May 16, 2010
This week, I am travelling to Palm Springs CA to attend the Networked Grid 2010 conference. In addition to being a great opportunity to network with some of the top names in the smart grid industry, I am also looking forward to a very full and exciting agenda of discussions and presentations that will serve to enhance my knowledge and understanding of the smart grid. That should provide plenty of material for updates to the blog in the coming weeks.
Last Tuesday, May 11, I attended an event entitled Growing Chicago’s Clean Energy Economy co-presented by the Environmental Law & Policy Center, Chicagoland Entrepreneurial Center and Chicagoland Chamber of Commerce and sponsored by Crain’s Chicago Business. The event included several panel discussions featuring representatives of the City of Chicago, the State of Illinois, the host organizations and several clean energy firms based in the Chicago area. Refer to the end of this article for a list of the key participants and the organizations and firms that they represent.
In his opening remarks, Howard Learner of the Environmental Law & Policy Center noted that the state of Illinois has one of the best renewable power standards in the country. This includes a state mandate for 20% renewable generation by 2020 with a specific carve-out of 6% for solar power. This solar power carve-out is especially important because solar generation peaks during the afternoon hours and actually leads the peak demand cycle, thereby offering an effective way to reduce demand for coal and oil fired peaking plants. State and federal policies as well as economic changes are also expected to reduce electricity demand by 15% by 2020.
Suzanne Malec-McKenna, Commissioner, Department of Environment, City of Chicago, spoke about the Chicago Climate Action Plan which drives the city’s approach to energy efficient building codes, clean and renewable energy sources, improved transportation options, reduced waste and industrial pollution and adaptation to changes that are already occurring in our environment. She noted that this is a living dynamic document that must be constantly updated to respond to changes that occur in state and federal regulations and initiatives.
Manny Flores, Acting Chairman of the Illinois Commerce Commission, the main regulatory authority in Illinois spoke about a number of exciting green developments occurring in Chicago. These included the Chicago Green Exchange, a sustainable retail and office development and the 35 acre Lathrop Homes site which is being redeveloped following the new LEED for Neighborhood Development guidelines from the US Green Building Council.
I had an opportunity to talk privately with Chairman Flores in the break and he referred me to the Illinois Statewide Smart Grid Collaborative and urged that representatives of industry and communities need to become more actively involved in contributing to the discussions that are taking place around the smart grid strategies for the state. Among other assets available at this site is the February 22, 2010 Facilitator’s Progress Report to the Illinois Commerce Commission which details the progress made by working groups dealing with Smart Grid Applications and Technologies, Consumer Policy Issues and Technical Characteristics and Requirements. Two additional working groups dealing with the Cost-Benefit Framework and Utility Smart Grid Filing Requirements had yet to start work at the time of the February report. The collaborative is scheduled to complete work by October 2010 so there is still an opportunity for interested parties to get involved and help to shape the outcome.
Jay Marhoefer is the founder and CEO of Intelligent Generation, made a number of interesting contributions to the discussion from the floor urging the participants to think less conventionally in terms of large centralized generation owned by the utilities and focus instead on the parallels with the PC and internet revolutions and the potential for democratizing the generation of power. Intelligent Generation has developed a hardware and software solution that optimizes energy cost savings and reduces the payback time for wind and solar generation capacity by determining the most cost effective time to acquire energy from distributed generation sources, or the grid and storing that energy for use when it is most valuable. This is a great example of the type of innovation that is occurring around smart grid.
In response to a question about the key technologies that universities should be teaching and researching in order to drive the wind power industry forward Andy Cukurs, CEO, North America, Suzlon Wind Energy Corporation, replied that he would like to see more emphasis on remote monitoring and diagnostics and better transmission and interconnection technologies. These are all technologies associated with the smart grid and are not unique to wind power. He also mentioned the need for improved coating technology that would prevent ice build-up on the turbine blades which can cause inefficiency in operations. Another great example of this type of innovation, is the evolving technology for energy storage at substations or in local communities as referenced in an article in Eco Periodicals, and supplied by another Chicago based company, S&C Electric.
There was a good deal of discussion about the regulatory environment. In Europe and other parts of the world, generous feed-in tariffs that allow operators of solar or wind power plants to sell electricity back to the utilities at higher prices on long term contracts have been used to stimulate the growth of the clean energy economy. In the US, a system of tax credits is used but there are several limitations with these credits. For one thing, they cannot be directly used by a startup company that has no profit to pay taxes on and so there is a secondary market to allow such firms to sell these credits in order to monetize them to help fund their investment. Another problem with the US approach is the lack of security for companies due to the fact that many of these tax credit schemes are temporary and subject to renewal on a periodic basis. However, as Madeline Weil of the Environmental Law & Policy Center noted, overly generous feed-in tariffs helped to boost the manufacture of Solar PV products but then some of those tariffs were revised downwards, causing a drop in demand which has caused a dramatic drop in the price of solar PV but has put manufacturers of this technology at some risk.
Perhaps the most well received statement of the entire event came during the Q&A portion of the final panel on the issue of clean energy financing. Michael Eckhart, President of the American Council on Renewable Energy, noted that the biggest impediment to renewable energy financing is the fuel cost pass thru which essentially absolves fossil fuel based generating plants from having to account for the cost of fuel in preparing their rate cases to the utility commissions. Based on discussions with people in the industry, he believes that if gas fired generating plants were required to lock in a price for 20 years as is often the case with wind and solar plants, the price that they would have to bid would rise to around 15c/KwH which would be on a par with or higher that current wind and solar rates in many markets.
Among the community and policy leaders participating were:
- Steve Daniels: senior reporter for Crain’s Chicago Business
- Michael Eckhart: President, American Council on Renewable Energy
- Manny Flores: former Chicago Alderman and acting Chairman of the Illinois Commerce Commission
- Jack Lavin: Chief Operating Officer, State of Illinois
- Howard Learner: Executive Director, Environmental Law & Policy Center
- Suzanne Malec-McKenna: Commissioner, Department of Environment, City of Chicago
- Jerry Roper: President & CEO, Chicagoland Chamber of Commerce
- Madeline Weil: Policy Advocate, Environmental Law & Policy Center.
Industry representation included;
- Sean Casten: President and CEO of Recycled Energy Development, a firm that specializes in capturing waste energy from industrial processes and turning that into heat and power.
- Andris Cukurs: CEO North America of Suzlon Energy Corporation, a wind turbine manufacturer and operator of wind farms.
- Peter Duprey: CEO of Acciona Energy North America, who are involved in building sustainable infrastructure, desalination and all forms of renewable power.
- Declan Flanagan: CEO of Lincoln Renewable Energy, a developer of solar and wind power projects.
- Amy Francetic: Managing Director & Founder of Invention Bridge, who provide innovation consulting services and investment capital to help commercialize science based research.
- Pete Kadens: President of SoCore Energy, an innovator and pioneer in the solar industry providing solar power solutions to municipal and commercial clients.
- Lois Scott: President of Scott Balice Strategies, a provider of public and corporate finance expertise.