Archive for May, 2008

As posted on CleanTechBlog.com 

I’ve been waiting a long time to write this blog post…

On May 1, Governor Ted Strickland signed into a law energy bill SB 221, which includes an advanced energy portfolio standard (AEPS) that finally puts Ohio in the advanced energy game.

By 2025, 25% of electricity sold in Ohio must come from “advanced” energy sources, including renewable energy, fuel cells, clean coal power plants, next-generation nuclear technologies, and energy efficiency.  Of this 25%, half (or 12.5%) must come from renewables (primarily wind, solar and biomass), and 0.5% must come from solar energy.  Additionally, half of the 25% is directed to come from sources located within the state of Ohio.  Also, by 2025, 22% energy reductions must be achieved through energy-efficiency programs.

Critically, unlike previous drafts of the legislation, the energy bill as passed includes a gradual ramp-up of AEPS requirements, beginning as soon as the end of 2009. This means that the advanced energy industry in Ohio can begin to emerge right away, as utilities are required to meet AEPS requirements almost immediately. Also of importance, utilities are subject to penalties for AEPS non-compliance, known as “alternative compliance payments,” the proceeds from which will be used to install advanced energy assets that otherwise should have been developed.

The only significant “out” for utilities is the so-called 3% price cap provision, in which utilities can ask the Public Utilities Commission of Ohio (PUCO) to allow less or later compliance with the AEPS requirements if they can prove that full compliance would increase the costs of wholesale power supply acquisition by more than 3%.

Obviously this will be an area of contention, requiring vigorous and diligent intervention at the PUCO to ensure that the analyses and assumptions used by utilities cannot spuriously claim a significant cost increase associated with advanced energy to evade compliance with AEPS requirements. It will be incumbent on those of us promoting an advanced energy industry in Ohio to keep these evaluations honest.  Advanced energy advocates would have preferred no price cap provision, or a provision that was worded more favorably.  But if the 3% price test is applied fairly, the advanced energy industry is confident that it can work with the language that was ultimately adopted.

Significant pre-existing limitations on “net metering” – the ability for customers to install their own power generation source and sell excess generation back to the grid – were alleviated.  This should greatly improve the economics of deploying solar energy, fuel cells, and other forms of so-called “distributed generation” technologies in Ohio.

My colleagues from the legal firm Bricker & Eckler have prepared summaries that provide an excellent overview with more detail on SB 221.

In short, the law represents a major step forward for advanced energy policy in Ohio, and will create a substantial market for advanced energy technologies in our state, thereby helping us build this important industry here. The law does not contain everything we would have wanted, and not all of the wording is exactly as we would have liked for the interests of advanced energy, but I’d score this bill at least a 7 and maybe an 8 on a scale of 1 (poor) to 10 (excellent).

With this law passed, Ohio will now be solidly on the advanced energy map. Advanced energy companies of the world, take heed:  Ohio is now open for business.  Ohio will be one of the largest regional markets in the U.S. for renewables, which will surely attract the attention of the renewable energy manufacturers and installers to set up operations here, employ people here, and pay taxes here.

The list of people to thank for their contributions toward the passage of this critical legislation for the economic revitalization of Ohio is too long for a short note, but must include the following:

• Governor Ted Strickland for firmly inserting the AEPS concept into the energy debates last summer.
• Mark Shanahan, the governor’s energy advisor, and his staff (especially Michael Jung) for insisting that the AEPS could not be jettisoned from the deliberations about overall electricity markets and regulation.
• House Speaker Jon Husted for strengthening most of the AEPS provisions that found their way into the final bill.
• House Public Utilities Committee Chairman John Hagan and House Alternative Energy Committee Chairman Jim McGregor for holding many hearings on advanced energy topics to ensure that the final bill would be drafted soundly.
• Senate President Bill Harris for leading his Senate colleagues to concur unanimously with the bill passed by the House.
• Erin Bowser and Amy Gomberg of Environment Ohio for their diligent work in educating lawmakers on the importance of a strong AEPS policy in Ohio.
• Terrence O’Donnell of Bricker & Eckler and the members of Ohio Advanced Energy (especially Norm Johnston of McMaster Energy) for expressing the voice of Ohio businesses that see advanced energy as a huge growth opportunity – if Columbus legislators would only create a favorable market environment.
• Hans Detweiler of the American Wind Energy Association and Colin Murchie of SunEdison for portraying compellingly the views of the national wind and solar industries and their interests in Ohio – if good policy were to be instituted.
• Jack Shaner of the Ohio Environmental Council and Janine Migden-Ostrander and staff of the Ohio Consumers Counsel for their tireless advocacy to promote strong energy efficiency standards in the final bill.
• Gene Krebs of Greater Ohio for, well, being Gene Krebs: advising anyone who cared to listen on how to navigate the byzantine processes of the Ohio Statehouse, with good humor to boot.
• Juanita Haydel and Kamala Jayaraman of ICF Incorporated for producing an excellent analysis of the potential impact of AEPS policy on electricity prices in Ohio.
• Ronn Richard, J.T. Mullen, and Bob Eckardt and the grantmaking staff (especially John Mitterholzer) of the Cleveland Foundation for providing me enough latitude to assist in these various efforts in Columbus, and for providing some financial support to some of them, too.
• Due Amici in Columbus for providing an excellent location for an end-of-day debrief over cocktails – and for serving the cocktails too (alas, not gratis).

Now that the bill is law, the first half of the game is over, and we’re ahead at halftime.  The second half of the game will be played at the PUCO, where the intentions of the lawmakers must be codified into fair and workable rules and procedures that cause the advanced energy industry in Ohio to actually come into being.  So while this law is essential, in many ways it is just the beginning.  Expect many months, and perhaps years, of activity before the details are fully sorted out in the PUCO.

As I wrote in an editorial in last week’s Crain’s Cleveland Business, the advanced energy community will need to maintain a high level of activity at the PUCO to protect the interests of building this new industry to revitalize Ohio.  We’ll be there.

As posted on CleanTechBlog.com 

In the late 1990s, the management consulting firm McKinsey & Co. released a widely read study called “The War for Talent,” which profiled how leading corporations were aggressively competing to attract and retain the best and the brightest in order to win in business.  (McKinsey’s favorite example of this at the time was Enron. Oops!)

Last month, the research firm New Energy Finance and the executive search firm Heidrick & Struggles released their own take on the war for talent in the cleantech space by surveying 75 senior executives worldwide. The key findings included:

• 96% of respondents said recruitment was a very serious or moderately serious challenge.
• 56% of respondents said the key challenge to delivering growth was finding executives – a significantly higher response rate than other challenges such as capital or policy.
• 46% of respondents said that CEO was one of the most difficult positions to fill, approximately the same rate as those who found the CTO role difficult to fill.
• 53% of respondents said the biggest barrier to recruitment was shortage of candidates with the right skills – far more than uncertainties about the future of the sector (32%), lack of employer name recognition (10%) or compensation (8%).
• 48% of respondents said most recruits came from the traditional energy sector, vs. 32% from the clean energy sector and 31% from “other young, high-tech industries.”

In other words, cleantech is now a serious industry, quickly maturing well beyond “mom-and-pops,” “tree-huggers” and “two-weird-guys-in-a-garage.” Cleantech is facing many of the same management challenges that big corporations face, and is increasingly poaching from the big guys.

As posted on CleanTechBlog.com 

I’ve never been a fan of the periodical Mother Jones – it has always seemed a bit too “alternative” for me. That said, I was recently given a copy of the May/June 2008 issue, a special report on the future of energy, and was surprised by the quality and balance of the articles.

I particularly found “The Seven Myths of Energy Independence” by Paul Roberts (author of “The End of Oil“) to be a compelling read. To him, the seven myths are:

1. Energy Independence Is Good
2. Ethanol Will Set Us Free
3. Conservation Is a “Personal Virtue”
4. We Can Go It Alone
5. Some Geek in Silicon Valley Will Fix the Problem
6. Cut Demand and the Rest Will Follow
7. Once Bush Is Gone, Change Will Come

I think many advocates are well-advised to reflect on #7. Bush is unquestionably the bête-noire of all things environmental, but he’s only a part of the problem, and arguably not even the biggest part. Congress and the entrenched interests completely stymie good energy/environmental policy. A new president will help, but won’t be a simple cure-all for what ails us in the energy and environmental arenas.

Which brings me to another article in the issue: “Congress’ Top 10 Fossil Fools” by Chris Mooney, profiling the “foes and thwarters of renewable energy.” In his list, they are:

1.  Sen. Pete Dominici (R-NM)
2.  The Southern Company (NYSE: SO)
3.  Sen. Mary Landrieu (D-LA)
4.  Rep. Joe Barton (R-TX)
5.  Sen. Jim Bunning (R-KY) and “Coal-State Dems”
6.  Rep. John Dingell (D-MI)
7.  Sen. Lamar Alexander (R-TN)
8.  Sen. Ted Kennedy (D-MA)
9.  Sen. John Thune (R-SD)
10. Sen. John McCain (R-AZ)

Probably no surprise that there are more R’s than D’s on the list, but I was really surprised at the omission of Sen. James Imhofe (R-OK), and by the inclusion of McCain. Apparently, the League of Conservation Voters gave the impending Republican presidential nominee a rating of 0 (that’s right, zero) last year “because McCain missed every single environmentally relevant vote,” including ones in which he could have been the tie-breaker to overcome a filibuster on the 2007 clean energy bill. Alas, what could have been…

Other good articles in the issue include:

• “The Greenback Effect” by Bill McKibben on why markets aren’t necessarily antithetical to the environment, but can be the driving force for environmental solutions
• “Breaking the Gridlock” by Jennifer Kahn on how the smart-grid could be the major enabler for energy efficiency
• “The Nuclear Option” by Judith Lewis, a reasonably fair and balanced view of the pros and cons of nuclear energy without the expected hyperbole
• “Tar Wars” by Josh Harkinson, which paints a not-at-all-pretty picture of what’s happening to the landscape in Northern Alberta as the tar sands are mined to make oil
• “Put a Tyrant in Your Tank” by Joshua Kurlantzick, profiling the bad guys leading many of the major oil-producing nations, who are financed every time you fill up at the pump

Lots of interesting nuggets to be found in the sidebar boxes, too. For instance, did you know that 30 percent of the electricity supply at the infamous Guantanamo Bay Naval Base is provided by wind turbines?

It’s well worth spending $5.95 at the newsstand. Pick up the May/June 2008 issue of Mother Jones.

As posted on CleanTechBlog.com

At a recent symposium on climate change solutions at Oberlin College, I heard a presentation by David Ball, who leads the Midwest Regional Carbon Sequestration Partnership at Battelle Memorial Institute in Columbus. His presentation was a fascinating collage of facts and observations about the status and prospects for in-situ sequestration of carbon emissions from coal powerplants and other large point sources. To wit:

CO2 must be sequestered deep underground to avoid cross-contamination with water aquifers, and also to find the low-density, “spongy” strata underneath the impermeable “caprock” strata. This tends to be several thousand feet below the surface. In order to keep the CO2 underground at these depths, given the high hydrostatic pressures that pertain so far below the surface, the CO2 must be compressed to approximately 100 atmospheres before injection. No wonder the energy/capacity penalty associated with carbon capture/sequestration is so significant!

The average coal powerplant emits about 24,000 tons per day of CO2. Meanwhile, the largest pilot project attempted to date in the U.S. for carbon sequestration has only dealt with a volume of 10,000 tons per day. In the North Sea off Norway, the carbon sequestration effort led by StatoilHydro at Sleipner has been sequestering about 2,800 tons per day since 1996. In other words, carbon sequestration has not yet been performed at anywhere near the volumes associated with powerplant emissions.

Notwithstanding the significant volumes of CO2 emitted in the upper Midwest from our fleet of coal generation and large industrial facilities, there is enough regional underground sequestration capacity to hold “hundreds of years” worth of CO2 emissions. This was news to me. I had heard concerns that the carrying capacity of the deep underground reservoirs suitable for sequestration would be small relative to our current emissions. As with many of the cleantech challenges, carbon sequestration is not a question of if something can be technically done. Rather, it’s a question if it can be done at an out-of-pocket cost that will be acceptable to politicians and their constituents.

Recent conversations I’ve had with a Norwegian company named Sargas, which is developing a 95% carbon-capture technology applicable to pressurized fluidized bed boiler combined cycle power generation facilities, indicates all-in costs (including capital recovery and returns) of under 10 cents/kwh, perhaps to as low as 7 to 8 cents.

This isn’t too bad, but I suspect the costs will have to be proven at lower levels - or energy prices are otherwise going to have to rise much farther - before many in the U.S. are assured that the potential economic impact of climate legislation won’t be severe. And of course, sequestration doesn’t address any of the concerns associated with mining the coal to begin with. For some ardent environmentalists, that makes coal unacceptable, even with cost-effective carbon sequestration. That said, practically speaking for voters and officials alike, it’s hard to overlook such an inexpensive and domestically abundant fuel.