outage management will trigger revisions to job definitions and training.
The Society for Human Resource Management has been discussing the workforce attrition topic to initiate and accelerate utility workforce planning, and this article offers some interesting observations. Among them, the recent economic downturn may have temporarily postponed some retirement timelines, but as many as 40% of the 400,000 electric utility workers and 106,000 natural gas workers may retire by 2013. A significant number of these jobs do not require a college degree, but will require a high school degree and specialized training.
The GridWise Alliance recently released a report titled The US Smart Grid Revolution: Smart Grid Workforce Trends 2011. This report reiterates the needs to replace retiring utility resources as well as fill entirely new roles created by the technology and service suppliers to utilities. Smart Grid enabling technologies are creating promising hiring activity in information and communications technologies (ICT) solution providers as well as traditional utility vendors. These jobs include skill sets in telecommunications, IT, cyber security operations, data management, project and program management, customer service, and administration. New roles in utilities, like the Consumer Engagement Manager featured in my previous blog will be created to address the changing landscape of utility priorities and job skills in consumer relationships.
SmartGridCareers.com is a website that specializes in assisting Smart Grid employers and job seekers and helps build the knowledge, skills, and information for effective performance through a variety of resources. Their services for job seekers include job listings by company and category, and screening services for employers. Right now they are running a survey to determine what information job seekers need about the Smart Grid to find their best fit in this growth area. Check out the pop up box on their home page to complete the survey.
The broad scope of available white collar and blue collar Smart Grid jobs is welcome news for our struggling economy. Government investment in a 21st century electrical infrastructure can do even more to put unemployed and underemployed Americans back to work. So why are our political leaders reluctant to invest in infrastructure like Smart Grid projects? It’s a good question to pose to them. Failure to invest in the Smart Grid is a failure to invest in us, our futures, and our national economic and energy security.