Energy conservation has a promising regional future, brightened by technology advances and forecasted higher power prices, according to the Northwest Power and Conservation Council's latest assessment.
The Council's draft regional plan identifies 2,800 average megawatts of potential energy savings regionwide through 2025. Those would-be efficiencies are deemed both cost-effective--an average cost of 2.4 cents per kilowatt-hour--and achievable.
This aggregate conservation potential is similar to the region's historic energy-saving accomplishments.
It exceeds 10 percent of projected total regional loads in 2025, and half the prospective Northwest load increases over the next 20 years, under medium-growth scenarios, according to the Council. It's also nearly double the approximately 1,500 aMW of cost-effective regional energy savings outlined in the last regional plan, from 1998.
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| (Courtesy of Northwest Power and Conservation Council) |
Residential-sector potential heads the parade of possibilities, at 1,235 aMW, highlighted by 530 aMW of lighting. Commercial energy savings are estimated at 1,145 aMW, in building and non-building applications. Industrial efficiencies are projected at an admittedly uncertain 350 aMW, with irrigated agriculture at 80 aMW.
If the region steadily acquires this conservation, power system costs would shrink $500 million (net present value). The risk reduction value is an estimated $1.5 billion, according to the Council.
However, the Council estimates an annual total resource cost of $380 million for this level of conservation. That's nearly triple the average annual regional conservation spending from 1997 through 2002, and exceeded in recent history only in the boom years of 1993 and 1994.
Realizing this abundant potential would require substantially more spending or more efficient approaches, the Council believes.
Translating the Council's voluntary goals into tangible results is another matter altogether. Asked later about prospects for regional attainment of the Council's energy-saving targets, power division director Dick Watson acknowledged difficulties, especially with conservation's rate impacts on utilities and Bonneville Power Administration. "It's always been a tugging and a hauling to get it done," he said. "I'm sure it'll be that way again. I also think the benefits justify it."
Historical Record: Almost 3,000 aMW
Nearly 3,000 aMW of savings have accrued from 1980 through 2002 in rhe Northwest, from utility/Bonneville Power Administration programs, energy codes and federal efficiency standards, according to Council figures.
A comparable amount can be had over the next 20 years, outlined Council conservation resources manager Tom Eckman in a May 19 presentation to the National Association of Energy Service Companies' midyear conference in Seattle.
Eckman summarized this affordable and doable energy-saving resource as large and inexpensive, consisting of "new stuff" and "improved old stuff," but also capital-intensive and rate-affecting for utilities.
"It requires more money or more efficient ways to deliver" than in the past, he told NAESCO conference attendees. However, he concluded, "It will cost the region a lot more money if we fail."
Technology Advances, Higher Power Prices
Two major factors have boosted the region's conservation potential, compared to the last Council plan.
One is improved technology. High-performance T-8 fluorescent lighting, compact fluorescent lamps and optimized controls are three examples cited by Eckman. Altogether, advances in energy-saving gadgetry have increased regional conservation potential by 1,240 aMW, the Council reports.
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| (Courtesy of Northwest Power and Conservation Council) |
Another significant bump comes from Council projections for higher power market prices. The Council's last plan forecast market prices through 2015 in a tight band between 2 cents/KWh and 4 cents/KWh. In this draft plan, the low-end forecast covers a similar range, but summertime price spikes are envisioned to 10 cents/KWh and slightly beyond in the coming decade--fueled by California and desert Southwest loads, Eckman said. "The West Coast markets generate a different value in what we want to search for and do" in Northwest conservation.
These higher avoided costs add 767 aMW to regional energy-saving prospects.
At the same time, the Council draft subtracts energy-saving possibilities because of new and revised federal efficiency standards (730 aMW), utility program acquisitions (600 aMW) and regional market-transforming actions (170 aMW).
The net gain in regional energy-saving potential is about 500 aMW.
New data--such as the Assessment of the Commercial Building Stock in the Pacific Northwest and other sources--also figures into this assessment.
Residential, Commercial, Industrial, Agricultural
The biggest regional conservation bonanza over the next two decades is right at home.
Residential-sector savings through 2025 are listed at 1,235 aMW. Lighting tops cost-effective and achievable household measures, at 530 aMW, with an average cost of 1.7 cents/KWh. "CFLs now cost under $3," Eckman said. "Last time we looked they cost $12, just five years ago."
Residential water-heating measures, such as heat pump water-heaters, could contribute 325 aMW. Space conditioning measures (notably including heat pump conversions and upgrades, and duct sealing) come in at 240 aMW, followed by appliances--almost entirely clothes washers--at 140 aMW.
In the commercial sector, building efficiencies could reap 725 aMW, in the categories of HVAC, envelope and refrigeration (375 aMW), new commercial building lighting (220 aMW) and existing commercial building lighting (130 aMW).
Efficient power supplies, municipal water and sewage treatment facilities, personal computer networks, light-emitting diode exit signs and traffic lights, and other non-building applications total 420 aMW.
The industrial sector (excluding aluminum smelters) could be the source of 350 aMW over 20 years, at 1.7 cents per KWh, through improvements in such features as process controls, drive systems, lighting and refrigeration. However, Eckman acknowledged much uncertainty over future industrial loads in the region and, accordingly, in the efficiency potential.
Irrigated agriculture, meanwhile, could generate 80 aMW of savings, through lower pressures on center-pivot watering systems and replacement of pumps, nozzles and gaskets.
Altogther, the potential energy savings are divided almost equally between lost opportunity and "dispatchable." That distinguishes between conservation measures done or else unavailable for a long time (as in new construction) and energy savings more frequently accessible.
Lost opportunity savings are cumulatively more expensive, representing about $225 million of the $380 million total annual resource cost for 150 aMW of savings.
"Because we're so good at improving codes and standards in this region, and nationally with respect to appliances, you're reaching into the law of diminishing returns in new construction," said Eckman.
But, he said, "We're not going to get the product mix ... if we focus only on what it costs out of the gate. If you only invest in short-lifetime measures, or things that are just cheap up-front, that's not going to get us where we need to go."--Mark Ohrenschall
The Northwest Power and Conservation Council's upcoming regional action plan is likely to include a central focus on sustained energy-saving efforts, even with the current power surplus that officials anticipate could last beyond 2010.
"Aggressive pursuit of conservation still has value to us," Michael Schilmoeller, Council senior power systems analyst, told Council members May 12 in Walla Walla, WA. "It also makes a large contribution toward reduction of costs and risks."
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Although the action plan for 2005-2010 is still under final development as part of the overall regional plan, Council staffers have tentatively identified about 150 average megawatts of consistent annual regional acquisitions. About half these prospective target savings could come from "lost opportunity" energy savings, and a similar amount from so-called "schedulable" efficiencies.
That overall figure jibes with the Council's latest projection of 2,800 aMW of cost-effective, achievable conservation regionwide over the next 20 years ( see related story). It also exceeds the Council's call for 100 aMW of annual conservation from 2002 through 2004.
This targeted acquisition level could reduce regional power system costs by $500 million and lessen risk by a projected $1.5 billion, according to the Council.
The Council esteems conservation as a low-cost resource--the median future cost is 3.2 cents per kilowatt-hour for lost opportunities, and 1.4 cents/KWh for schedulable--capable of moderating future electric prices.
Council staffers think the region has sufficient total generating capacity until about 2011, under a medium-growth scenario. But they acknowledge some individual utilities have different timetables for resource additions.
When new power resources are needed, the Council believes a low-risk portfolio would consist of natural gas, coal and wind power. "We still see wind playing a very large role in what gets built out in the next decade," said Schilmoeller.
Background
This will be the Council's fifth regional plan, and Dick Watson, the agency's power division director, noted similarities between now and the first such regional blueprint in 1983.
Both follow a crisis (Washington Public Power Supply System then, the energy crisis of 2000-2001 now) that led to sharply higher retail electricity prices, with declining overall regional loads and excess power capacity. The Council now sees a current regional surplus of about 1,000 aMW.
"The reality is that we are still experiencing demand well below the level it would have been had the forecast in the Council's last plan continued," Watson told Council members. In addition, a substantial amount of new generating capacity--primarily natural gas-fired plants owned by independent power producers--started operating in recent years.
"Under medium growth, we're not getting down to a load-resource balance picture until somewhere out in 2011," Watson said, adding that faster or slower growth rates would change the scene.
He and Schilmoeller distinguished between this regional outlook and the circumstances for individual Northwest utilities, several of which are planning and soliciting new generating resources before 2011.
Nevertheless, Watson said, "The analysis currently suggests not a lot of [new] generation the next few years."
Action Planning: Conservation
Even with this expected abundance of power supplies, Council staff believes persistent conservation is an important regional strategy.
A preliminary draft describes "major thrusts" of the upcoming plan. First, "Acquire those low cost resources that provide a hedge against future fuel price, market and/or environmental risks. This means a focus on conservation with particular emphasis on 'Lost Opportunity' conservation."
Conservation is the top-priority resource under the Pacific Northwest Electric Power Planning and Conservation Act, the draft said. Conservation features "several unique characteristics relative to other resources," such as lack of operating costs and emissions, plus adaptability for development, "assuming the necessary programs and budgets are in place."
Energy savings can serve as an inexpensive reserve margin for the power system, "which reduces market exposure risk and may moderate wholesale price swings." according to a Schilmoeller slide presentation.
Consistent pursuit of conservation--even during times of low power prices and thus lower cost-effectiveness thresholds--is ultimately less expensive than the proverbial roller coaster, Schilmoeller told the Council.
"This approach of sustained, orderly development makes a lot of sense," he said.
The preliminary draft action plan lists myriad ways to achieve regional energy-saving goals, by Bonneville Power Administration, utilities, public-purposes funding administrators, regulators, state and local governments, and the Council. These include programs, budgets, planning, equipment standards, energy codes, evaluation and resource assessments.
Asked later about prospects for regional attainment of Council energy-saving targets, Watson acknowledged difficulties, especially with conservation's rate impacts on utilities and Bonneville Power Administration. "It's always been a tugging and a hauling to get it done," he said. "I'm sure it'll be that way again. I also think the benefits justify it."
In addition to conservation, the Council thinks demand-response options could be valuable during times of high power prices and/or limited supplies. But more understanding is needed on specific approaches, costs and resource potential.
And, despite the anticipated near-term power surplus, the Council's draft suggests "actions that will ensure the ability to develop additional generation resources when needed." These include voluntary resource adequacy standards and "effective planning, expansion, operation and management of the region's transmission system." Resolving hindrances to renewables development is another potential action.
Natural gas, coal and wind represent low-risk resource options for 2011 and beyond. A Council slide outlines construction starts for 1,000 MW of gas plants in 2011, 500 MW of coal in 2011 and again in 2019, and 500 MW of wind in 2013 and a whopping 3,500 MW of wind in 2017, although Watson later noted actual development would likely be phased.
As with conservation, wind could shrink power system costs by $500 million and shrink risk by $1.5 billion.--Mark Ohrenschall
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A recent demand-response pilot program on Washington's Olympic Peninsula has yielded promising initial results for Bonneville Power Administration's exploration of non-wire alternatives to building new transmission lines.
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Two paper companies, two U.S. Navy facilities, Mason County PUD No. 3 and BPA joined in a four-day test in March that led to an average of 22 megawatts of peak demand reduction during selected hours. Bonneville paid a contractually agreed-upon price for these negawatts, which the customers delivered by using their own generation resources and, in one case, curtailing loads. BPA used Internet-based THE DEMAND EXCHANGE trading platform for this venture.
Twenty-two MW equal the peninsula's yearly forecasted load growth, which suggests the possibility of deferring new transmission lines for a similar period, according to BPA project manager Brad Miller. By late 2007, BPA officials think, the peninsula's 1,000-MW transmission capacity could be insufficient to serve peak loads in a cold snap.
This is the first completed pilot under the landmark Non-Wires Solutions program of BPA's Transmission Business Line. TBL acting vice president for planning/chief engineer Brian Silverstein labeled it "an exciting first step," in a news release.
Silverstein told Con.WEB Bonneville could be ready to directly compare new lines and non-wires alternatives in an upcoming environmental review process for Olympic Peninsula transmission upgrades.
BPA continues to analyze the demand-response pilot results, while also moving ahead with plans to test other potential non-wire options.
A host of technological, institutional, economic and other issues remain to be considered for line alternatives.
Looking Beyond Wires
The Non-Wires Solutions program (formerly known as Non-Construction Alternatives) arose after a 2001 study recommended Bonneville examine non-wires solutions in planning specific projects and in long-term outlooks. "Expansion of BPA Transmission Planning Capabilities" also suggested involving Northwest stakeholders in planning processes, which led to creation of a roundtable group.
BPA is reportedly the first major transmission provider to take a non-construction approach, roundtable member Ralph Cavanagh of the Natural Resources Defense Council said in early 2003.
The imperative to bolster transmission capacity is increasingly clear. BPA has not built substantial new transmission since the late 1980s, while transactions are growing almost 5 percent a year, according to a November presentation. BPA has done less-expensive upgrades, such as voltage support devices and advanced controls, but the system is stressed and more reinforcements are needed, the presentation said.
Bonneville plays a vital role in bringing electricity to Northwest loads--it owns and operates 75 percent of the region's high-voltage transmission system, with 15,000 line miles and 285 substations.
Olympic Peninsula Pilot
BPA and its roundtable have identified three broad categories of potential ways to stretch existing transmission capacity: demand response/load management, strategic energy efficiency/conservation and generation/distributed generation.
The Olympic Peninsula pilot used the first approach.
Participants were Nippon Paper Industries U.S.A. of Port Angeles, Port Townsend Paper Co. of Port Townsend, Mason PUD No. 3 and naval facilities at Bremerton (a shipyard) and Bangor (a submarine base).
At 8 a.m. the day before each of four so-called "events" in March, Bonneville posted an offer price for demand reductions, on THE DEMAND EXCHANGE portal to which it subscribes, explained Miller. Participants had two hours to accept, reject or propose a counteroffer, and could select the amount of reduction. Prices and megawatts could vary by the hour, he said.
The first daily event lasted one hour, the next two were four hours and the last covered morning and evening periods.
Participating entities reduced their system demand in different ways, according to Miller. Mason PUD fired up its natural gas-fueled Olympic View Generating Station; Port Townsend used a wood-waste-fueled generator, supplemented with diesel; the Navy relied on diesel generators; and Nippon shut down a batch line. "It was a nice cross section to see how each responded," Miller said.
Average purchased hourly reduction during these events was 22 MW, for which BPA paid a total of about $40,000 for the entire pilot, according to Miller (he didn't divulge specific prices). He called it "a very good buy." Delaying a potential $30 million transmission upgrade could make the long-term economics compelling.
"This in essence shows we have the potential of at least one-year deferral" of a planned transmission reinforcement project on the peninsula, and perhaps as many as five years. Miller called this " a very successful pilot" that shows "some really good promise."
Still, flaws happened. Miller specifically mentioned software and communications snafus.
He also cited a dilemma for Mason PUD and its 5.5-MW generator, because BPA only accepted 1-MW increments; the utility and BPA eventually settled on a 5-MW bid at a somewhat higher price to help cover costs for the unsold generation. "That's part of the game of dealing with this," he said.
BPA will contract for an evaluation. The agency also is planning an extension of this pilot next winter, Miller said, to "track weather, track loads and see how close we can be on hitting those peak" demand reductions.
Other Non-Wires Pilots
BPA has other non-wires pilot programs in the works, including two on the peninsula.
One would enroll residential and commercial customers to shift energy to off-peak periods, through an Internet-based system. "This pilot is demonstrating two-way communications for load control and is one of the first regional applications of the Energy Web concept," using "intelligent-building controls as well as distribution and transmission system information," according to a TBL newsletter.
BPA also has engaged Portland-based Celerity Energy to aggregate and manage distributed generation resources on the peninsula, operated only in emergencies.
Elsewhere in Washington, BPA is joining with Pacific Northwest National Laboratory to "install remotely accessible load-shedding equipment and software in two commercial buildings in Richland to determine how much energy can be reduced for limited periods of time in a single building," the newsletter said. "The goal of this pilot will be to demonstrate a system that uses Internet devices to control and monitor dispersed electric loads."
Also in Richland, a 30-kilowatt-capacity microturbine is planned for installation in a commercial building to test remotely controlled distributed generation.
Silverstein said these pilots are intended as technology demonstrations, and to work through various issues.
At this point, he said, "The demand-response types of measure like the [completed Olympic Peninsula] pilot are probably the lowest-cost alternatives we have from a transmission perspective."
Still, he thinks energy efficiency and distributed generation have a place, too. "I think it'll be location-specific," he said. "It depends what the opportunities are in the particular area."
One institutional challenge BPA faces is assigning costs and benefits for energy efficiency and distributed generation. Efficiency measures reduce transmission requirements, Silverstein noted, but BPA transmission rate-setting doesn't recognize that. "We are working in the roundtable, and we're going to address that issue in the next Bonneville transmission rate case," he said.--Mark Ohrenschall(Jude Noland also contributed to this article)
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Some energy conservation programs fare better than others.
But regardless of their level of success, all energy-saving initiatives are instructional.
Lesson topics can include customer interests and actions, financial incentives, program design, marketing targets, ancillary benefits, technology shortcomings and marketplace realities.
A Northwest conservation program retrospective was shared by Ken Keating, Bonneville Power Administration's market transformation coordinator and a longtime demand-side management program evaluator, at an April 1 Portland forum sponsored by the Oregon Chapter of the Association of Professional Energy Managers.
"No program is so good it can't be faulted," Keating said. Conversely, "No program is so bad that it doesn't serve somebody's goals; there's something being accomplished."
Keating outlined what he considers some notably successful regional energy-saving ventures from the past quarter-century: Energy $avings Plan for industrial customers, a "dipstick audit" weatherization program, Hood River Project, Super Good Cents, Manufactured Housing Acquisition Program and the Conservation and Renewables Discount Program.
He also gave some "raspberries," for a pilot weatherization loan program, a pilot solar and heat pump water-heating venture, a commercial audit program, Energy Smart Design, third-party conservation bidding and the Northwest Energy Efficiency Alliance's Premium Efficiency Motors Program.
"Only by learning the lessons of the past can we move on and hopefully get better," Keating told the APEM gathering.
He also emphasized the long-term accomplishments of Northwest energy conservation, reaping nearly 3,000 average megawatts from 1980 to 2002 through BPA/utility programs, energy codes and federal efficiency standards, according to Northwest Power and Conservation Council figures (see related story).
"This group and those who preceded you have been responsible for a major [energy] resource in this region," he said. "That shouldn't be lost in the details of what's positive and negative in individual programs."
Success Stories
Keating briefly described some "winning" Northwest energy efficiency endeavors.
- Bonneville's Energy $avings Plan industrial program emerged from an earlier initiative, known as Sponsor-Designed, in which industrial customers were solicited for energy-saving proposals, and given a deadline for submittals. This yielded little response. "What we learned is industrial customers don't plan that way," Keating said. Instead, they try to make many changes at the same time, based on internal cycles that don't necessarily match utility timetables. The resulting E$P allowed industrial customers to offer brief conservation proposals, which, if enticing, could be fleshed out in engineering detail later. This has become a national model.
- A so-called "dipstick audit" weatherization program followed a residential home energy audit venture "developed by really good engineers working in the early 1980s without much experience in the field. They came up with a standard heat-loss model ... that took half a day to figure how much energy was coming out of a house," said Keating. Benton PUD came up with the idea of recommended guidelines based on audit findings--for example, replace a single-pane window with a double-pane window--and Bonneville launched a redesigned program that gained comparable energy savings to the engineering-based approach.
- The Hood River Project taught the region that much energy efficiency could be achieved through concentrated effort in a single community. "You could get 80 to 90 percent of the people who did [energy] audits to take action if you pay them enough money," he said.
- Super Good Cents "has been maligned sometimes," Keating said, particularly for costly Super Bowl advertising in its early days. But that splashy approach carried a message: "We're advertising to the builders: 'This is a serious program. We're ready to put big money behind it; maybe you ought to sign up.'"t SGC demonstrated the viability of cost-effective energy-efficient residential construction measures, he said, and was "very successful in driving [energy] codes we see today in Oregon, Washington and Idaho."
- Manufactured Housing Acquisition Program: Keating called this "a huge success," achieving nearly 100-percent market share for manufactured homes built to SGC standards, through financial incentives to manufacturers. MAP eventually became a victim of its own success, burning through budgets so quickly that BPA and utilities finally called a halt. SGC-level manufactured homes in the region subsequently plummeted as a percentage of the market, but have since rebounded to slightly more than 60 percent, for SGC and Energy Star models.
- Bonneville's Conservation/Renewables Discount Program: "This is a program I could say a lot of bad things about. The reality is this program wasn't an overwhelming success accomplishing what it was designed to accomplish." But, Keating said, it revived the Northwest's utility conservation infrastructure after the late 1990s decline, especially in smaller utilities. C&RD might be too successful, he suggested, because many utilities are exhausting their available credits before the rate period ends in 2006 (see Con.WEB, April 29, 2004, for a report on the C&RD).
'Raspberries'
Keating also gave some "raspberries" to several programs.
- BPA launched a pilot weatherization loan program around 1980, on the cusp of a recession. But it found utilities were ill-equipped to act as lenders and many participating customers had credit troubles, which led to property liens. "We're still getting loan repayments" from this program, he said. "We don't know what to do with it," he said.
- Solar and heat pump water-heating pilot program: Bonneville encountered technological problems with this 1980s-era initiative. One-third of heat pump water heaters failed each year, and electronic controls were dicey for solar water-heating. Then there were some customers who pumped solar-heated water directly through their faucets.
- A commercial audit program was intended to help expand the market for this service, but Keating said BPA found itself, as an example, paying $6,000 apiece for audits on several 7-Elevens in the same town audited by the same company. "Audits were like Bibles--often cited, but never read," he said.
- Energy Smart Design reached fewer than 600 commercial buildings regionwide in four years, even with 60 participating utilities. ESD did enable some smaller utilities to offer assistance to commercial customers, Keating said. But the program was too utility-centric, he said, and lacked contractor feedback on potential improvements.
- Third-party conservation bidding: This 1990s venture with energy service companies didn't achieve a lot, Keating said, and it led to some program gaming by contractors. As an example, "We paid different bidders different amounts, so those with the better deals waited for the others to do audits and studies, and then poached the jobs," Keating told Con.WEB later via e-mail.
- The Premium Efficiency Motors Program--"I helped design this program," Keating said--focused on rebates for retailers stocking premium efficient motors. But these dealers were using just-in-time inventory techniques. And, "Half of motor rebates went to seven companies already buying efficient motors anyway, as their policy." The Alliance stopped this venture. Keating's lesson: markets change and programs need to be adaptable.
Keating also cautioned about programs that take off too fast and suffer letdowns.
"Despite all of the winners and losers, despite the ups and downs, steps and missteps, we have continued to produce incredible value for the region," he concluded.--Mark Ohrenschall
Idaho Power has received state regulatory approval for a wind energy purchase from neighboring Montana.
This move advances what could evolve into a couple of significant regional firsts: Idaho Power's first large direct purchase of wind power, and Montana's first utility-scale wind farm.
Neither is yet certain, because construction of the proposed 9-megawatt-capacity Horseshoe Bend Wind Park near Great Falls depends on at least two unresolved issues.
One is renewal of the expired federal wind energy production tax credit. United Materials of Great Falls, which has proposed Horseshoe Bend, also needs a final deal with NorthWestern Energy to deliver electricity to Idaho Power.
United Materials board chairman Bob McIntyre expressed optimism on both counts. He wants to start moving toward construction by early summer, and to meet the planned December operating date for Horseshoe Bend. "That's our hope," he told Con.WEB in early May.
The Idaho Public Utilities Commission on April 23 endorsed the 20-year power-sales agreement between Idaho Power and United Materials, whose wind project would be a qualifying facility--eligible for a mandatory utility power purchase--under the federal Public Utility Regulatory Policies Act (PURPA).
This pact has mutually agreed-upon terms for payments linked to power delivery amounts and seasonality, but the IPUC said these novel provisions aren't precedent-setting for other QF contracts.
In a separate decision, commissioners declined to rule on the ownership of environmental attributes of QF renewables projects. Idaho Power and others had argued these marketable attributes (often known as green tags or renewable energy credits) are the property of developers, but PacifiCorp and Avista Corp. contended they belong to power-purchasing utilities.
Horseshoe Bend Wind Park
Horseshoe Bend Wind Park arose from United Materials' interest in linking the company's gravel pit to the NorthWestern grid. Diesel generators currently power the facility, but McIntyre said a wind project would facilitate a substation and connecting power lines.
The wind farm, consisting of six 1.5-MW-capacity turbines, would be situated on United Materials property about a mile from the gravel pit. Exergy Development Group also has a reported role in this project. (See Con.WEB, March 31, 2004, for more details on Horseshoe Bend.)
United Materials and Idaho Power reached formal agreement in January on a QF contract, and in April the IPUC said the investor-owned utility's payments would be allowed "as prudently incurred expenses for ratemaking purposes." Commissioners wrote they are "pleased that the Company is adding a wind project to its contract resource portfolio."
Idaho Power aligns with Bonneville Environmental Foundation for its retail green power program, but the utility has not directly bought wind-generated electricity.
The contractual terms include performance-based payments for energy deliveries. IPUC-approved "base energy rates" would apply for wind-generated power that falls within 90 percent to 110 percent of United Materials' estimated monthly generation. These rates, varying by year and season, range from 3.3 cents per kilowatt-hour in 2004 to 8.9 cents/KWh in 2025.
For additional electrons above 110 percent, United Materials would receive a market-based surplus energy price. But if actual wind generation dips below 90 percent of the monthly forecast, a shortfall energy payment would count against the base energy price, if market prices for that month are higher than the contract's base rate.
"The provisions will encourage United Materials to provide energy with a greater degree of 'firmness,' while at the same time allowing a reasonable amount of flexibility to United Materials in operating its facility," according to IPUC staff comments.
In addition, the base price would shift with the seasons, reflecting Idaho Power's energy needs. The highest payments per kilowatt-hour would accrue in June, July, November and December, and the lowest in March, April and May. These are rearranged monthly groupings for calculating seasonal QF payments, according to the IPUC.
McIntyre said he considers the terms reasonable. "We're comfortable with our agreement," he said. "I think it's fair both ways."
Commissioners approved this "negotiated and mutually accepted contract," but said it "sets no precedent for our future regulation of such agreements."
Green Tags Ownership
In another decision, the IPUC decided not to decide on an Idaho Power request to clarify ownership of green tags from QF projects.
This won't affect Horseshoe Park, according to McIntyre, who applauded the ruling. Asked about green tags sales from the project, he said, "We haven't worked that out yet," but added, "The green tags are ours to sell."
Idaho Power recommended the commission declare that QF developers have full ownership of green tags, as long as the utility has a right of first refusal on the purchase. " ... retention of those tags by the QF developers may encourage the development of additional green energy resources in Idaho without the need to increase energy purchase prices," the IPUC described the utility's position.
BEF, Northwest Energy Coalition and Advocates for the West support green tags ownership by developers, but not the utility's right of first refusal, which BEF said "effectively diminishes the market value of the tags to the owners."
On the other side, PacifiCorp favored QF green tags belonging to the power-purchasing utility, which along with its ratepayers "bear the risks associated with QF generation and should receive the benefits arising therefrom," IPUC summarized. Avista Corp. took a similar position.
IPUC staff questioned whether the commission has jurisdiction over green tags, as the state has no renewables portfolio standard, no legislative creation of green tags, nor tax incentives for renewables. Staffers recommended environmental attributes remain with developers.
Commissioners decided Idaho Power's request "does not present an actual or justiciable controversy in Idaho and is not ripe for a declaratory judgment by this commission."
Entities can voluntarily buy and sell green tags, but the purchase price would not be recoverable in utility rates as a PURPA-related cost, the IPUC concluded.--Mark Ohrenschall
From an engineering standpoint, it looks like full steam ahead for the proposed Raft River Geothermal Project in southern Idaho, which could be the first commercial-scale geothermal power producer in the Northwest.
Boise-based U.S. Geothermal announced in mid-May that all five Raft River production wells were open and ready for flow testing to determine their exact electrical production capacity, estimated by geothermal engineering contractor GeothermEx to be as much as 17 megawatts.
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The findings will help the company design an air-cooled, closed-cycle plant at the Cassia County site, which U.S. Geothermal hopes to start operating in 2006.
But recently failed negotiations with Idaho Power over a 10-MW, 20-year power purchase agreement under federal Public Utility Regulatory Policies Act (PURPA) rules have complicated the situation.
Meanwhile, another Idaho geothermal developer--Idatherm--has planned to start drilling wells for its proposed venture near Idaho Falls.
Power Purchase Issues
U.S. Geothermal in late April filed a complaint with the Idaho Public Utilities Commission, contending that "Idaho Power is insistent on three unreasonable and unjust provisions in the proposed power purchase agreement."
One key issue is that Idaho Power wants the ability to terminate its contract if state law is changed to allows retail electric deregulation. "If that clause is in the [power purchase agreement] we will not be able to finance the project," Doug Glaspey, the company's chief executive officer, told Con.WEB.
Idaho Power also would levy "extreme financial penalties," said the complaint, if U.S. Geothermal's total output in any month falls below 90 percent, or above 110 percent, of projected output. The investor-owned utility declines to buy an annual average of 10 MW at non-levelized posted rates approved by the commission. Idaho Power said it will purchase a maximum of 10 MW per hour at posted rates, the complaint said.
In an official response, Idaho Power acknowledged discussions and contract draft exchanges with U.S. Geothermal, but denied the firm's key complaints.
The IPUC has received a similar complaint against Idaho Power by two would-be QF wind developers, who object to the proposed shortfall/surplus provisions. The utility responded with a similar denial.
The commission could decide on these complaints this summer, IPUC staffer Rick Sterling told Con.WEB.
These raise important issues regarding utility purchases from QF producers, he said.
Idaho Power is beginning to view QF contracts as similar to conventional power sales agreements, which typically include penalties for non-deliveries, according to Sterling. This is seen as particularly applicable to intermittent wind power.
Meanwhile, he said, more QF proposals have come in since the IPUC recently raised the eligibility threshold for published avoided-cost rates from 1 MW to 10 MW, and stretched contract terms to 20 years.
PURPA was intended to advance non-utility power generation, but, Sterling said, many implementation details are left to the states. "What we've had here in Idaho, most of the time historically, has been pretty promotional. We've got a lot more PURPA projects than most of the surrounding states."
How the commission rules on these cases could affect development of smaller renewables projects in Idaho, he said.
Idaho Power has reached agreements with several smaller-scale renewable power producers on contracts virtually identical to those now being challenged, including one for power from a 9-MW-capacity wind farm in Montana (see related story). Commissioners approved those deals, but made clear they did not set any precedents.
In addition to this proposed venture, U.S. Geothermal responded to PacifiCorp's recent solicitation for up to 1,100 MW of additional renewables with a proposed 20-MW plant, also at Raft River. GeothermEx estimates the Raft River site carries a total potential for as much as 90 MW.
Idatherm Geothermal
Also in southern Idaho, Idaho Falls-based Idatherm has planned to begin drilling the first of three wells in the Willow Creek area southeast of Idaho Falls, where 480-degree water was found at reachable depths in the late 1970s. Idatherm exploration manager Carl Austin said he believes each well would generate 10 MW, in an area with at least 100 MW potential. He said Idatherm will gain a clearer picture of potential capacity once drilling commences.
The company also plans to drill in about a year in the China Cap area of southeastern Idaho, where it holds a lease in an area with up to 50 MW potential capacity, Austin said.
Federal legislation may boost the prospects for these and other geothermal ventures.
Karl Gawell, executive director of the Geothermal Energy Association, said he is optimistic Congress will soon pass federal energy tax legislation--recently approved in the Senate--that would extend a 10-year federal production tax credit of 1.8 cents per KWh to geothermal power, for projects placed into service in 2005 or 2006.
"If this bill passes, you will see new geothermal projects," he said.--Garrett Hering (Mark Ohrenschall contributed to this article)
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Idaho Power's new approach to energy purchase contracts with small-scale power producers has drawn a rebuke from the Idaho Public Utilities Commission, which grudgingly approved a 20-year deal with a 17.5-megawatt-capacity biomass power plant despite the utility's failure to fully follow IPUC procedures for setting power prices.
The generating facility will produce power from wood waste and other renewable materials at an old Boise Cascade plant location near Emmett. Renewable Energy of Idaho plans to design, construct and operate the facility. Idaho Power will pay for the generated power based largely on forward market prices and its recent power purchase contracts.
Although the commission earlier approved two contracts that used the utility's new approach for wind energy (see related story) and run-of-river hydropower, neither exceeded the 10 MW cap on power purchases from eligible facilities that triggers specific costing procedures set by the state.
Biomass Power Purchase
The 1978 federal Public Utility Regulatory Policies Act requires utilities to buy power from so-called "qualifying facilities" at rates and conditions set by state commissions.
Idaho limits QF output qualifying for PURPA rates to 10 MW or less. QF power above that threshold must be priced with a specific cost model to determine a rate that the company, the renewable project and customers find reasonable, as described in a 1996 IPUC order.
For the biomass power, Idaho Power negotiated a contract based primarily on forward market prices and the utility's recent power purchase contracts. Idaho Power said it did not have sufficient experience using its AURORA electric price forecasting model, and that Renewable Energy faced severe time constraints to start the project while it was still viable.
The commission ultimately approved the agreement--despite Idaho Power's failure to use the approved costing method--because it deemed the negotiated rate to be reasonable.
The May 4 commission order stated Renewable Energy was seeking separate sites to set up two QF facilities--one 10 MW, the other 7 MW--to circumvent regulatory issues for 10-MW-plus power. It contends the poorer economics of decentralized operations would increase the utility's payments by $25 million over the 20-year contract period.
The commissioners also said they did not want the venture to go bust because of Idaho Power's failure to follow previous commission orders. "What is persuasive in this case is the unfairness of holding the project hostage" because the utility failed to follow procedures, they wrote. "We regret that the company has placed Renewable Energy, staff and the commission in this position."
The company's failure to use approved methodologies, IPUC wrote, is "unacceptable and inexcusable." Commissioners said it would not set a precedent for future cases.
IPUC warned Idaho Power that future disregard of the procedure would result in contracts regarded as voluntary purchases not subject to full cost recovery from customers, rather than mandated purchases under PURPA. Commissioners urged Idaho Power to open a case to revise the methodology, if utility officials think it's no longer valid.--Rick Adair
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"Welcome to saving the world."
That's how energy programs director Roger Ebbage greets new students in the Energy Management Program at Lane Community College near Eugene.
EMP students can save the world--or at least make a contribution--by learning and using the knowledge gained in this two-year program, which offers associate of applied science degrees for energy management technicians and--new this school year--an option for renewable energy technicians.
Many EMP students indeed have moved on to make a difference for an array of energy-related organizations, from utilities and government agencies to myriad private-sector firms.
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| Reid Hart makes a point to EMP students. (Photo by Mark Ohrenschall) |
Despite the lofty ideal expressed by Ebbage, EMP is no fuzzy, green-dreaming exercise.
It's a professional, technical program--part of Lane's science department--in which students are immersed in the complexities of building energy systems and renewable energy technologies. The objective is preparing students for employment, whether they are traditional college-age youth or older students intent on a new career direction.
"All in all, I think it's a really well-set program that does train people for a broad range of possible jobs," said Reid Hart, an EMP faculty member and advisor who works for Eugene Water & Electric Board's energy management department.
EMP began in 1980 and has educated hundreds of students since, except for a hiatus in the late 1980s and early 1990s. Its vocational focus, curriculum and funding sources have changed over the years, but the program remains one of the longstanding conservation/renewables educational ventures in the Northwest.
"It's a testament to the quality of instruction overall that they're still doing it," said Andy Ekman, a Northwest Energy Efficiency Alliance project coordinator who formerly worked on energy education ventures for Bonneville Power Administration.
Con.WEB takes a look at EMP's history, curriculum and people.
Brief History
Lane's Energy Management Program launched in 1980 when physics professor Alan Gubrud secured a $300,000 grant from the National Science Foundation, Ebbage recounted.
EMP initially focused on residential weatherization and solar water-heating, which offered healthy job markets at the time. But prospects receded later in the decade, and the program shuttered in 1988.
It revived in 1992 with Bonneville Power Administration funding and a revised emphasis on commercial energy analysis, driven by BPA's interest in commercial energy efficiency, according to Ebbage.
This was part of BPA's strategy to develop trained energy conservationists for commercial programs, Ekman recalled.
As Bonneville's three-year funding ended amidst conservation cutbacks, Eugene-area utilities and the college chipped in enough money to keep the program alive, but without a full-time teacher. EMP turned exclusively to local professionals for its faculty, which Ebbage said has brought practical experience to the curriculum.
Also in the mid-1990s, the program shifted to a "generalist" approach to energy management, Ebbage said, eliminating separate emphases for energy technicians and auditors, marketing/sales and facility management. Hart suggested this change, designed to produce students capable of working in different areas.
The program faced a serious crisis in 1997 when Lane, beset by its own funding cuts, announced plans to eliminate EMP. But a three-year Northwest Energy Efficiency Alliance grant enabled EMP to continue with some internal shuffling, Ebbage said. Alliance dollars also helped launch the Northwest Energy Education Institute, which provides training for energy professionals, separately from the Energy Management Program.
In the late 1990s, EWEB began to earmark dollars for EMP from money the utility voluntarily pays to local schools in lieu of property taxes. "We were the happy recipients of their community stewardship," said Ebbage. "They have kept us alive," though scaled back from earlier heydays.
"The efforts Bonneville ... launched seemed to have borne some fruit," said Ekman. "That also speaks to the local utility involvement, especially in Eugene."
EWEB contributions serve local as well as utility interests, Hart said. "We feel we get benefit out of the program, both in terms of the fact we do from time to time hire folks that graduate, and just having those people in our community, in facilities, understanding energy management, makes sense."
He attributed the program's longevity partly to the efforts of Ebbage and earlier leadership. "It takes someone who's interested in keeping the thing rolling," working in the college and community as well as the region. "I think also we do have a high demand for the results down here in Eugene, more of a green focus in our community," although both he and Ebbage make it clear students may have to leave the area to find work in this field.
Where EMP Students Go
Since 1980, several hundred students have enrolled in EMP, including more than 200 since 1992. Ebbage said the program started with high annual numbers, exceeding 30, but declined until a recent post-energy crisis upsurge. The 2003-2004 enrollment was 36.
He acknowledged a "pretty high attrition rate" among EMP students. Some are older, with families, and leave the program to take care of other responsibilities. Some find jobs before graduation, which Ebbage described as "a good problem ... The intent is for a professional, technical program to give people an education so they can go directly from school to work."
Former EMP students are found in a variety of organizations and occupations.
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| Two EMP students examine a light. (Photo by Mark Ohrenshall) |
An informal survey of 1992-1997 EMP graduates found 42 percent landed their first post-school job with private energy-related concenrs, while 33 percent entered the public-sector energy arena. A quarter were in unrelated fields or continuing their education.
About half of those surveyed, 51 percent, started as energy analysts while 43 percent began in various building trades and 6 percent worked in facilities management.
Ebbage share three anecdotal examples of EMP students and their subsequent career paths.
One student, who after graduation had been working two full-time jobs to support his family, was tipped about a job opening with an Arizone electric cooperative. He now is "happy as a clam" as the utility's energy management staff, said Ebbage.
Another student had found work with an HVAC contractor in California, shifting into the company's combined heat and power plant division. She recently was hired by the U.S. Environmental Protection Agency in Washington, D.C. to help promote combined heat and power applications through public/private partnerships. " ... thanks for the hundredth time for getting me launched," she wrote Ebbage in a recent e-mail.
Yet another EMP student went to an informational interview at PacifiCorp and wound up hired as a contract energy management employee; he now works full time for the investor-owned utility.
"My commitment to students is they'll get work," Ebbage said--if they follow work-search protocols (such as networking with industry groups), and, depending on the situation, if they are willing to relocate.
What EMP Students Learn
Lane's Energy Management Program now offers tracks for energy management technicians and renewable energy technicians, both of which culminate with two-year associate of applied science degrees.
The renewables option, for which the first class graduates this spring, responds to a "vibrant job market" for solar electric and solar water-heating systems, Ebbage said. Rising numbers of installations, abundant financial incentive programs, declining costs and increased efficiencies are evidence of solar's promise. Residential wind power is "not really a viable market yet," he said, while commercial-scale wind projects generally hire experienced electricians and other tradespeople. "So we've held off on the wind" and focused on solar, Ebbage said.
First-year courses are identical for energy management and renewables tracks, the college catalog shows. Offerings include energy-related classes (such as introductory energy management, residential/light commercial analysis, lighting basics and energy efficient methods), as well as intermediate algebra, English composition and technical report writing.
Second-year offerings for energy management move into analyses of energy investments, commercial energy use, energy accounting, controls strategies and building energy simulations. Renewables students learn about solar design and installation.
Energy Schooling
A Con.WEB reporter visited Lane Jan. 15 and observed two second-year EMP classes: energy controls strategies, taught by Hart, an EWEB energy management commercial engineering supervisor; and commercial energy use analysis, instructed by Mike Hatten, a principal engineer for SOLARC Architecture and Engineering in Eugene.
Hart's class began with a technical discussion touching on thermostats, temperature differentials and setpoints, among other items.
Next came a segment on timing of HVAC controls. "We want people to be comfortable, but do we want the mice in the building to be comfortable at 2 in the morning? Probably not," he advised students.
Hart delved into different types and methods of time controls--"You get into commercial buildings, and a bunch of fans, pumps, motors often run all the time unless they're hooked into these control systems."
He mentioned accommodating occupancy patterns of buildings, such as people working weekends and nights in offices.
One way to reduce energy consumption is through a "fixed optimum start," in which night setback temperatures are gradually and incrementally raised from, say, 3 a.m. to 6 a.m., at which time the setpoint is reached.
Hart detailed how to calculate energy savings through the "equivalent full-load-hour method," comparing percentage loads at different times.
Another topic was duty cycling, or running HVAC systems a short duration every so often (perhaps five minutes out of every 30) to maintain building ventilation. This strategy is sometimes criticized for shortening the lifespan of electric relays, but Hart said it can be a suitable appoach, particularly for existing buildings.
A hands-on lab session, involving relays, thermostats and time clocks among other equipment, concluded the nearly three-hour class.
Hatten's class on commercial energy use analysis gathered that afternoon for a walk-through at Lane's downtown Eugene facility.
"Have your detective hats on from this point forward," Hatten told the students, whose scoping mission for the day would lead toward a full-scale commercial energy audit by the quarter's end.
Starting in a conference room, Hatten pulled out a flicker checker, which discovered the presence of magnetic ballasts for lighting. Also noted were incandescent downlights for a chalkboard and a retrofitted light-emitting diode (LED) exit sign--mixed measures for energy efficiency. The conference room also is its own thermal control zone, which Hatten said makes sense for occasionally crowded spaces.
An adjoining mechanical room revealed variable air volume fan-powered thermal units for the first floor. Hatten suggested students look for operations and maintenance opportunities in mechanical rooms, such as unusual noises; shortly, he noted hissing sounds in the building, a sign of leaky air ducts.
Up on the roof were several exhaust fans. Keep an eye out for solar collector sites, Hatten said. A raccoon scurried across the roof, apparently oblivious to its energy features.
Below the roof area were found time controls, which Hatten speculated could be for lights.
"Figure where the air is moving," he advised, standing in another mechanical room. For example, a closed damper indicates return air is being exhausted. He also pointed out various water pipes and valves, and direct digital controls for fans; pneumatic controls have likely been abandoned.
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| Mike Hatten talks with EMP students during a building walk-through in downtown Eugene. (Photo by Mark Ohrenschall) |
Moving along, the class came upon a janitor's room with lights ablaze. "Occupancy sensors might be an option," Hatten wryly noted.
Students peered into classrooms, bathrooms and lab rooms to investigate lighting, and found a mix of T-12 and T-8 fluorescent lamps, along with some reflectors and diffusers.
Computers were turned off in the computer lab.
Some vending machines had VendingMiser installations, but not all, which Hatten raised as an energy-saving opportunity.
The basement--a dirty, musty space with odd smells and masses of exposed piping--featured a chiller, several compressors and two water heaters, with recirculating pumps, for potable water. Hatten pointed out some of the air and water system details, before sending the students outside, near the end of class, for a look at windows, walls and exterior lights.
EMP Students
Students enroll in EMP from a diversity of backgrounds, interests and ages, as interviews with several students revealed.
Sarah Helmers has a brother and friends who have gone through EMP; she also gravitated toward the program "because it fits in with my own personal interests and skills," she said.
A longtime bicyling industry worker in Eugene, she's mechanically adept and, at age 45, is seeking less physically taxing work. She expresses a keen interest in energy issues, and finds herself motivated to reduce energy waste.
Helmers also appreciates the vocational nature of EMP. "One of the things that motivates me is that there is actually a career at the end of the program. Unlike many degrees, I have confidence I jump on the path and that's where I'm going." She finds EMP "more intense" than her undergraduate studies at the University of Oregon, where she earned a geography degree.
Classmate Tim Kaiser worked for a small energy services company in Eugene about a quarter-century ago, but it folded and he went into the bicycling business for a couple of decades before deciding to change careers. He thought about engineering, but considered the cost of schooling and his age (49) and opted for EMP, specifically the energy management technician track and its higher entry-level pay than renewables technicians.
"It's a profession that's always going to have a future, at whatever level the current trends will vary," said Kaiser, who intends to move to Canada, where his parents are retired.
Asked about making a difference through energy management, Kaiser said, "In some small way. I have no illusions of grandeur. I leave that to the 20-year-olds," he smiled.
Two first-year students, Erik Westerholm and Rick Crawford, came to EMP after being laid off from their respective jobs.
Westerholm, formerly an aerial photographer, spotted a newspaper advertisement with a person in front of a solar panel, and came to Ebbage's office the day after losing his job. He professed a mix of personal energy idealism and career realism. "Hopefully I'll go out into the marketplace and be paid to do things."
Crawford worked at a plywood mill in Coquille, OR for nearly two decades after high school, before losing his job. "I just took the opportunity to do something new," he said. EMP "fits with my values" and offers career growth potential, with prospects in such areas as renewables installations, sales, education and energy auditing.
Niall and Ali Gartlan moved to Eugene in 2002, from Northern California and Humboldt State University. "We were looking to start our own business in sustainable living, and this seems to be a ... perfect little medium to play into it," said Niall.
The Gartlans manage townhomes and apartments with sustainable design features, such as programmable thermostats, low-flow showerheads and toilets, paints without volatile organic compounds, no carpets or vinyl, and linseed-based flooring in bedrooms. A flier also advertised incentives to buy 100 percent wind power from EWEB's retail program.
"A lot of people are really value-oriented in this class," said Crawford, and they want to live their ideals through energy management and/or renewable energy.--Mark Ohrenschall
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