Clean Infrastructure

The President’s plan to combat COVID19 has failed. Congress must step in — now

The US had two choices on how to combat COVID-19 - a national shut down or an universal testing/isolation regime like in South Korea. Nine weeks into the crisis, the US has done neither, and so now we have some of the fastest growing infection rates that any country has experienced since the pandemic began.

Time is running out to prevent the virus from becoming something which fundamentally alters the American way of life. The President has made it clear that he cannot lead us through the crisis, and thus is it time for Congress to take responsibility for developing and implementing a true national plan. We only have a few days to get this done.

In recent days, expert opinion has converged about what we must do:

1) Surge supplies/beds/staff to the medical front lines

2) Implement a national 3 week stay at home program

3) Crash/stand up a national testing/isolation regime like in South Korea

4) Fund a “Manhattan Project” for a vaccine/therapeutics/testing/equipment both for COVID and to prepare for future pandemics

The economy and our society cannot stand back up until the virus is tamed. Washington’s focus on stimulus and worker support, while important, should have come after a national plan to combat the virus was in place. We have no choice now except to work on both in the days ahead.

It is critical that Congress also find time to pass the Klobuchar/Wyden bill that would help institute a national vote by mail program for the 2020 election. While so much else is up in the air, Americans should have the certainty of knowing that our democracy marches on, undaunted.

Finally, we need to focus far more attention on our young people. Both to help them better protect themselves from getting the virus and to help them and their families cope with what could be difficult months at home, away from school.

The President’s plan has failed, and Congress must step in now to develop a clear national strategy to tame the virus. There is no higher priority in the days ahead.

What's Next for Clean Energy

This past weekend, I attended the Aspen Institute's Clean Energy Roundtable, an annual gathering of business, political and policy leaders working in clean energy. Inspired by the many insights and ideas presented, here are my thoughts on the state of clean energy today and what lies ahead. 

First the good news.  Prices of key clean energy technologies are plummeting, bringing many technologies such as distributed solar and energy storage closer and closer to mass deployment.  The cost of solar panels today is about 20% below that of a year ago.  And it should continue dropping for the forseeable future. In other words, the performance/price ratio is improving exponentially, like computer chips if not quite as fast and for different reasons, cost economies for the most part as opposed to breakthrough technologies.  The main driver of the plummeting costs is volume and successful efforts by the Chinese government to vertically integrate the Chinese solar industry--that now supplies over half of the world's solar panels.  (In advanced thin films, costs per watt are also coming down.)  Even more dramatic price drops are occurring in battery storage across a range of chemistries with prices halving in the the last year.  Plummeting prices that translate to rising performance are good news for developers, electric car-makers and the global industry at large.

The story is more complicated, however, in the United States where we are in what might be described as the best and worst of times.  This past year saw torrid growth in solar deployment in the US with solar capacity doubling; Wind installations also grew and wind is now a very competitive source of power.  Solar--already competitive with subsidies and in some markets--will be very competitive in several years.  That is the good news.  The bad news is that solar generation still supplies only .2% of US electricity and, what's more, growth has been driven by the 1603 provision in the tax law that allows tax credits to be redeemed for cash.  This provision expires on December 31 this year. Since the financial crisis, tax credits deals to build everything from affordable housing to energy have exceeded the pool of capital from investors seeking to shelter profits.  That means tax credits absent the 1603 provision can be worthless.  With extension of Section 1603 uncertain , the solar industry may face significant challenges beginning this winter.

Similarly, on the wind side, the end of the 1603 credit would take a toll and the production tax credit for wind, itself, expires at the end of next year. While companies are scrambling to start projects before these deadlines pass, afterwards activity may fall of the proverbial cliff.  In short, while global fundamentals for clean energy remain strong, the sector remains quite sensitive to government subsidy.  In the US with subsidy likely to to change and-especially with gas prices likely to stay low as more shale gas comes onstream, we may see more clean energy activity shift overseas.  (One potential fix to this problem: moving clean energy off "subsidies" and giving them equal access to the master limited partnership tax break that extractive industries like oil and gas enjoy.)  Cheap American shale gas could nicely complement intermittent, renewable energy, but effortst to bring the technologies together have lagged.

Indeed, despite intense focus by Silicon Valley and the support of the US government, the US is not catching up with Europe or China on clean energy and in many measures, we are falling further behind.  A few years ago, Germany adopted an export promotion plan that included factories as exports.  It exported gas turbine and solar panel factories to China which is how China has so rapidly come to dominate many areas of clean manufacturing.  The Germans have done well selling machine tools to the Chinese while creating demand (and green power) at home through an aggressive feed in tariff  The US, however, except for a few bright spots like Applied Materials that makes equipment to manufacture panels, First Solar, a thin film manufacturer, here and there innovators like Sun Edison and Tesla--and a few large companies such as GE and IBM, has yet to find its way.

Why?  Unlike Germany that has deep credentials in improving manufacturing incrementally, we have excelled through innovating and creating new industries. For example, France Telecom deployed the minitel years  before America  went online but US companies ultimately came to dominate online technology once we created the open Internet platform that allowed yankee entreprenurship to flourish.  Yet despite developing scores of breakthrough energy technologies in our national labs and robust funding of clean energy companies, as I have written before, clean tech innovators have run up against the brick wall of a regulatory system that funnels purchasing decisions to regulated utilities.  The latter are dis-incented by law to invest in new technologies.  Meanwhile, in many states, the consumer remains locked out of the action entirely behind the Iron Curtain of the electricity meter. The sector is still attracting capital but time is running out to upgrade the regulatory structure to what I have described as Electricity 2.0 to create large, gatekeeper-free platforms that reward innovation and investment.

If there is one strong positive on the clean energy front, it is that the consumer has been given a small seat at the table, notably through the introduction this year of the first two electric cars, the Chevy Volt and Nissan Leaf, and in the form of the proliferation of direct generation of electricity, primarily from solar.  The electric car is a technology that can engage the consumer on the ultimate playing field of new, more,  better.  However, if the the cars fail to thrill, clean tech will experience a potentially huge setback.  For that reason making electric cars and charging infrastructure work has to be a key priority for the industry.

More broadly, the once almighty American Consumer who has not only driven domestic growth in recent decades by controlling a huge chunk of GDP but also funded the development of the Pacific rim, has been the missing force in the clean energy sector.  Consumers are prohibited from directly buying clean energy by law in many states in contrast to communications or the Internet where consumer demand drives rapid product life cycles and profits at a speed in synch with venture capital.

Indeed, the write once, make money everywhere, model of the Internet is providing stiff competition for capital to clean tech where local regulations and the gate-keeping role of utilities can sap the energies of even the best funded, most visionary entrepreneurs.

Nonetheless, my final takeaway was that while challenges abound, clean energy remains one of the largest, most important and potentially, most transformative projects of the 21st Century.   Our job is to engage the consumer, sweep away barriers and play to America's strengths in innovation, entrepreneurship and out-of-the box thinking  in the face of obstacles.

Oil in the Spotlight

While oil prices have come down since their recent peak a few weeks ago, they remain in the spotlight.  This weekend, President Obama used his Saturday address to call for increasing drilling.  Coming on the heels of last week's grilling by the Senate Finance committee of the nation's top oil executives a propos of a proposal to end longstanding tax breaks for drilling, his remarks capture the frustration many people feel about rising gasoline prices.

Our anger would no doubt bemuse many overseas for US gas prices are low by global standards.  Indeed, as the attached graph shows, they are still less than those registered two years ago.  What is nonetheless frustrating about gas prices is their volatility.  Gas price shocks like hurricanes and flooding are hard to predict but when they occur,devastating.  The impact of the 1970s shocks are well understood: they launched stagflation in the US and Europe and inaugurated a huge transfer of wealth to the oil states that persists to this day.  But even the milder 2008 shock, some economists now believe, may have played a role in triggering the Great Recession.  And the story that many are using to explain the collapse, not just in oil prices but in commodity prices across the board in recent weeks, is expectations of a weak economy ahead--perhaps one deflated by high commodity prices over the last year.

As frustrating as oil shocks are, the record of efforts to address them has been more frustrating still. The 1970s oil shocks were bad but the famous lines at the pump that helped Ronald Reagan defeat Jimmy Carter were due not to the oil shocks but to price controls--a policy intervention that succeded only in creating shortages.  Worse, price controls were slapped on domestic oil but not foreign oil, and traders reaped millions by illegally recertifying shipments. 

In 1980, Congress passed a windfall profits tax on oil.  Given the huge profits by oil companies at the time, it seemed like sound economic policy  However, the tax applied only to domestically produced oil and, in retrospect, was a key step in accelerating our dependence on foreign oil.  More successful was the creation of the Strategic Petroleum Reserve and the creation of gas mileage standards. But neither of these has proved a silver bullet either.  The Reserve has yet to be tapped and the CAFE standards, while they have cut fuel use, by looking at the entire fleet are correctly criticized for allowing gas guzzlers to persist.

If controlling volatility in commodities markets has never been easy, it has become more difficult in recent years.  A series of commodity index funds launched by Merril Lynch but now owned by Goldman Sachs have become established vehicles for hedge funds and others to place large quantities of money, exacerbating movements.  Indeed one theory of the commodiites runup this past year is that it reflects global liquidity created by the QE2 program of the Fed that spent about $600 billion buying securities.   Indeed, the commodities crash last week, coincided with the end of QE2.  Yet another theory for the commodities crash is that authorities raised margin requirements on commodities traders.  The commodities "bubble" as some has described it has drawn comparisons with the financial and real estate bubbles, in particularly, in light of the IPO "at the top" scheduled this week by Glencore, the company started by Marc Rich decades ago after he fled the United States.

All of this is a way of saying that reining in oil and gasoline prices is not easy.  But given the devastation, price spikes can cause, it must still be attempted.  Perhaps the single most important thing we ought to do is reign in Opec, the organization that more than any other can alter the price of oil.  Secondly, financial regulators need to study more carefully how trading in commodity indices as an asset class can drive monetary movements with serious real world consequences.  Beyond that, we should be working over the long term to wean ourselves off scarce resourcs such as oil toward renewable resources.  That cannot happen overnight but it will be the only long term resolution to the problem of oil and gasoline price volatility.

Nuclear Meltdown

The earthquake and tsunami that struck Japan on Friday is a disaster from which Japan may need years to recover.  It is a disaster, however, from which the Japanese and by extension world nuclear industry may never fully recover.  The meltdowns at up to six reactors that the Japanese are now struggling to contain are of a scale that easily rivals that of the last two major disasters, Three Mile Island and Chernobyl.  What is different is that the Japanese meltdowns are occurring a quarter century after Chernyobyl in a country, unlike the former Soviet Union that has substantial transparency.

A generation after the last two disasters, there is an expectation that nuclear facilities are far safer.  And while the Chernobyl disaster was detected by radiation levels observed in Sweden before the Russians acknowledged there was a problem, the entire world is now glued on efforts to halt the Japanese meltdowns.  Years after Chernobyl the health impact is still shrouded in uncertainty.  The union of workers who cleaned up at Chernoybl estimates that 10% of its members or 60,000 people died in the cleanup alone--not counting the long term helath effects of the radiation cloud that spread across Europe.  We will probably never know the true impact of Chernyobyl.  In contrast, what happens in Japan over the next few days, months and years, will be highly visible to the entire world and that cannot be positive for the nuclear industry.

The challenge of nuclear energy is akin to the Black Swan problem identifed by Nicholas Taleb in his book of the same name.  Nuclear accidents are unlikely.  But when they occur, they can be catastrophic.  In a world of quarterly returns and every day crises, few people have time to worry about the equivalent of 25 or 50 year floods.  When they occur, however, society reacts.  In the United States, Three Mile Island effectively imposed a moratorium on nuclear power that remains largely in effect today.  It is hard to believe that something similar will not occur in Japan. And, indeed, notwithstanding positive comments by Sunday TV shows this morning about not rushing to judgment on nuclear power here in the US, it is certain that countries everywhere will carefully scrutinize any nuclear power projects going forward.

While the world's attitude toward nuclear will not be the same after Fukushima, it is equally unlikely that the world will quickly disband its nuclear power capacity.  The reason is that despite the immense cost of nuclear energy and requirement for state support--especially in light of the Fushimaya disaster, it is unlikely the private market will ever fund a nuclear reactor without government loan guarantees and assumption of liability in the future--there are no quick alternatives.  Indeed, energy--not only electricity generation--but also oil continues to be a strategic business wrapped in national security.  It is no accident that the first energy ministerial did not occur until this year (at the behest of the Energy Secretary Chu), so deeply is energy caught up in state security--and as we see in Japan, state civil preparedness. 

However, the longer term interest of the United States and, indeed, all other countries, is to remove energy from the calculus of government strategy.  The way to do that is by making it abundant, harmless and cheap. Former CIA director Jim Woolsey likes to use the example of a commodity that was once more strategic than petroleum--salt.

In the 19th Century prior to the invention of refrigeration and the advent of automobiles running on gas, salt was a key strategic commodity.  So highly prized was this compound used to preserve food, that nations fought wars over it and its supply was a matter of national importance.  However with the invention of affordable refrigeration in everyone's home, salt ceased to be a strategic commodity.  The once precious crystals are now available for free in shakers in every restuarant.  Meanwhile, virtually everyone has a way to preserve their food at home--in the form of a refrigerator.

Can we do the same with energy?  Distributed generation of electricity--of the scale that Germany has achieved with its feed in tarriff, combined with a way to store it--has the promise to wean us off centralized generation of power and the risks associated with the nculear variety.  If transportation moves toward electric sources, it has the potential to wean us off oil as well. 

It will not happen overnight.  But the disaster in Fukushimaya should remind us of the complexity not only of nuclear energy but of huge, centralized generation, cause us to question huge government subsidies of this form of power subject to catastrophic interruption--not to mention health impacts and encourage us to step up efforts to develop, a distributed, democratic, resilient, system of energy provision that makes power cheap, abundant and safe.

Why We Need a Green Lane on the Grid

Last week, cold temperatures in Texas besides disrupting Superbowl preparations, led to power outages.  Rolling blackouts across the South focused attention on our troubled grid with some trying to blame the problems in Texas on wind power that now provides more power in Texas than nuclear energy.  In reality, howevever, the problem was that several coal plants would not kick over in the cold and heating strained natural gas supplies.  Wind power actually came to the rescue. 

Texas and rolling blackouts in Washington DC and New York following recent storms show that our grid is in need of an upgrade.  But they also show that the solution to our problems do not lie in the past.  They lie in the future.  We need to increase resilience and flexibility on the grid using 21st Century technologies and being mindful of 21st Century economics.

How do we get more clean, resilient power online and then get it where it is needed?  Later today, I am going to be unveiling a new policy idea called the Green Lane.  It is a simple proposal to give producers of clean energy--wherever they may be, simple, universal access to a new Green Lane to get that power anywhere it is needed.  Would this require massive new investment?  No.  The good news, while the whole network does need more capacity, initially it would merely require minor regulatory reform to switch on a Green Lane to give clean, green power an easy on ramp to the network and then get that power where it is needed.

Our current system, as I have writen before, was not built with on ramps.  Rather, the dominant model is large, centralized generation as befits a network that was built on the 20th Century premise of huge economies of scale.  However, the dominant new forms of electricity generation have changed.  Gas fired plants, wind turbines and solar are less about a single, central generation point than about collecting energy where it exists and then getting it where it is needed.  Today a better model for the electricity network is our highway system that allows anyone open acess to move goods where they are needed.   But today, a host of barriers block new generators from finding an on ramp to the network.  Many new projects require millions of dollars in legal fees and rate filing applications to get access to the grid.  This is not how its supposed to work.  Indeed, progressive areas of the country such as the PJM Interconnection have adopted plug and play standards to hook up power.  But we are a long distance from plug and play standards for the entire network.  What's more, once the power is online, currently there is no easy way for consumers--be they large companies like Wal-Mart and Google or environmentally concious households and communites to get clean power.

The idea of a Green Lane is simple.  Create a single standard to allow plug and play hookup to the network on either end--to upload clean power and download it without having to negotiate complex agreements that are an insurmountable barrier to most people.

Tune in later today at 2:00PM today to learn more about the Green Lane.  Click here to RSVP

Senator Bingaman: Energy Priorities for the New Congress

As Simon notes below, this coming Monday, January 31 at 12:00pm, NDN and the New Policy Institute's Electricity 2.0 Initiative will host Senator Jeff Bingaman who will deliver his thoughts on Energy Priorities for the New Congress.  To accomodate the tremendous interest in this event, we have moved it to the National Press Club.  As Simon notes, come early to get a good seat.

As chairman of the Senate Energy and Natural Resources Committee and a long term leader on energy issues, there is no person whose views on energy are more important to the national debate on the future of energy policy than Senator Bingaman.  And there arguably is no more pressing time than now to think about our energy priorities, particularly in light of the President's call in the State of the Union earlier this week for America to accelerate clean energy deployment in order to win the future.

Senator Bingaman has played a leadership role in all of the major legislation shaping energy in recent years. Many believe there is an opportunity this year to make historic progress on clean energy and renewable electricity.

The stakes could not be higher.  The United States leads the world in the development of many cutting edge clean technologies like thin film solar.  But we have fallen well behind in measures including integration of wind and solar, percentage of renewable energy, the smart grid and the manufacture of solar panels and wind turbines.  China, Japan and Europe have made clean energy a key priority.  The question is, can the United States combine our R&D, capitalist system, spirit of entrepreneurship and productivity to lead again?  In electricity, can we create a second golden age similar to that of Edison and Tesla? Can we mobilize and empower Americans who want to be involved but who have remained on the sidelines so far to lead this revolution?   

Following the Senator's remarks, we have convened a distinguished panel to discuss the coming legislative session and new energy policy ideas.

Our panelists include:

  • Hon. Tony Knowles, Former Governor of Alaska and President of the New Energy Policy Institue
  • Hon. William Massey, Former Commissioner, Federal Energy Regulatory Commission
  • Stephen Harper, Global Director, Environment and Energy Policy, Intel Corporation
  • Steve Corneli, Snr. Vice President of Sustainability, Strategy and Policy, NRG
  • Michael Moynihan, Director NDN and NPI Electricity 2.0 Project (moderator).

I hope you will join us for this timely event.

Senator Bingaman: Energy Priorities for the New Congress
with Panel Discussion to Follow
Monday, January 31, 2011 - 12:00 Lunch, 12:30 Program Begins
The National Press Club
529 14th St. NW, 13th Floor Washington, DC

Winning the Future

The vision President Obama laid out last night--future forward and focused on winning the
clean energy race through innnovation, freeing business to compete and investing in research
and education--was spot on.  So was the parallel he drew to Sputnik.  For the United States is not necessarily ahead in clean technology.  Although we have developed some of the most exciting clean technologies on the horizon--in thin film solar, phosphate technology battery storage and algae-baed biofuels--by many measures we are behind.  China leads us in manufacturing solar panels and wind turbines, Germany is ahead of us in solar deployment and Denmark is way ahead in integrating wind.  None of these leads occurred as dramatically as the Soviets launching a satellite into space.  But they are no less indicative of the challenge we face.  In short, clean technology is not like computer technology where we initially led and then other countries worked their way up the value chain, eventually moving the jobs--making phones and computers--overseas.  In the case of clean technology, we are starting out behind  If we are to lead the world in these critical future technologies, it is vital that we raise our game in order to leapfrog the competition. The proposal the President laid out last night can help us get there.  But only if we collectively succeed in carrying it out.

Part of how we can lead the clean energy economy is to create a level playing field for new sources of energy.  The President's proposal to place clean energy on an even footing with fossil fuel energy is the right way to proceed.  To be clear, it is neither rare nor wrong that the US has historicaly subsidized oil and gas exploration.  Energy like food is a strategic commodiity.  Virtually all countries subsidize it--developed countries on the producer side and developing countries like China with subsidies for consumption--to lower gasoline prices for consumers.  During the 19th and 20th centuries, those subsidies served us well.

What is wrong, however, is subsidizing one form of energy--oil and gas--at the expense of new clean technologies.  We need to put clean technologies on an even playing field lest they lose out to incumbent fuel sources, especially those we purchase from abroad.  All one needs to do to see what our foreign oil bill is costing is to look at the gleaming new cities that have sprung up in the Gulf states--and look at our decaying roads and bridges by comparison. 

Second, as the President said, we need to invest in R&D.  However, we are fortunate to already have a great deal of technology under development in our labs.  The challenge in the US context is to move technology beyond the development stage to commercialization.  Because energy is capital intensive and business models live or die based on the price of oil which is set by a cartel, making capital available to startups to help them bridge the "valley of death" together with guarantees on large projects is critical here.  If there was one problem with the ARRA bill, it tended to give out large amounts of money to huge companies.  We would get a lot more value from giving many small grants out to entrepreneurs and startups.

Third, as we did after Sputnik, we need to mobilize our country to improve math and science education.  Math and science are neglected at even the best public schools in the US.  We need a full court press to raise our mathematical and scientific literacy.

Fourth, we need to rethink energy regulation.  Much of the entire clean energy project resolves around the electricity sector.  Yet the electricity sector is still dominated by regulated monopolies that under the US rate of return system are strongly disincented from investing in technology at all. 

On Monday of this week, I moderated a discussion on energy regulation at the Clean Economy Network Summit with about 40 clean energy leaders and government energy officials.  What emerged from our discussion was that American utilities--the dominant players in the industry--receive no reward for taking risk.  Whereas in Italy, utilities have already put smart meters in 100% of homes--because the savings make good business sense--in the US, even subsidies in ARRA have not overcome resistance created by the system from implementing this new technology.  Current rules forbid utilties from taking risk and block entrepreneurs from implementing clean, smart energy solutions that would be profitable today.  With better rules in place, we would already be seeing the Googles and Ebays of cleantech emerge.  But rules today forbid companies from sharing power in an industrial park.  They forbid a Wal-mart from sharing energy efficiency with a Sam's club across the street.  Even critical government facilities must buy their power through a meter from a local utility.   We need a complete overhaul of the regulatory framework if we are to meet the President's challenge.  That is why NPI's Electricity 2.0 Initiative will soon be unveiling our proposal for the Green Lane--a lane on the electricity highway to which every clean producer will have an open on ramp-- that will allow clean electrons to go from any point to any point on the US network--without running into a host of barriers and redtape.

All of these changes will take government action--not to prescribe the energy future--but rather to free entrepreneurs and American businesses--to combine ideas, capital and knowhow to build and win the clean energy future.  The bi-partisan cooperation evident in mixed seating during last night's speech is a good sign that such cooperation and progress are possible.

This coming Monday, January 31, Senator Bingaman, a long time leader on energy issues and Chairman of the Senate Energy Natural Resources Committee will join us at NDN and the New Policy Institute to discuss his vision for the energy future and thoughts on legislation this coming year.  Joining him will be former Alaskan governor Tony Knowles and other enery and technology leaders as we discuss a roadmap to the clean energy future.

We look forward to seeing you at this event and to working with the NDN community and others as together we create a policy environment that will enable America to win the future.

Lights Out at the Meadowlands

Yesterday evening something shocking occurred at the Meadowlands stadium in New Jersey as the New York Giants faced off against the Dallas Cowboys.  It wasn't just the fact that the Cowboys, 1-7 before the game upset the  Giants who had won their last five games.  Rather, it was that that the stadium experienced two separate blackouts totaling about twelve minutes. 

When the stadium went black in the midst of a Giants possession, players reportedly hit the ground while fans in the pitchblack dome held friends and family hands and flipped out cell phones for light.  The lights came back.  However, the failure of power at a major televised sporting event bears some comment.

The Giants released a stadium afterwards that the first outage of certain lights occurred when one feeder line into the stadium failed.  A second feeder took over but then failed a few minutes later, leading to the total blackout.  Eventually the first feeder was restored allowing the game to continue.  The Meadowlands has received publicity for installing a large solar energy array that meets about half its daytime needs.  This energy used during the day, however, did not come into play during last night's outage.

While accidents happen and the 82,000 fans in the stadium last night didn't panic, a blackout at an NFL game is not a good thing and frankly shouldn't happen in a first world country.  (Tellingly, to rationalize it, all Giants co-owner Steve Tisch could say was "we have all experienced blackkouts in our homes.")  It is one more reason that America needs to update its outdated network to Electricity 2.0.

What might have prevented last night's blackout?  Onsite storage, a smarter grid to rapidly sense problems before they occur and dispatch power accordingly and greater backup capacity--all elements of Electricity 2.0 that increase reliability and network resilience, might have avoided it.  How to get those elements in place?  Open up the network to new technologies and capital.

Last week, NDN hosted an event on microgrids and localized power generation with industry leaders.  Could a microgrid have helped avoid this outage?  By themselves, islanded microgrids do not improve reliablity over the wider network.  However in combination with grid backup they dramatically improve it.  Sports complexes like military sites, univerities, corporate campuses and real estate developments are ideal candidats for microgrid and cogeneration technologies.  However, we need to put in place the policies that can enable them: policies that our panelists identified such as allowing private electricity tielines, switching to outcome-based pollution standards, driving the development of microgrids at DOD installations and the removal of barriers to microgrid-grid connections.

Come to Our Electricity 2.0 Event on Microgrids and Local Generation Tomorrow

When people think of microgrids and on-site electricity generation, they often think of an exciting new industry that is, however, still in its infancy. Microgrids promise to change how we use power. However, many think they are something that lie in the future. In fact, microgrids and local power generation do have an extraordinary potential to revolutionize energy delivery in the United States as we know it. However, they are here today. In the United States, cogeneration--the local generation of clean electricity in the course of heating a building--is a multi billion dollar business, practiced by many Fortune 500 companies. Clean, local generation of power has been one of the great success stories of clean energy and electricity to date. Microgrids--the local management of power--are well known in Europe and China, the former as a consequence of liberalization over the last decade and in China because there is not yet a single, unified grid. Indeed, the distributed nature of China's electricity sector is one of the secrets of that country's breakneck advances in renewable power. Tomorrow, NDN is convening a panel to discuss a sector poised to grow dramatically in the US. We are fortunate to have four industry leaders who are true pioneers in the field to discuss the potential of the industry and the policy reforms needed to unlock it. Why is local power generation and management so intriguing? First, by moving power closer to the people or user, it solves transmission and line loss problems. Local generation can often cut through the gordian knot of how to site power lines in congested areas. Second, it shifts responsibility for managing load and generation to the edge, promoting energy efficiency. While large grids can help balance intermittency across wide areas, smart, localized grids provide immediate feedback on usage, creating a tighter connection between load and demand. The fact is a truly robust network requires both large and small balancing pools. Third, local generation is tangible, democratic and empowering to users, giving them new control over their energy usage. Fourth, local power networks promote security. Nowhere, perhaps, is the potential of microgrids greater than within the government. Currently, most government facilities have ordinary meters making them vulnerable to blackouts. A diversity of grids, or a network of networks arguably provides far more resilience than a single failsafe grid. Finally, however, in line with our Electricity 2.0 goals, microgrids and localized generation provide a platform for new economic activity involving new participants, ideas and capital. And no one embodies that more than our four panel participants, Sean Casten CEO of Recycled Energy Development, Guy Warner, CEO of Pareto Energy, John Kelly, Deputy Director of the Galvin Initiative and Jeff Marqusee who oversees microgrid efforts at DOD. However, a number of policy barriers are currently constraining the growth of this sector. Come learn about thse tomorrow as we discuss the job creating economic potential of the sector and the policy measures needed to unleash it. Here are the details: Electricity 2.0: Understanding the Transformative Potential of Microgrids and Distributed Power with: Sean Casten, President and CEO of Recycled Energy Development, a global leader in combined heat and power. Guy Warner, CEO of Pareto Energy, a pioneer in microgrid development John Kelly, Deputy Director of the Galvin Electricity Initiative which has championed “perfect power” microgrid development Dr. Jeff Marqusee, Executive Director of SERDP/ESTCP, who is leading microgrid initiatives at the US Department of Defense. November 10, 12:30 pm Lunch to be served NDN Event Space 729 15th Street, NW First Floor Washington, DC RSVP

Offshore Electricity Transmission

This morning's story in the New York Times about the partnership of Google and Good Energies (among others) to construct a underwater transmission line 15 to 20 miles off the Atlantic coast between New York and Norfolk in order to serve off shore wind projects along the coast speaks to the centrality of transmission capacity to tapping wind resources.  However, it also speaks to the importance of independent transmission as a mechanism to accelerate clean energy and Electricity 2.0.

Last week, we released our acceleration agenda for Electricity 2.0.  Among other things, we noted the importance of access to long distance transmission capacity as a way to get renewable power onto the grid and also as a way t get it off.  While there is an open mechanism in place to access so-called bulk power lines currently under FERc rules, capacity is constrained. Limited capacity makes access a difficult proposition for renewable energy developers.  Taking down bulk power directly, meanwhile, is prohibted by law for all but utilities.

The Google-Good Energies backed project, led by Trans-Elect, a transmission developer faces a number of hurdles before construction can begin . But as the article points out it has received praise from most quarters. ( A key variable is distance from shore.  A two hundred foot windmill is visible up to 28 miles away so a windmill 15 miles from shore could be visible on clear days.)  However, a number of other large independent or merchant transmission projects are underway or have been completed.  ITC, originally a spinoff of Detroit Edison, has begun building transmission capacity throught the Midwest.  One prominent merchant transmission line is the high voltage DC or HVDC line connecting New Haven and Long Island.  A similar HVDC line connects San Francisco with Pittsburg, CA to the East where San Francisco draws much of its power.

Over time, a larger more robust independent network, complementing utility owned lines would provide additional flexibility to our nation's electricity architecture, allowing large electricity users to source their power where it is cheapest.  Combine that with the smart grid and it is possible to envision enterprise sourcing and management of power--analagous to enterprise management of information technology.  And, of course, new transmission capacity such as the Trans-Elect project would provide is critical to developing wind resources.

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