Observations on The National Clean Energy Summit
I had the privilege of attending the National Clean Energy Summit in Las Vegas on August 18th and 19th. Sponsored by Senate Majority Leader Harry Reid, the University of Nevada Las Vegas, and the Center for American Progress, the summit brought to together an extraordinary number of state and national policy makers to discuss the mandate for a clean energy agenda.
The conference opened with President Bill Clinton and included such major luminaries as T. Boone Pickens, Robert Rubin, and Michael Bloomberg, not to mention the governors of Arizona, Colorado, and Utah. In addition, there were speakers from academia, utilities, finance, and technology related initiatives.
I want to share some of my observations:
First, there is a mandate for a clean energy future. It is bipartisan and it is imminent. Greenhouse gas emissions and our dependence on foreign oil are the driving factors. While state and local governments are well in front of the federal government, policy makers are anxious for Congress to take decisive action.
Second, there were a number of common themes expressed by the vast majority of speakers -- so much so -- that they virtually became the “holy grail” of the summit. Here is what they are:
- Tax Credits - Speaker after speaker called for the extension of current energy tax credits. Beyond that, longer term tax incentives (in the form of both guarantees and credits) were considered essential to jump start and sustain solar, wind, and geothermal industries.
- Energy Conservation and Efficiency - The great low hanging fruit of clean energy. President Clinton’s “no brainer.” The thought is that through energy conservation and efficiency initiatives new generation can be avoided. Paths included utility decoupling, along with utility incentives, longer term financing, and application of new technologies, particularly in lighting and smart meters.
- A Price on Carbon - Unanimity that carbon had to have a price, for social, health, and economic reasons. Most of the time, this meant a cap and trade system. Mayor Bloomberg called for a straight-forward carbon tax. The prevailing view was that it didn’t matter who became next President as both candidates were committed to sign cap and trade legislation.
- The Electric Grid - Perhaps the most prevailing theme was the call for a revamped national transmission structure. In short, both wind and solar are located where the grid is weakest -- wind in the Midwest and solar in the Southwest. A projected $60 billion will be necessary to create an effective national grid that moves these cleaner fuels to populated markets.
The big surprise at the summit, at least to me, was Dan Reicher’s, of Google, presentation that the future of clean renewable energy lay primarily in “enhanced” geothermal energy. In essence, enhanced geothermal means uses the earth’s abundance of hot spots as a heat exchanger. Holes (using newly developed and less expensive drilling technology) are drilled to these hot zones, water is poured into the hole, and steam rises to drive turbines. Google is convinced we can produce massive amounts of clean electricity world-wide using this process.
Other observations:
Coal - At least with respect to the summit attendees, unless the coal industry finds a way to sequester carbon safely, the future of coal is bleak. The irony, of course, is the projected growth in new coal-fired plants to meet rising demand.
Offshore Drilling - Most speakers, including Senator Reid, felt offshore drilling in sensitive areas would not have a meaningful impact on prices or supply. Nevertheless, Senator Reid indicated an offshore drilling “compromise” would pass the Senate this year. This was interpreted as lifting the federal ban, but giving states the right to veto development.
Biofuels - The food-for-fuel issue was much in evidence. Numerous speakers called for the shift from food based ethanol to waste based ethanol (cellulostic). Hope seems on the horizon with new technologies.
Federal Renewable Portfolio Standards - Another virtually unanimous call. While 23 states and the District of Columbia have some form of renewable energy portfolio mandates (often 20 percent), there was a definite call for federal standards. Look for this to be included and probably pass in next years cap and trade legislation.
Autos - While T. Boon Pickens called for natural gas powered vehicles (at least in the short-term) most speakers believe in a future powered by electric cars. President Clinton said that 100 mpg cars are now technically available using supplemental batteries in conventional hybrids. Other speakers stressed the reduction in green house gas emissions using electric vehicles even if the electricity was based upon coal-fired generation. FERC Commissioner, Wellinghiff, went even further saying that electric-fired cars would provide such a significant benefit to the utilities, that we would be paid to charge them.
Financing - According to Jon Creyts of McKinsey, the upfront capital required to significantly reduce our GHG emission (which will be a projected 9.7 gigatons (a billion tons) of CO2 in 2030) will be approximately 1.5 percent of GDP. While I need to figure out how much that is, suffice to say that upgrading the national grid alone is expected to cost $60 billion. Bank of America predicted its investments would total $20 billion over the next 10 years. Collectively, the financial sector is looking for tax incentives and the maturing of the carbon markets.
Nuclear - Only one speaker brought up nuclear energy. Activists in the audience objected to nuclear transportation and waste. Despite the fact that nuclear constitutes 20 percent of current usage and is clean burning, it was conspicuously avoided.
Renewable Portfolio Standards: An Avenue for Fostering Alternative Energy Projects
Government’s response to the focus on climate change must be holistic and visionary. One regulatory avenue for fostering alternative energy projects that assist in the battle against climate change is a Renewable Portfolio Standard (RPS). At its core, an RPS is a requirement that retail electricity suppliers purchase a certain percentage or quantity of renewably generated energy. Currently 25 states and Washington DC have mandatory targets for retail electricity purchases and 4 states have non-binding goals. In 2007 the House of Representatives passed an RPS, but the US Senate did not.
While most RPS programs share a common goal of encouraging the production of renewably generated energy, they vary in terms of purchase goals, timeframes for compliance and eligible technologies. Wind, solar, and geo-thermal are eligible under most of the RPS programs, but eligibility criteria varies widely with respect to other technologies and fuel sources such as bio-mass, landfill-gas, municipal solid waste, hydropower, and fuel cells. While the advantages in terms of climate change impacts associated with renewably generated energy may seem obvious (no emissions), less obvious may be the results stemming from the expansion of several states’ RPS programs into non-renewable areas.
The variety of RPS programs has allowed for many designs and policies to be demonstrated. Although not technically renewable, combined heat and power, energy efficiency and demand side energy efficiency have found their way into several of the RPS programs. By reducing demand for electricity, air emissions from current fossil fuel fired power plants is reduced to the extent that power is not needed. Arguably, the impact from reducing the demand of one megawatt of power, should have the same air emissions impact as the creation of one megawatt of renewably generated power and as such the nexus to demand management and energy efficiency in an RPS becomes self evident. Energy efficiency, demand management, and renewable energy should co-exist in an RPS and are a fundamental part of the future of our energy delivery system. As states continue to adopt and refine RPS programs, policy makers should bear in mind what this future of a sustainable energy delivery system may look like.
The US Department of Energy (DOE) has promoted (in part) a vision of the future that includes a hydrogen based energy delivery system that begins with small-scale distributed generation (DG) systems fueled by hydrogen. These DG systems provide stationary power and may also dispense hydrogen for hydrogen-fueled vehicles. DOE has funded several projects that evaluate the potential for the generation of wind-to-hydrogen, solar-to-hydrogen, geothermal-to-hydrogen and hydro-to-hydrogen, hydrogen generation systems. The common denominator is that renewably generated electricity is used to power an electrolyzer to generate hydrogen. Renewably generated hydrogen is the future. To bridge the gap to the future, however, Renewable Portfolio Standards should be developed that include hydrogen generated from fossil fuels.
One notable Wind-to-Hydrogen (also Solar-to-Hydrogen) demonstration funded by DOE is in Hawaii at the Kahua Ranch test site. There, the wind turbine has been configured to produce 48VDC, the solar array has been redesigned to produce 48VDC and each of these generation sources is connected to 24 battery cells allowing 48VDC short term electricity storage. The electricity is used to power an electrolyzer that generates hydrogen which is then stored in a low pressure hydrogen storage tank. When electricity is needed the hydrogen is used to run a 48VDC Plug Power Gencore Fuel Cell system.
Fuel cells utilize hydrogen and hydrogen-rich fuels to generate electricity and useful heat in a remarkably efficient way. A fuel cell is an electrochemical device that combines hydrogen and oxygen to create electricity heat and water. Because the conversion of hydrogen occurs without combustion, fuel cells do not produce the emissions normally associated with combustion such as carbon dioxide, oxides of nitrogen, carbon monoxide and particulates. Fuel cells are secure, reliable and high-quality power at the point of demand, with some systems able to provide high quality thermal energy as well as electric energy. Because many renewables like wind and solar produce intermittent power, a natural symbiotic relationship exists since fuel cells have the ability to generate electricity regardless of weather conditions. Fuel cells can act as a power storage technology converting off-peak generated wind and solar energy to peak power. Clean power that emits virtually no pollution during the power generation is a natural complement to intermittent renewable technologies such as wind and solar.
Introducing fuel-neutrality for fuel cells into every RPS in the short term will provide a bridge to renewably generated hydrogen. Currently, supplies of renewably generated hydrogen are scarce and the delivery systems not readily available. Simply put, today’s fuel cells that use existing fossil fuels (much more efficiently and cleaner than any combustion engines) can also use hydrogen from renewable sources as they become cost-competitive and the production and delivery of renewably generated hydrogen catches up with the demand. In this manner, the use of hydrogen from the conversion of hydrocarbons is seen as a temporary expedient to the long-term development of fuel cells. Moreover, even when they run off of fossil fuel derived hydrogen, the inherent efficiencies of the fuel cell systems, and the lack of combustion is an incremental advancement in the fight against climate change.
The vision of the future displayed in the Kahua Ranch project will only be advanced in the short term if fuel cells that utilize hydrogen reformed from fossil fuels are made a part of any federal RPS. At its core, a RPS should promote technologies that have a legitimate chance of substantially lowering pollution, reducing stress on the utility grid, spurring economic development, increasing our energy independence and fostering demand for hydrogen production and delivery systems that will eventually be renewably generated.
Initially, it may sound counter intuitive, but by allowing hydrogen generated from fossil fuels in any RPS, a critical component to generating the demand for renewably generated hydrogen will be in place and our path toward a more sustainable and energy independent future will be advanced. This model is not without precedent. New York, Pennsylvania, Connecticut, Minnesota, Colorado, Maine all include fuel cells as renewable resources regardless of the fuel supplied.
