AD: Which states do you feel are in the worst shape as far as the capacity and reliability of their energy grids are concerned?
Hess:
The perception is the western states are in worst condition, due to
usage and lack of redundancy in the network; however, the western grid
is integrated with the Canadian grid, which has a surplus of
hydropower, most of it coming from the Canadian Rockies. The western
sector is huge geographically but can mitigate that risk through better
power sharing with Canada and Mexico. The year 2000 power shortage in
California was caused by reduction of power generation in the Pacific
Northwest. The western grid certainly needs more improvement, but is
also better positioned because there is the political will and public
consent to bring about change, especially in California, Oregon, and
Washington.
Recently I spent almost 12 months scouring over 20
states in the Midwest, Northeast, South, and Southeast regions for a
client that required short circuit capacity for its manufacturing
facility. We evaluated all the grids, discussed detailed capacity and
reliability plans with FERC and regional utilities like Duke and
Southern Companies, along with regional grid groups like ERCOT
(Electric Reliability Council of Texas). The bottom line is that our
electric grid is stressed, and we need these renewable sources to
supplement and diversify our energy supply - but the time required to
develop new power plants or sources, or to do basic reconfiguration of
infrastructure (i.e., move a major 220 KV line or secure a right of way
with appropriate EIS efforts), is prohibitive and creates uncertainty
with investors, especially foreign entities with large requirements.
And
now we're also competing with countries whose renewable energy
development efforts and infrastructure enable distribution to customers
that is as good if not better than ours - at a lower operating cost
(for example, coal-to-liquid initiatives in China and the Middle East
versus their infancy here in United States, with carbon sequestration
being the big constraint). We need to get some of these projects up and
running - all forms including solar, wind, clean coal, nuclear - with
"can do" attitudes and compete for precious jobs that continue to look
for the best locations to enhance competitive advantage.
AD: How much of a facility's energy can be realistically provided by solar, wind, geothermal?
Hess:
Companies cannot go "at risk" just to say they utilize alternative
sources of energy - they must still go back to the basics I mentioned
before: accessibility, reliability, redundancy, and cost-efficiency.
Sweeney:
I think this depends very much on the type of operation, and also where
it is located. We are just starting to hear from a few select clients
the idea that direct access to green or alternative energy is a site
selection criterion, so they will look for a 100 percent ideal. In most
areas of the country, you will be subject to the RPS commitment level
(renewable portfolio standard, the amount of overall generation in a
utilities portfolio coming from renewable), so maybe 20 percent. But
again, this does not mean 20 percent of the electrons entering your
facility were generated with alternative - the grid constraints and
loss of energy over distance movement prevents wind farm energy in
North Dakota from being burned at a pharma plant in North Carolina.
Hess:
When the question come up about what percentage of power would likely
be generated from alternatives, we usually tell clients that still
comprises less than 1 percent of the candidate state's electric power
portfolio - we obviously still have a ways to go.
That being
said, however, there are some great examples of alternative energy
being used in the workplace, especially in Europe. Since 2006 all new
buildings in the EU, especially Spain, must have solar panels for water
heating. Wind power is growing at the rate of 30 percent annually,
with a worldwide installed capacity of over 100 GW and is widely used
in several European countries and the United States. Photovoltaic (PV)
power stations are particularly popular in Germany and Spain. Solar
thermal power stations operate in the United States and Spain, and the
largest of these is the 354 MW SEGS power plant in the Mojave Desert.
And Brazil has one of the largest renewable energy programs in the
world, involving production of ethanol fuel from sugar cane; ethanol
now provides 18 percent of the country's automotive fuel.
AD: What about going off-grid and doing co-generation or geothermal?
Sweeney:
This is not a new idea; it was very popular during past energy price
crunches. It is really dependent on the particular project and its size
and mode of operation. The using company does not have to operate it
themselves - there are still a number of firms who will finance and/or
build and/or operate as a third party. This alternative is best for
fairly large users with a very consistent load (24/7 operations). I
have not seen a groundswell of these like we did 15 or so years ago,
but it is a realistic option for some firms/projects.
Hess:
Co-generation activities have been successful in many clusters of
industry on a local level like petrochemical in Louisiana or facilities
in industrial parks next to large industrial complexes with excess
power - they create their own distribution power grids. Projects I have
worked on have seen as much as 20 percent power from co-generation in
these isolated situations. We have much to learn and leverage from
these "localized" best practices.
Geothermal, I think, is too
risky. It would need highly reliable backup sources, and accessing
geothermal for larger projects is probably pretty tough relative to
location needs and overall infrastructure development. I'm sure there
are best practices, but this source is not on the radar screen with
traditional clients.
