Is green energy our new plastics industry?

By Elisa Wood

December 17, 2009

If The Graduate were written today, Mr. McGuire’s career tip to Benjamin probably would have been “green,” rather than “plastics.” But it’s likely Benjamin would have responded in the same quizzical way: “Just how do you mean that, sir?”

It was difficult to envision the vast number of new products, businesses and careers that would emerge from the plastics industry following World War II. The same is true for the green energy industry today. A report issued December 16 by PricewaterhouseCoopers sheds some light.http://www.pwc.com/us/cleantechrevolution

To know where the business opportunities will be, watch the unusual alliances forming among industries, according to “Cleantech Revolution: Building Smart Infrastructures.” We see hints already as automakers, utilities, battery makers and communications providers ally in preparation for an expected $165 billion smart grid build-out. The report cites several examples, among them:

• Nissan’s partnership with San Diego Gas & Electric to build electric vehicle charging stations
• Echelon and T-Mobile’s deal to create wireless networks connecting utilities to smart meters
• Cisco assisting Duke Energy in building a smart grid

“As the build-out gains traction, it has the potential to support a proliferation of new businesses across sectors, much like the evolution of both the semiconductor industry and the Internet,” says Tim Carey, PWC U.S. clean technology leader.

Don’t be surprised, says the report, to see a national retail store chain partner with an electric battery maker to install charging stations nationwide for plug-in electric vehicles. A new wave of corporate mergers and acquisitions also could be in the cards. The opportunities are vast, especially when you consider the size of the smart grid. The US has 160 million households awaiting installation of smart meters. These new devices will require changes in the way we operate our electrical infrastructure, which encompasses 3,100 utilities, 10,000 power plants, 5,600 distributed energy facilities and 157,000 miles of high voltage transmission wires, says the report. How many better mousetraps can a system of this size support? More than we can imagine.

The clean technology, boom, however, depends heavily on consumer acceptance. If consumers find smart meters too complicated or plug-in hybrids unreliable, the game is over. To avoid this problem, organizations like the American Council for an Energy Efficient Economy are focusing on understanding customer motivation.http://www.aceee.org/conf/09becc/09beccindex.htm.

Use of smart grid technologies must become “pervasive and ingrained,” says the PWC report. Sunil Sharan, of the Center for American Progress, sees the smart meter becoming like the Blackberry, “with all sorts of applications.” Indeed, energy industry insiders often describe the next game changer – whatever it will be – as the cell phone of energy. But given how integral electricity is to our everyday lives, clean technologies need to become everyman products. Out of the corporate alliances, the mergers, the breakthroughs and the investment deals, maybe it’s not energy’s cell phone that will make fortunes, but its plastic wrap.

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter.

Obama, poker and what 2010 holds for energy efficiency

By Elisa Wood

December 10, 2009

Jon Stewart said it best: Obama is a lousy poker payer. Lucky thing, too, for the energy efficiency industry as it heads into 2010.

Stewart’s December 8 “The Daily Show” aired a clip of Obama recently telling business leaders: “I don’t want to tip our hand too much, but one of the things I would be surprised if we don’t end up moving forward on is an aggressive agenda for energy efficiency and weatherization.”

Tip his hand? In fact, as Stewart pointed out, Obama has shown that hand broadly to the world for the last year. Starting with his January 2009 inaugural speech, Obama buoyed the clean energy industry by advancing renewable energy, a first for a US president in that forum. But that turned out to be just the start. In talk after talk this year, he pushed efficiency. If US voters didn’t know the term ‘weatherization’ before, they know it now. What could be better publicity for a product than having it endorsed by the leader of the free world?

To say 2009 was a banner year for the energy efficiency industry is an understatement. Under Obama’s watch, the federal government has channeled $20 billion in stimulus dollars to energy efficiency and now promises more from bailout funds returned by banks.

While the money – and Obama’s support – was the big story for 2009 and continues to be going into 2010, it is important to remember that electric energy is ultimately a local industry in the United States. What happens before state public utility commissions and regional regulatory bodies often has greatest influence.

To that end here a few local trends of 2009 that may grow in 2010.

*Efficiency as a first fuel. Environment Northeast has been successful in convincing several New England states to consider efficiency to be the first fuel in portfolio planning. That means when utilities plan resources, they must secure all cost effective energy efficiency before pursuing power plant development or power purchases. http://www.env-ne.org/

*Decoupling. Utilities have little incentive to encourage energy savings if they earn their profits from selling power. Decoupling changes utility accounting and cost recovery by delinking profits from sales. California and Massachusetts are examples of states with full decoupling and their utilities have among the most aggressive efficiency programs in the country. Several other states partially use the approach; others are considering adopting it.

*Energy efficiency portfolio standards. Similar to renewable portfolio standards, EEPS require that utilities, and in some cases competitive retail suppliers, achieve certain energy savings goals. Federal proposals are under consideration for a national EEPS. That may or may not happen. But 19 states now have the standards; look for more to pursue the approach.

What else does the EE industry have to look forward to in 2010? Please post what you see in your crystal ball.

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter.

How many negawatts do I need before I retire?

By Elisa Wood

December 3, 2009

A candy shop owner on Cape Cod offers a new approach to build a retirement portfolio: put solar panels on your roof.

“We looked at the stock market last year and it didn’t look too good so we decided to invest in electricity,” said Ray Hebert, owner of Stage Stop Candy in Dennisport, in an article on wickedlocal.com by Nicole Muller. http://www.wickedlocal.com/dennis/news/business/x1792920283/PHOTO-GALLERY-Solar-energy-to-power-chocolate-production-at-Dennisport-shop

Thanks to today’s generous state and federal subsidies, Hebert expects to recover costs in five years and then begin collecting a return on investment of 13.8%. “What investment can guarantee that?” he asks. “And since electricity costs are expected to climb, my profit will go up, up, up over time.” He plans to channel the savings into his retirement account.

I’m not a financial planner, so won’t pretend to know if Hebert’s numbers are correct. But his reasoning points out a new and growing way consumers and businesses have begun to think about electricity. Efficiency allows them to not only save money, but also to earn it.

In Hebert’s case, he is saving money by using a generation source that has no fuel costs – sunshine is free – and by taking advantage of Massachusetts net metering laws, which allow consumers to sell back to the local utility any excess power generated by their solar panels.

But there are other ways, as well, that consumers can earn a return on electricity savings. Neighboring Connecticut, for example, has become the king of monetizing energy savings through its innovative energy efficiency certificates. The certificates represent energy savings (negawatts) businesses achieve when they install efficient technologies. Each megawatt-hour of savings equates to one certificate. The businesses then sell the certificates to utilities or retail electricity suppliers who use them to prove to regulators that they’ve achieved state-mandated levels of energy savings.

So far, the Connecticut program is largely confined to businesses, although homeowners are eligible. Private companies have been trying to come up with ways the householder can easily participate, but are having trouble convincing state regulators that their programs can work. One company proposed a green stamps approach, where customers could buy lights, appliances and other efficiency equipment through certificate savings. (See the CPower case before the Connecticut Department of Public Utility Control: http://www.dpuc.state.ct.us/DOCKCURR.NSF/4ad307989ca5ed2a85257523004e0191/d122623c2e5eab5c8525767400500afc?OpenDocument&scrollTop=545)

Programs that monetize electricity savings are likely to grow as more utilities install smart meters in homes and businesses. Smart meters let consumers see when and how they use electricity, so that they can better control costs. Connecticut Light & Power found that consumers who participated in a smart meter pilot program liked using the devices, although those who did so for environmental reasons were more satisfied than those who participated to save money. This isn’t surprising since residential customers only saved $24.69 on average from June 1 to August 31, 2009. http://nuwnotes1.nu.com/apps/mediarelease/clp-pr.nsf/0/0E66EBF11810786085257673004EA13B?OpenDocument

Would the savings be more meaningful if packaged into an investment that increases the value of the money — the Cape Cod candy shop owner’s approach? The possibilities are many: Pairing energy efficiency companies with financial firms to offer energy savings retirement accounts or college funds, or perhaps channeling the money into tax deductible donations. Whatever the case, translating kilowatt-hour savings into concrete financial products for consumers offers intriguing market possibilities for the electricity industry.

http://www.wickedlocal.com/dennis/news/business/x1792920283/PHOTO-GALLERY-Solar-energy-to-power-chocolate-production-at-Dennisport-shop

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter.