Climate Change and Alternative Energy Program – Part 6

This is the final entry from the trip, and thanks to a hectic final day in Washington State, it’s been written on my first day back in the office in the UK.

An early start to the day as we were bundled into our van at 08.00 to drive across to the Washington State capital, Olympia. Our first meeting was with State Senator Karen Fraser, which was held in the magnificent State Capital building. Karen was kind enough to give us a US politics 101 class at the start of the meeting which helped clear up some things that had been confusing me (that’s not me saying I now understand everything by the way!). I’ll not delve into this here, but it is worth noting that each US State has its own Constitution, and that any law passed must be in line with the Constitution or it can face legal challenge. It’s also worth noting that States have freedom to act where there is an absence of a National initiative; the emergence of State level GHG initiatives (such as cap and trade schemes) is an example of this. Washington State has not yet passed a cap and trade initiative, although one is in the legislative pipeline (it has been knocked back once already).

In a wide ranging discussion, a number of interesting points arose. The first is that people are feeling oppressed by the level of US debt and therefore there is a pushback on new spending programmes. Action on climate change is being directly affected by this. It is easier to deal with water and air quality issues as these are more tangible to the public.

Washington State is somewhat distrustful of nuclear power, due to a rather chequered history. The State has one of the most contaminated nuclear sites in America, and there is a perception of significant feet dragging at Federal level over clean up of the site. It was noted that a failed bond scheme for new nuclear build has further soured public opinion.

Regarding other power sources, I’ve already mentioned that the State derives around 60% of its power from hydro. Coal is unfavourable in the State and in fact there is only one coal power station in Washington. Natural gas is less disfavoured than coal. I’ve also mentioned previously the existence of NIMBY opposition to wind power as well as issues of grid connection. The fact that certain power sources are disfavoured is important because elected Representatives and Senators tend to represent their districts more strongly than there parties (because elections come around so frequently), so a strong local bias is likely to be reflected in the voting on Bills.

Our next visit was to the Washington Department of Ecology (DoEc), where we had an interesting discussion on climate change adaptation. Washington has 2200 miles of coastline and is already experiencing erosion problems and models are predicting further pummelling through storms and waves. Currently the DoEc is hoping to incorporate some forward planning into a forthcoming State Act (I missed the title) to help mitigate against these impacts.

In Colorado we heard that there are potentially serious problems relating to water availability and I asked if the same was true in Washington. From models, it appears that the overall quantity of freshwater will not change appreciably; but there less snow melt and more rainwater as things warm up. Additionally there may earlier low river flow in summer, which is bad news for salmon, which are already in trouble in the State.

We heard that the DoEc is being encouraged to save energy, as are other Departments within the State. What was interesting was that the DoEc will be allowed to keep up to 50% of the savings as long as they reinvest into energy efficiency. All Departments have targets, but there isn’t really a penalty of missing them - other than the shame factor.

Dave Sjoding, from Washington State University, described some of the DoEc energy from waste projects. As with many places, the State is running out of landfill space and is therefore examining options to reduce waste being buried. What I liked about this CHP proposal was that it was more holistic than simply burning rubbish; co-products were considered, such as phosphorus and nitrogen for fertiliser.

We headed back to Seattle for the final formal meeting of the day, which was with Kevin Schneider, a smart grid expert from the Pacific North West National Laboratory. Kevin gave an absolutely fantastic overview of the US power system and noted that idea of a smart grid is somewhat of a misnomer. He suggested that it is more likely that a smart grid will be a way to operate the electricity system in a more flexible way utilising communications and information technology. He suggested that such a grid would have more information on how electricity is consumed, would have better utilisation of assets and would integrate renewables.

He noted an experiment in the Olympic Peninsula – a community that is served by a single power line that is rather congested. Smart devices were deployed to each dwelling that relayed information to a central computer and had the ability to control certain household devices, such as hot water, heating systems, fridges and dryer loads. Consumers were supplied with a simple dial that allowed them to set it to “more comfort” or “more saving”. Each dwelling had an account set up into which a portion of their previous energy bill was placed, and were told that any money remaining in the account at the end of the project would be theirs (i.e. there was a fiscal incentive to save energy). The master computer then conducted real time auctions between the dwellings, based on the dial settings. At times of peak, dwellings set to "more saving" could have applicances turned of briefly to flatten the demand. The result of the one-year trial was threefold:

1. There were no interrupted load complaints
2. Peak load was reduced by up to 30%
3. The power demand was much smoother – in fact during one 12-hour period it was almost completely smooth, which is virtually unheard of!

Kevin noted that Smart Grids may not necessarily cut bills, but they can make a difference in power quality and infrastructure use efficiency. He also noted that it is expensive to install such technologies in the house and perhaps in the short term better gains might be had through smart control of the T&D infrastructure.

Hype and overselling has been a key feature of Smart Grids and fears about invasion of privacy (e.g. the Government is controlling your AC unit) or overstated benefits (e.g. a report estimated vehicle to grid technologies could earn EV owners up to $6,000 per annum, when the figure is likely to be closer to $50) have set its reputation back somewhat.

Our final appointment was a social engagement in the hotel bar with Craig Gannett , a local lawyer working in the field of renewable energy.

All in all a fantastic trip with some great highlights! Many thanks to the US Embassy in London and the US State Department (and ultimately the US tax payer) for hosting us and to the various local bodies in Washington, Denver and Seattle who arranged the programme. I’m absolutely sure that all I’ve learned will be useful in the future, although right now I haven’t quite worked out what to apply it to!

Climate Change and Alternative Energy Program - Part 5

Our first of four meetings was with Climate Solutions (CS). They are a not for profit organisation seeking practical solutions to climate change in the Pacific North West (Washington, Idaho, Oregon and Montana). CS is funded by Foundation money and contributions from other organisations such as industry.

NOTE: Whilst Idaho is included, they are not active because they have a staunch Republican Governor - it was quite obvious to us that they are only included because they border with Montana and therefore it would be odd if they were excluded.

CS reiterated many of the points we have already heard regarding the state of play of climate legislation and also the fact that much of the recovery funds is going to large companies rather than SMEs.

CS are engaged in a number of activities in partnership with others. An example is a recently launched report "Carbon free prosperity 2025" which highlights opportunities for the NW alongside a refreshingly honest approach to capacity to deliver.

CS are engaged with an organisation, New Energy Solutions, to develop energy efficiency strategies bespoke to different communities. For example they are working with high end (middle class) and lower end (manufacturing) communities to understand and implement measures that will be most effective in efficiency gains. For example, in the high end communities, people prefer a whole house service, delivered by trusted tradesmen.

CS also work at the Federal level also, keeping up to date on current policy. They have found that the best mechanism to have impact is to cultivate relationships with stakeholders who can access Senators. One such group is Business Leaders for Climate Change which comprises over 100 business leaders.

Interestingly CS had a better handle on policy impacts than I am used to seeing. For example, their work contributed to Republican Senators voting for the Waxman - Markey Bill.

Our next visit was to an SME - Bionavitas. The company specialises in technology to grow algal biomass. Their basic technology is to use fibre optic cables to permeate light through algae growth tanks resulting in a greatly enhanced (factor of 10) yield per unit light.

The company is founded and funded by a board of business angels, of which there are many in Washington (for example Microsoft started here).

Whilst Bionavitas is interested in biofuels, their core business is remediation. Washington State has a number of phosphorus mines which are leaching selenium into water sources causing downstream problems. Bionavitas are growing algae that remove and fix selenium and filtering the water.

Another profitable line is to grow astaxanthin producing algae. Astaxanthin is the nutrient that turns salmon flesh pink (it's found in shrimp etc) and is a valuable commodity for fish farms.

The CEO noted that it is difficult to raise funds from Federal money as the application process is complicated and long (100 page plus proposals). Some recovery money is slightly easier to access.

Our final meeting was with Democratic State Representative John McCoy.

Washington State has 49 districts and each or these has two Representatives (98 total) and one Senator. The legislative system is similar to Congress in that legislation must pass through both houses. There is a Governor who signs off the final bill. Don't get confused here with the 2 senators and several representatives who sit in Congress in DC and represent Washington…we did!

John is Chair of the Committee on Transport, Energy and Climate Change and was therefore knowledgeable on all the issues we had previously heard about. He agreed with us that the numerous utility companies did not make for easy application of legislation and initiatives in energy and climate change and hinted he would like a single state utility to do everything. Of course, as a realist, he was sceptical about this ever happening, but has commissioned some university research to examine the possibility.

There is interest in a feed in tariff type mechanism, which is often called a Standard Offer Contract. The idea is to enter into a contract for say 20 years with a price of unit electricity delivered based on the technology and with allowance for a small profit by end of contract. There are a large number of issues with this proposal at both federal and state level, so I wouldn't expect to see any movement soon.

We also learned that the utility penalty of $50 per MW for missing RPS is to be paid to State funds and will be used to deploy new renewable technologies or energy efficiency measures.

Washington State has a silicon business providing materials for solar PV and is interested in bringing other aspects of the supply chain to the State. There is also interest from Boeing on biofuels and wind power. There is also interest in electric vehicles and there is ongoing work on the recharging infrastructure.

Our final appointment of the day was dinner with Joe McDermott, a State Senator, who was kind enough to answer all my questions about the political system. I’ll not summarise this here, but feel free to ask me about it.

Climate Change and Energy Program - Part 4

Tuesday 2nd November

On Tuesday we spent a day at Tacoma Power (TP), a municipal (public) owned energy company established in1893. TP serves 160,000 customers and proved to be an interesting model to explore what we previously learned at FERC.

TP is a very low carbon company, deriving the majority of their energy from hydro power - a commodity that Washington State is blessed with. TP only produces half the energy it requires, the rest it buys from Bonneville Power Administration - a large DoE agency based in the Pacific North West that runs a number of Federal hydro dams and also a nuclear power plant.

Stepping back for a minute, it is clear that Washington State is a good example of the complexity of the US electricity system. It has numerous Public Owned Utilities (POUs) and Investor Owned Utilities (IOUs) and also Rural Cooperatives. The T&D infrastructure is owned by numerous players (including all of the above) and there is significant inter-company energy trading. As we have heard previously there is a Renewable Power Standard (RPS) in place in the State, which requires 15% electricity to be derived from Renewables by 2020_on top_ of what is already produced. Energy efficiency measures do count toward this, although as discussed below, some measures do not.

As already noted, TP portfolio is almost exclusively hydro power and already they have a surplus, so building additional renewable power is uneconomical. Therefore TP propose, in the most part, to achieve the RES through efficiency measures, which they call conservation. They also see this strategy as a means to avoid building significant new power in the future. They noted that current demand grows about 2% per year.

A quick aside here - Washington State has considerable wind resources and these are being exploited by other companies to meet RES. Already this has resulted, on windy days, in an excess if power on the market. Hydro companies must generate to moderate river flow, and in this situation it has resulted in them paying customers to accept power that they need to dump on the system. This is something that we might expect to see in the UK as wind power levels come up.

Returning to conservation, TP has a conservation pathway to meet their RPS obligation which boils down to monthly aspirations. They have three broad initiatives ongoing which are industrial, domestic and NEEA. Broadly speaking the first two include efficiency measures we have previously heard about such as low energy lights, reduced cost for efficient HVAC equipment, work with large companies on efficiency projects and preferential customer rates on energy star whites goods. NEEA (the North West Energy Alliance) is a Trade Association that numerous energy utilities pay fees to in return for a share of their large energy efficiency projects (such as hospital energy efficiency). Broadly speaking it seemed that TP were on track to meet the RPS. A good job as there is a $50 per MW fine for missing the target! They were aware that they are hitting the low hanging fruit and that more difficult things will have to be examined in the future.

Curiously, behavioural measures, such as advertising campaigns, even if they result in lower energy usage, do not count toward the RES target, which to me seemed completely perverse. I’ve asked a few people about this and it turns out that this is a consequence of the poorly written Public Bill that passed into legislation. It appears that Bills can only be changed after two years, and the first time they tried to change this bill in the State it failed to pass through the legislative process (in other words it didn’t get the majority vote). This means it’ll have to wait until next year.

TP have a smart meter project ongoing and have rolled it out to 16,000 customers. Communication is based on fibre optics and they have actually started a cable and broadband company to take advantage of the fact they are laying the cable anyway. This system has enabled a pay as you go tariff for customers on the poverty line (which comprise 40% of their customer base!). The system allows customers to buy credit (as little as $5 at a time) and then warns them when it's time to top up (they will be cut of off if they don't pay). In contrast to the UK system, this system works out cheaper for customers, as service charges are based on how much power is used.

We also had the opportunity to visit one of TPs hydro projects, which was great fun. We learned that in some of the dam systems where you might have five dams in a cascade on one river, it may be the case that each project is owned by a different company, meaning that there has to be close collaboration to regulate river flow (e.g. one company cannot generate flat out if others don't want the flow).

A final point - as a POU, TP are not supposed to make a profit. It's OK for them to have a surplus as long as the money is reinvested into necessary projects. This means that potentially investment in infrastructure is possible, albeit at a slow rate. Obviously this isn't necessarily the case for IOUs.