Energy Exchange

Clean Energy And Economic Development Are Birds Of A Feather

By Jackie Roberts / Published: January 10, 2013

Our new Clean Energy Economic Development Series highlights the successful creation of clean energy clusters in Ohio, Iowa and Colorado.  Some report highlights: 

  • Ohio experienced record investment and merger and acquisition deals in clean energy in 2010 and 2011.  Ohio also significantly increased patents in batteries, fuel cells and wind technologies, moving up in national rankings in all three areas.
  • The Metro Denver region alone had about 1500 companies and 18,000 workers in the cleantech sector in 2011, and achieved a 35 percent increase in direct employment growth since 2006.
  • Iowa leads with the second-highest installed wind capacity in the nation, and is one of only two states that receive over 20 percent of electricity from wind power.  According to the American Wind Energy Association, Iowa has attracted more major wind industry manufacturers than any other state.

While the road map to economic growth differs somewhat for each region or state, these road maps share a formula for success where policy and economic development actions work together across three fronts: (1) stimulating demand for clean energy products and services, (2) seeding innovation in clean energy solutions and (3) recruiting and supporting new firms, jobs, and workforce skills in clean energy. 

But the work is just starting, not just for Ohio, Iowa and Colorado, but for all states.  Every state needs to look to expanding clean energy policy and actions, for example:

Stimulating Demand: The American Taxpayers Relief Act (ATRA) provides critical federal support for wind energy through a production tax credit (PTC), as well as extending energy efficiency tax credits for residences and businesses.  (Under current law, the solar investment tax credit remains in effect through December 31, 2016.)  The wind tax credit helps create customers for the nearly 500 wind manufacturing facilities across the country.  Renewable Portfolio Standards (RPSs) should be strengthened (and certainly not weakened as in Michigan).  Utilities need incentives to invest in smart grid, energy efficiency and other demand-side management programs.   New policies, such as on-bill repayment (OBR), should be passed to create customers for energy efficiency while saving consumers and businesses money.

Innovation: As spending debates loom, we need to maintain investments of federal dollars in clean energy research and development (R&D).  States need to create local programs, such as Ohio’s Third Frontier which promotes technology commercialization.  Third Frontier has helped take the fuel cell industry in Ohio to a new level (measured by higher patent rankings in fuel cells and batteries). 

Recruiting & Workforce Development:  Smart grid investments create modern infrastructure and resilience that is valuable to companies.   Other recruitment tools include easy siting — Iowa City created a Wind Energy Supply Chain Campus that is “shovel-ready” for wind-related companies – and the availability of skilled labor.  Iowa Lakes Community College trains 200 students a year in construction, operations and maintenance of wind turbines using five training labs at the college.   

Clean energy policy and economic development go hand-in-hand because America needs growth sectors to reduce unemployment.  A Brookings Study of clean economy jobs found that between 2003 and 2010, the newer, “cleantech” sub-sector related to energy efficiency and renewable energy grew at a “torrid pace” across the nation.  (Wind: 14.9%, Solar Thermal: 18.4%, Solar PV: 10.7%, Fuel Cells: 10.3%)  As Ohio, Iowa and Colorado have shown, clean energy can deliver economic growth.

Posted in Renewable Energy, Washington, DC / Tagged | Read 1 Response

Don’t Walk Away From Clean Energy Research & Development

By Jackie Roberts / Published: December 20, 2012

“The changing energy landscape and the resulting trade opportunities it affords will continue to provide consumers with more choices, more value, more wealth and more good jobs.” – ExxonMobil Energy Outlook, 12/12/12

I agree with Exxon.

We are moving closer to energy independence. But, even as the U.S. is facing a boom in natural gas, the only way we’ll reach our goal is if we don’t shortchange alternative energy research and development.  Changing the energy landscape must include rapid advances in zero carbon energy technologies, for very good reasons that are in danger of being overlooked in the fiscal cliff negotiations.

First, despite its great promise, we should remember that important questions remain about the health and environmental impacts of natural gas operations. The extraction and distribution of natural gas can result in the release of methane – the main ingredient in natural gas and a greenhouse gas many times more potent than carbon dioxide.  Due to the many possible escape routes for methane into the atmosphere, the true carbon footprint of natural gas is uncertain right now, and we need to diversify our energy portfolio and avoid getting locked into an over-reliance on one energy source.

Second, micro-grids will be increasingly important in a world with more storms, flooding, and other “weird weather.” We must be prepared for that scenario. Alternative energy and smart grid solutions can be more resilient, if designed properly. The current model of a large, centralized energy plant is increasingly problematic.

Third, alternative energy offers enormous potential for economic development, exports, and even savings on energy bills. As just one example, look at the Department of Energy’s investments into fuel cells.  According to the Clean Energy Patent Growth Index, more clean energy patents are associated with fuel cell technologies than with any other clean energy technology, with over 950 fuel cell patents issued in 2011. Fuel cell durability has doubled, expensive platinum content has been reduced by a factor of five, and the cost of fuel cells has fallen 80% since 2002. With DOE support, 36 commercial technologies have entered the global market as of this past fall.

These advances can benefit communities across the country.  Tulare, California invested in molten carbonate fuel cells for its wastewater treatment plant; this plant now produces about 45% of the electricity needed to run the plant which translates into a savings of more than $1 million per year (not to mention 6,200 tons less CO2 per year).  With over 16,500 wastewater treatment plants in the U.S., communities could find enormous savings and build more resilience — if access to other fuel source is interrupted or electricity goes down, the plant can continue to partially operate and provide critical services to the community.

Talk about more choices and more value for communities, and more wealth and more good jobs for suppliers of fuel cells.

Posted in Renewable Energy, Washington, DC / Read 1 Response

Recycling That White Plume Of Smoke On I-95

By Jackie Roberts / Published: August 30, 2012

Today, President Obama signed an Executive Order to facilitate investments in capturing waste heat and developing combined heat and power at many of our industrial facilities (“CHP” projects).  This energy efficiency strategy can save manufacturers as much as $100 billion in energy costs over the next decade, and offers a type of “renewable” energy as the heat is already available, but too often vented to the atmosphere.  According to Oak Ridge National Labs, many industrial operations have an efficiency of 45% or less; waste heat recycling can increase the efficiency of these systems to 80% by capturing waste heat and putting it back to work.

You may have never thought about waste heat, but you’ve probably seen it many times:  visualize driving through an industrial area and seeing white smoke coming out of smokestacks.  These plumes often comprise heat and steam, and thus represent a wasted resource that we should be capturing and converting to useable energy. 

The Executive Order should spur prompt actions by federal and state agencies to facilitate projects.  Examples of possible actions are streamlining state permitting, crediting projects toward state clean air requirements, sharing state best practices, and working to better engage utilities in partnering on projects. 

CHP projects will not only help our industrial facilities save money on energy costs, but investing in these projects create jobs across a wide variety of businesses engaged in making components, designing and constructing systems, and operating the new energy resources.  For example, a recent study by Duke University on recycling industrial waste energy highlighted the six main components needed in each project:  boiler/steam generators, steam turbines, generators, condenser/cooling tower, steel piping and electrical parts such as wires and switchgear. 

These components represent standard, high value components made by businesses across the U.S., particularly the Midwest and Texas, but also companies in Oklahoma, Georgia, Illinois, and Arizona.  All of these components use smaller parts such as basic bearings, valves, fans, rotors, and so on, not to mention the extensive steel piping used in each project.  One project in Port Arthur, Texas used 2.5 miles of steam pipeline – good news for the steelworkers. 

In addition to the job of manufacturing all these parts, CHP projects require workers to install the components on-site, such as welders, pipefitters, design engineers, and traditional construction workers.  On completion, often 15-20 new workers are hired to run the new steam plant/power facility.  The CHP project developer, Recycled Energy Development, notes that the cost savings and increased competitiveness at a project completed for West Virginia Alloys enabled the plant to retain its entire workforce, rather than face job cuts of 20%. 

So, every time you pass a white plume of smoke on the highway, be glad that today’s Executive Order moves us one step closer to eliminating this waste and helping America’s industries be more competitive.

Posted in Energy Efficiency, Washington, DC / Read 3 Responses

New EPA/DOT Vehicle Standards – The Reality Behind The ‘Job Killing’ Sound Bite

By Jackie Roberts / Published: November 22, 2011

Last week, I wrote about energy efficiency’s role in greenhouse gas standards for power plants and the reality behind the “Job killing EPA regulations” sound-bite.  The recently announced new fuel economy and greenhouse gas standards for light vehicles provides further evidence that the reality of Environmental Protection Agency (EPA) regulations is job creation, not job destruction.

According to the government, the “proposed program for model year 2017-2025 passenger cars and trucks is expected catalyze demand for currently-available, innovative technologies including advanced gasoline engines and transmissions, vehicle weight reduction, lower tire rolling resistance, improvements in aerodynamics, diesel engines, more efficient accessories, and improvements in air conditioning systems. The standards should also spur manufacturers to increasingly explore electric technologies such as start/stop, hybrids, plug-in hybrids, and electric vehicles [and] … includes a number of incentive programs to encourage early adoption and introduction of “game changing” advanced technologies, such as hybridization for pickup trucks.”

U.S. auto companies are already investing in these new technologies as the best bet to gain market share in the world economy.  The Energy Department’s battery program (an investment of $2.4 billion in 48 advanced battery and electric drive projects) is ensuring that the U.S. supply chain is ready so that we don’t just buy batteries from Japan and others.  According to the Department of Energy (DOE), the United States is on track to achieve a 40% share of global capacity to produce lithium-ion batteries for vehicles by 2015.  An assessment of the battery value chain by Duke University shows at least 50 U.S.-based firms are involved to date, with 119 locations in 27 states performing manufacturing and research and development (R&D). 

We have leading material science experts in Dow, Dupont and 3M that can help design new composite materials to help meet the need for less weight.  The 70,000 tire workers would love to have a chance to make the most efficient, low rolling resistant tires- and then sell those tires to the rest of the world.  A second value chain assessment of hybrid vehicle technology shows U.S. firms dominating the hybrid market for medium and heavy-duty trucks, putting the U.S. in a great position to develop hybrid light duty pick-up trucks. 

At every turn, there are job creation possibilities.  What the EPA and Department of Transportation (DOT) proposal does is ensure that the market for efficient vehicles is a strong and vibrant market, one that grows jobs at every turn.  Furthermore, ensuring that U.S. firms have enough customers today – the key ingredient to growing a healthy business – is the only way to compete in the global markets of tomorrow.   EPA regulations maintain auto jobs and create new jobs in sectors such as battery manufacturing.  Now, the new battery plant by A123 Systems lithium ion in Livonia, Michigan won’t have to fire the 300 new workers it just hired. 

For consumers, these improvements would save an average of up to $6,600 in fuel costs over the lifetime of a model year 2025 vehicle for a net lifetime savings of $4,400 after factoring in related increases in vehicle cost. Overall, the net benefit to society from this rule would total more than $420 billion over the lifetime of the vehicles sold in model year 2017-2025.  No lost jobs here.

In sum, this is what “job killing EPA regulations” look like in the real-world.

Posted in Washington, DC / Read 1 Response

Energy Efficiency Investments – The Reality Behind The ‘Job Killing’ Sound Bite

By Jackie Roberts / Published: November 15, 2011

In letters to the President delivered yesterday, business groups as diverse as the Industrial Energy Consumers of America (representing major manufacturing sectors such as cement, paper, chemicals and steel), the Ohio Business Council for a Clean Economy, Ingersoll Rand and Recycled Energy Development all agree and are asking for the same  thing: EPA should make energy efficiency front and center as it adopts regulations to set greenhouse gas standards for power plants under the Clean Air Act. 

Given the existence of many positive return-on-investment energy efficiency options, including energy efficiency as a compliance strategy, is a no-brainer. In fact, McKinsey & Company’s Unlocking Energy Efficiency in the U.S. Economy shows the U.S. industrial sector alone can reduce annual energy consumption 18 percent by 2020 and save more than $442 billion in energy costs by investing in energy-efficiency opportunities that quickly pay for themselves (investments that have a positive NPV, or net present value). In the process, they also reduce greenhouse gases, which is what EPA wants. 

But energy efficiency goes beyond a cheap compliance strategy.  It pays returns in perpetuity:  Imagine if several years down the road when these investments have paid for themselves, this $442 billion savings is made available for investments in U.S. manufacturing. The job creation potential then takes off.  At conservative rates of four jobs per million dollars invested, that would create an estimated 1.75 million jobs.  

Typically, facilities can find 20-30 percent in energy efficiency opportunities that pay for themselves in less than two years. For example, EDF recently helped the IUE-CWA union conduct a three day “Treasure Hunt” to search for energy-saving opportunities at the Cobasys advanced battery manufacturing plant in Springboro, Ohio. Even at this state-of-the-art facility built in 2003, the team identified savings that would cut the plant’s energy bill by 18.5 percent and emissions of greenhouse gases (carbon) by 19 percent.

It’s hard to see how a regulation that asks facilities to implement these savings would “kill jobs” when the investments pay  back in less than two years, and provide the company with benefits from  cost savings in perpetuity.          

Once again, a careful look at how companies can comply with EPA regulations shows the “jobs killing” rhetoric to be simply scaremongering. Energy efficiency investments create 8.9 to 11.9 jobs for every $1 million in spending. (Spending on fossil fuels, by contrast, generates 3.7 jobs (oil and gas) to 4.9 (coal) jobs per $1 million in spending.)  So, compliance isn’t a burden and the path forward is job intensive. 

It’s a nice added benefit that energy efficiency jobs can be found across the U.S. and across industry sectors.  For example, the Industrial Energy Consumers of America asked EPA to place special emphasis on industrial cogeneration, an energy efficiency solution also known as ‘combined heat and power’ or ‘waste heat recovery’. A value chain assessment of this solution by Duke University shows that it will increase demand for large equipment such as generators and turbines, all made in the U.S., and lots of new steel piping, good news for the steelworkers.

In sum, a dollar spent on energy efficiency provides triple returns: industrial facilities and building owners quickly see their investments generating annual cost savings (just 2-3 years out), power plants don’t need to build new capacity and raise rates to pay for it, and all the firms across the U.S. that supply energy efficiency solutions see new customers.  And, in the process, CEOs can also check off that “compliance with EPA regulation” box because greenhouse gas emissions will drop significantly.  “Job killing EPA regulations” is a great sound-bite but the experience of firms in the real-world doesn’t support the rhetoric.

Posted in EDF Climate Corps, Energy Efficiency, Jobs / Read 4 Responses

The Solyndra Panic

By Jackie Roberts / Published: September 20, 2011

Source: Solyndra / BusinessWire

Bad news from Solyndra has set off a bit of a panic around everything from the future of solar in the U.S., the role of government in supporting innovative technologies, and prospects for clean energy jobs.  Caution is advised and perspective is needed lest we walk away from a pivotal new global market.  Let’s start with the big picture on solar.  I believe it is critical that we focus on the full value chain for energy and environmental solutions to better understand the economic growth inherent in the clean energy market.  In the case of solar, an analysis released last month by GTM Research examined the entire value chain – from raw material inputs and capital equipment needs to panel assembly and installation and maintenance.  The results show that the U.S. has a trade SURPLUS with rest of the world AND with China in the solar sector defined across the entire value.

Let me highlight some of the key findings: 

  • The U.S. was a significant net exporter of solar energy products with total net exports of $1.9 billion in 2010.
  • The U.S. solar industry had a positive trade balance with China with net exports of $247 million – $540 million.
  • The largest solar energy export product is polysilicon, the feedstock for crystalline silicon photovoltaics, of which the U.S. exported $2.5 billion in 2010.
  • 2010 U.S. solar energy installations created a combined $6.0 billion in direct value, of which $4.4 billion (75%) accrued to the U.S.

This is a good news story, and not surprisingly to me as over the past several years we’ve heard positive stories from companies like Komax Solar, an equipment supplier.  Six years ago, Komax took a risk and transitioned itself from medical technology and electronic machines to supplying the equipment needed in the assembly plants for solar panels.  Komax is exporting, has tripled its workforce, and has leveraged its expertise in precision machining to move into new solar markets.

What role the government played in the larger solar story is hard to pinpoint, but many solar companies had real and critical capital needs during the recession that the American Recovery & Reinvestment Act of 2009 (ARRA) filled.  Project Sunburst, a Maryland Energy Administration (MEA) initiative that benefitted greatly from the ARRA funding, created demand for solar panels installation on public buildings and triggered $36 million private investment.  In addition, while the primary goal was making it easier for public entities to go solar, “It had an additional goal or larger goal to encourage the growth of solar energy generation in the state as a resource,” MEA spokesperson Ian Hines said. The investment helped give the industry the extra push that put it over the tipping point as a maturing industry in Maryland.

This leads me to believe that ARRA has indeed been an important ingredient.  The government has also taken a portfolio approach that includes companies like Nanosolar, which received almost $44 million as a 48C tax credit (one of the ARRA programs) and is currently hiring.  This is a company whose prospects excite me.   

At the end of the day, experience shows that the private sector is better at picking winners and losers, and the government is much better at “setting the table” – for example, investing in core, enabling innovations such as developing a well-designed, open-platform smart grid that enables new entrants such as solar power to compete with old electricity providers (the value chain for smart grid solutions, by the way, is extremely promising for US firms and job creation).  And, equally as important, the government must put into place energy policies that provide a level playing field and ensure that the full costs to society of energy products and services are accounted for, policies that ultimately put a price on carbon.

Posted in Grid Modernization, Renewable Energy, Washington, DC / Tagged , , | Read 1 Response