CWEB.067/July.20.2001
Oregon's electric industry restructuring and public-purposes funding for energy conservation and renewable energy will likely begin next March, five months later than originally scheduled.
Gov. John Kitzhaber was expected to sign legislation approving the delay from Oct. 1 of this year to March 1, 2002. That new date will inaugurate Oregon's version of restructuring, allowing open access to electric suppliers for customers of PacifiCorp and Portland General Electric, along with provisions for regulated cost-of-service rates for investor-owned utility customers.
March 1 also will inaugurate a new era in Oregon's funding of conservation and renewables. Three percent of electric revenues--estimated at several hundred million dollars over the 10-year period established in the legislation--will be earmarked for energy-saving and renewable energy initiatives. Most of these funds will be administered by the fledgling non-profit Energy Trust of Oregon.
Energy Trust board member Jason Eisdorfer called the five-month postponement "a little disappointing. We think that energy efficiency in particular is a real useful tool during this period of uncertain times." Still, he added, the delay "gives the Trust board a little bit of breathing room. We were really struggling with some of the energy crisis stuff. We were really struggling with the uncertainty in the Legislature--how fast to go forward, how far forward we were going . . . And now we have a start date, which is enormously helpful."
Among issues facing the Trust in coming months will be shifting away from utility-funded programs, hiring an executive director and staff, and crafting a strategic plan to guide the agency.
"I'm terribly excited by this whole thing," Eisdorfer said. "Other states are going to be terribly jealous how we do this. We'll have the most efficient and effective delivery system for energy efficiency in the country, and on the renewables side, all kinds of different and interesting and exciting proposals."
Restructuring Debate
The five-month delay emerged out of a long state legislative debate. Kitzhaber signed the original restructuring legislation (Senate Bill 1149) in 1999, but in the intervening two years California's debacle has given pause to many other state restructuring initiatives--even though Oregon's model provided a number of consumer protection features (including cost-of-service rate options) and didn't require utilities to sell their generating resources.
The Oregon House of Representatives approved an 18-month delay in May (see Con.WEB, May 30, 2001), and the state Senate came back with five-month postponement. Kitzhaber "probably didn't want a very long delay, but he wanted to separate it from the rates going up in October," said the governor's natural resources advisor Louise Solliday. She expected the governor to sign the bill; he had not done so as of Con.WEB deadline July 20.
Eisdorfer called the five-month postponement "almost fortuitous . . . It could've been worse."
The Northwest Energy Efficiency Council's July newsletter noted that Oregon restructuring "survived the travails of a tumultuous legislative session. Efforts to defeat the legislation, delay it for 18 months, and to raid the public benefits funds were put off by a committed core of legislators and a coalition of interests that include both energy efficiency and renewable energy interests in the state as well as Oregon industrial customers." NEEC praised Oregon's public-purposes funding as "perhaps the country's most thoughtful model for long term investment in energy efficiency."
Trust acting executive director Marc Smiley and board member John Reynolds outlined their thinking for moving ahead with public-purposes funding: "It is essential to accelerate energy efficiency activities and development of renewable resources quickly, both for long- and short-term reasons," they opined in The Register-Guard newspaper in May. "In the short term, these efforts would have an impact on the current energy shortage. In the long term, we would develop energy independence."
Public Purposes, Energy Trust
Oregon's restructuring law sets aside 3 percent of electricity revenues collected from PGE and PacifiCorp customers for public purposes. These funds will be allocated for new cost-effective conservation and new market transformation (63 percent), above-market costs of new renewables (19 percent), new low-income weatherization (13 percent) and low-income bill payment assistance (5 percent).
The conservation and renewables portion will be overseen by the Energy Trust, which was formally established by the Oregon Public Utility Commission in October 2000 (see Con.WEB, Oct. 31, 2000). In February, the OPUC approved an eight-member board of directors to govern the new organization (see Con.WEB, Feb. 28, 2001).
The Energy Trust board has met regularly and conducted some preparatory work, with the help of Smiley and consultant Ed Sheets as well as with separate advisory committees for conservation and renewables.
One of the biggest issues now will be the transition from utility-funded programs to Energy Trust initiatives, according to board member Tom Foley. "We've discussed with utilities the idea of a transition phase to commit some of the Trust money to continue funding [existing] programs, so we don't have a cliff" in activities before the Trust is fully functioning. The OPUC has already given approval to PGE and PacifiCorp to continue current conservation programs (see Con.WEB, May 30, 2001).
Now that the start of public-purposes funding is set, the Energy Trust board is seeking an executive director. A job announcement and job description went out in mid-July.
In addition, the Energy Trust has circulated a preliminary draft of an interim strategic plan for the non-profit organization. It covers vision, mission, goals, objectives, strategies, activities and values. The board plans a retreat in late July to further discuss strategic planning, according to Foley.
For more information on the executive director position and the draft interim strategic plan, call (503) 493-8888, or send an e-mail to marc@marcsmiley.com. --Mark Ohrenschall [Cindy Simmons contributed to this report]
Compact fluorescent lamp sales have boomed in the Northwest during the energy crisis, by one count increasing by about 75 percent in the year's first quarter compared to the entire last half of 2000.
Resource-efficient clothes washers and energy-saving VendingMi$er devices for vending machines also have grown increasingly popular around the region in recent months.
At the same time, energy efficiency businesses reportedly are not experiencing a uniformly robust marketplace. All the buzz about conservation has yet to translate into a commensurate level of project activity, although some upswing is evident, according to Northwest Energy Efficiency Council executive director Stan Price.
Energy-Efficient Products: Compact Fluorescents, Resource-Efficient Washers, VendingMi$ers
Compact fluorescent lamp installations have been widely touted as a relatively quick, simple and inexpensive way for people to directly respond to the energy crisis.
Sales figure bear out the surging growth of CFLs.
In the last six months of 2000, a total of 294,214 Energy Star-qualifying compact fluorescents were reported sold through the Northwest Energy Efficiency Alliance's Energy Star Residential Lighting program. This represents "strong upward movement, especially in the final months," according to a program sales data report for the period. And it doesn't account for all regional CFL sales, as it lacks data from some retailers and manufacturers and excludes non-Energy Star models.
That regional sales figure--along with wholesale power prices--skyrocketed in the first three months of 2001, to 516,715 CF lamps. Meanwhile, compact fluorescent fixture sales rose from 13,664 in the second half of 2000 to 19,747 in the first quarter of 2001. " . . . these products are selling extremely well in the Northwest," an updated sales data report noted. Most reported sales were recorded in retail chain outlets; Costco and Home Depot stores collectively accounted for about 60 percent of CFL sales.
Sales also have expanded among small and independent retailers, according to My Ton of Ecos Consulting. Jensen Distribution, for example, shipped a few hundred CFLs in December to those types of outlets; within a few months, monthly distribution exceeded 10,000 units. "The coupons [see below] and the energy crisis certainly factored in, but a lot of groundwork was done by NEEA's lighting program to educate retailers on CFLs and the Energy Star program," he said.
Fred Meyer outlets tallied 98,922 sales of CF lamps in the year's first quarter--nearly triple the quantity reported for the last half of 2000. "The hottest selling [energy-efficient product] for us has been the compact fluorescent bulb," company spokesman Rob Boley told Con.WEB in late April, citing "dramatically" higher sales. CFL types "across the entire spectrum" were going fast, although those with incandescent-equivalent wattages of 60 to 100 watts were the most popular, he noted.
A regionwide program launched in early April offers many Northwest electric customers free coupons worth $6 toward the purchase of Energy Star-qualifying compact fluorescents of 13 watts or larger (see Con.WEB, April 30, 2001). Bonneville Power Administration spearheads and funds this energy-saving initiative, and participating Northwest utilities deliver coupons to their customers. More than eight million coupons were circulated by July, according to Marci Sanders of the Alliance.
Portland General Electric reported sales of 80,000 CFLs from coupons during April.
Energy Star-qualifying clothes washer sales also have risen in the region, although not to the same extent as CFLs. The Alliance's Energy Star Home Products program found regional sales increased about 10 percent in December 2000 from the previous December, growing from 2,956 units to 3,285 units. January 2001 sales, though, were virtually identical to January 2000, but about 11 percent higher than January 1999.
Another energy-efficient product has proliferated in the Northwest in recent months: VendingMi$er. These devices power down a vending machine when people aren't around, while keeping drinks cold through periodic automatic repowerings. Energy savings typically range from 40 percent to 60 percent depending on a machine's location, according to Ryan Wood of VendingMi$er manufacturer Bayview Technology.
"The VendingMi$er by itself has good paybacks, good economics, and independent of the energy crisis it would have been a smashing success on the open marketplace," he told Con.WEB in March. "The crisis has accelerated the visibility and the urgency for people to use it as a tool to save energy. Some utilities and customers have latched onto this as a quick, high-visibility solution."
To that point in time, Avista Utilities, Tacoma Power and Snohomish PUD were among Northwest utilities with VendingMi$er programs. In early May, BPA launched an initiative with Bayview to install VendingMi$ers on vending machines in the service territories of participating local utilities. As of late June some 70 utilities had joined.
"Our goal is to put a VendingMi$er on every machine" in the four-state region, an estimated 100,000 installations, Bayview president David Schanin told Con.WEB in early July. The company plans to accomplish this by late 2002 through the BPA initiative, as well as other special arrangements with utilities including Seattle City Light and Eugene Water & Electric Board.
"We've found a lot of cooperation from all the people we work with," he said. Cost-effective energy savings (typically 1,700 kilowatt-hours per year per machine; BPA estimates a levelized cost of 2.4 cents/KWh over a 10-year measure life) are a major selling point, as is the "invisible" nature of the device and the relative ease of mass installations. "There are no losers here," said Schanin. "Nobody really sees any changes, and it benefits everybody involved."
Energy Efficiency Businesses
Conservation has gained a higher stature during the energy crisis (see Con.WEB, Feb. 16, 2001), but this hasn't created a proportional boom for energy efficiency businesses.
"It would be reasonable to suppose that business is at an all-time high," NEEC executive director Price told Con.WEB in April. "After all, the region hasn't experienced this level of concern about energy supply adequacy since the early 1980s. However, many NEEC businesses are reporting that while talking about conservation is at a premium, project activity still lags substantially behind the conversation."
This remained "by and large" true as of mid-July, he later noted, adding, "I think that customers have moved in response to both real rate increases and the significant media coverage of the energy supply crisis."
Utility incentive bonuses for efficiency projects completed this year--including those offered by Seattle City Light and Puget Sound Energy--"are bringing some long-dormant projects to action."
The apparent gap between conservation talk and conservation work has also been noticed by consultant and NEEC board member John Graham. "If you ask a lot of [efficiency] consultants and contractors, what they might often times say is they pick up a lot of messages that the political structure is there [supporting conservation] and the utility structure is there, but there's not as much action as you would expect." His wife asked him: "Why aren't you insanely busy?" The supply side of energy seems to have received more "dialogue and activity" than the demand side, he told Con.WEB in April.
Graham did see growing utility interest in ways of gaining energy savings as a resource. He thinks retail rate increases will spur more conservation activity, as will initiatives such as BPA's conservation/renewables wholesale rate discount and Oregon's public-purposes funding (see related story this issue).
"The voluntary part [conservation effort promoted by governors and utilities] is important," said Graham. At the same time, "We really need to do a lot of projects with the end-use customer level. I find it frustrating there are a lot of engineering studies on cost-effective conservation projects put forward for businesses to look at [that] have not gotten funding; they're sitting on somebody's desk gathering dust. Why aren't more people taking action? The capability is there to get a lot of energy conservation."
Fred Gordon of Pacific Energy Associates, another NEEC board member, has noticed "a lot of [efficiency] businesses going out of business, even this year, due to lack of work." NEEC members "haven't seen any groundswell for general commercial/industrial lighting and HVAC contractors," he told a Council forum in Seattle in early June. "I think there's a lot of latent capability."
The extent of the efficiency market's development depends on "a few very important details," according to Price. "First, can the conservation message that the regional policymakers send change in emphasis from a message of deprivation to one that emphasizes doing more with less? Second, will customers come to understand that while the current energy market chaos will eventually settle down, it will not return to the days of extremely low electricity rates? And, third, will the region design aggressive efficiency program efforts that fully utilize the products and services of energy service providers?" He fears the Northwest could end up with an overcapacity of new power generating resources and yet another abandonment of energy efficiency, causing serious economic damage. "This unfortunate path would ultimately insure that the Pacific Northwest loses its last vestige of regional advantage with regard to electricity prices."
Price also worries that people think the energy crisis is over because of BPA's less-than-expected 46-percent wholesale rate increase and falling power-market prices. "My analogy has been that energy efficiency feels like a tortoise in a hare's race," he said. "Energy efficiency cannot compete with an effort [BPA's load reduction] that nets 2,200 [average megawatts] in a matter of weeks. If energy efficiency has a great year in the region, we might get 150 aMW. The critical difference, of course, is that the 2,200 aMW is achieved largely with negative economic consequences while the 150 aMW provides lower costs and increased regional economic productivity."
The economic benefits of energy efficiency were apparent to Salem, OR-based weatherization contractor Jerry Page, who recently introduced duct testing and sealing as a service. A local newspaper article carried a headline linking duct sealing with lower home energy costs. "The response to this article absolutely floored me," Page wrote to James Mattil of the Climate Crafters program. "We've got about ten requests for audits immediately . . . I felt that this concept of pressure testing would be difficult for most people to understand. I am pleasantly surprised to see that a great many people are adopting the concepts so quickly and easily." --Mark Ohrenschall [Lynn Francisco contributed to this report]
Energy conservation has gained momentum among Northwest public-power utilities in the midst of increasing electricity rates.
New and expanded programs, conservation staff additions, community outreach, internal efficiencies and other means of promoting and accomplishing energy savings were outlined at a public-power utility roundtable June 14 in Salem, OR. Representatives of 14 Oregon and Washington utilities shared conservation notes at the gathering, along with staff from Bonneville Power Administration and the Northwest Energy Efficiency Alliance.
"Busy, very busy," summarized Tim Lammers of Columbia River PUD. His utility plans to enhance residential weatherization and heat-pump programs through BPA's conservation/renewables wholesale rate discount. It also signed up for BPA's VendingMi$er installation initiative. Columbia River offers coupons for compact fluorescent lighting and is developing financial incentives for energy-efficient appliances. And, the Northwest Oregon utility is diligently communicating with customers about rate increases; an energy-savings booklet is part of the program. "We really want to be able to help our customers through it," Lammers said.
The roundtable took place eight days before BPA announced its 46-percent wholesale power rate increase beginning in October--smaller than earlier projections, but still the biggest single percentage boost in Bonneville rates in nearly two decades.
These various conservation efforts discussed at the roundtable are largely intended to help soften the impacts of rising electricity prices. Debra Peters of Okanagon County PUD reported a quadrupling of customer calls and energy audit requests following a recent utility rate increase. "The [PUD] conservation office has been very important recently," she said.
New, Expanded Conservation Programs
One popular demand-side strategy for public-power utilities is participating in assorted BPA conservation initiatives: compact fluorescent coupons, VendingMi$er installations, commercial lighting rebates and Conservation Augmentation were all cited at the roundtable.
ConAug ventures in varying stages of development were listed by Cowlitz PUD, Springfield Utility Board, Midstate Electric Cooperative, Pacific County PUD, Central Lincoln PUD and Emerald PUD. Jim Wellcome of Cowlitz described a ConAug "lost opportunity" industrial project saving 1 million kilowatt-hours, while Jim Dolan of Pacific County reported a broad ConAug agreement for savings in the PUD's residential, commercial and industrial customer sectors.
Rebates and loans for energy-efficient products were also frequently mentioned at the roundtable.
Financial inducements covered the likes of appliances (particularly Energy Star models), water-heaters and heat pumps.
As for loans, Emerald finances heat-pump installations in manufactured homes at 6-percent interest, according to EPUD's Joe Savage. Clark Public Utilities, meanwhile, proposes to drop its interest rates from 5 percent to zero for weatherization and heat-pump loans, while raising efficiency standards to include required duct sealing. The city of Ashland will pay 80 percent of the cost up to $300 for duct sealing or replacement, said Ashland's Cathy Cartmill.
Another way to promote energy-efficient products is to sell them through the utility. Okanogan PUD does so with compact fluorescents, said Peters; a recent shipment of 1,500 CFLs sold out in less than three days. The PUD also has doubled its conservation staff from one to two, noted her new colleague Steve Brown.
Information Age
Many utilities are emphasizing conservation information for their customers, through the written and spoken word.
Utility newsletters are one vehicle for delivering the conservation message. Cowlitz PUD even included CFL discount coupons in its newsletter, according to Wellcome.
Some utilities, including Columbia River PUD and McMinnville Water & Light, are distributing other types of materials emphasizing energy-saving opportunities. McMinnville has put together energy conservation tips for homes and businesses, which it sends to customers who call for energy audits, according to conservation manager David Christie. The utility also plans to hang "high usage warning" door messages on the homes of about 300 of its biggest residential power consumers. Midstate Electric Cooperative is distributing conservation kits with items such as compact fluorescent lamps, low-flow showerheads and faucet aerators, according to Midstate's Teresa Lackey.
Local speaking engagements are another way to communicate with customers about conservation. Utilities spreading the word in this fashion include Salem Electric, Cowlitz PUD, Okanogan PUD and Clark Public Utilities.
Do-It-Yourselfers
Several utilities reported on their own energy-saving initiatives. Salem and Cowlitz, for example, have reduced lighting in their own buildings. "We've found you can do without a lot of lighting without jeopardizing security," said Wellcome.
At McMinnville headquarters, various "low-cost, no-cost" measures have cut energy consumption nearly 50 percent over the past four months in a "fairly new" commercial building, reported Christie. These measures include closing warehouse bay doors in cool weather, turning warehouse unit heaters down to 55 degreees, shutting off half the high-intensity discharge (HID) lighting in the warehouse, reducing water-heater temperatures from 130 degrees to 115 degrees, shutting off unused computer monitors, tuning up heat-pump economizers, and adjusting thermostat set points to 70 degrees for heating, 77 degrees for cooling. Utility employees have not complained about these changes, he later noted.
Among other initiatives shared at the roundtable were Clark's 10-percent credit for residential and business customers who reduce consumption 10 percent or more for July through October compared with the same period last year; a voltage reduction effort at Central Lincoln PUD (from 126 volts to 120 volts at substations, with virtually no impacts); and Ashland's consideration of a $2-per-watt rebate for residential solar photovoltaic systems.--Mark Ohrenschall
[Editor's note: This is the second part in a Con.WEB special report on industrial energy conservation. The first story focused on Northwest industries' increasing attention to conservation. Subsequent stories will examine industrial energy-saving opportunities, programs, resources and case studies.]
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Industrial energy conservation is largely a matter of economics.
Energy efficiency measures can benefit industrial firms by lowering operating costs and improving competitiveness. But spending money to save energy requires a measured decision for most industrial companies.
Oregon-based Henningsen Cold Storage has implemented five energy efficiency projects in the past five years, and three more are pending. "The primary focus we had was to try and increase our bottom line," said engineering services manager Paul Henningsen at a recent Northwest industrial conservation teleconference. He cited increasing competition in his consolidating industry as well as customers seeking lower storage rates as reasons behind the pursuit of energy savings. Electricity (primarily for refrigeration) accounts for 20 percent of his firm's expenses, trailing only labor. "Our goal was to reduce our power requirements [as low as possible] with the greatest return on investment," he said. With help from government and utility sources, the company has reduced its energy consumption 60 percent below the industry average.
Paybacks enter into the equation of industrial conservation, as Henningsen noted. So do other priorities, such as the primacy of production. For many industrials, and especially high-tech firms, reliability is their highest goal for electricity service. Efficiency projects with advantages beyond kilowatt-hour savings are more likely to happen.
Industrial conservation measures commonly face such challenges as internal competition for capital, lack of information and resources, the relative unimportance of energy (for some industrials), and, significantly, the historically low electricity rates in the Northwest.
Rising prices for electricity and natural gas may have lowered these barriers--while also jeopardizing the region's industrial base: as of late June about half the region's industrial load was shut down in the wake of the energy crisis, according to the Northwest Power Planning Council.
Industrial Conservation Economics
The increasing industrial attention to conservation is a classic price-driven response. "Energy, not just electricity, is a much more important input all of a sudden, economically," said Power Council conservation manager Tom Eckman. He calls energy pricing "the major one" of factors influencing industrial conservation.
Indeed, industrial power rates throughout the region are trending upward, although not uniformly.
Bonneville Power Administration in June announced a 46-percent wholesale rate increase effective Oct. 1 for its utility customers, which will translate to retail rate increases of varying amounts. Tacoma Power in December 2000 enacted a temporary 75-percent surcharge for its three largest industrial customers, and 58 percent for other industrials. Clark Public Utilities bumped up its average industrial rates 35 percent in January. Idaho Power raised rates 42 percent for industrial customers in May. Portland General Electric forecasts industrial rate increases of up to 60 percent in October. Some other large Northwest utilities, including Puget Sound Energy, plan to keep their industrial power rates stable for the near future, according to a recent Con.WEB survey.
"Many [industrial firms] realize the energy prices that we have been getting used to in the Northwest might not last forever," energy consultant Steve Dunnivant told Con.WEB in early January, noting a recent surge in calls for industrial plant energy audits.
Tacoma Power energy services account executive Steve Craig agrees. "People understand that efficiency makes sense. Cheaper rates aren't going to last forever." Historically low power rates for industrial customers have offered little financial incentive for efficiency investments, he indicated.
Cost-cutting potential is a prime motivator for industries to pursue energy efficiency. Dunnivant likes to put it in the context of production: "How many more shoes could they make, or gallons of juice could they process, if they had dollars back from the energy they're consuming now and were using it more efficiently?"
Energy savings can provide a competitive advantage, within industries and even within companies. "The cheapest kilowatt-hour or therm is the one we don't use," said David Hawk, energy/natural resources director at Idaho-based agribusiness company J.R. Simplot, speaking to the Northwest Energy Efficiency Alliance board of directors in 1999. "Conservation and energy efficiency are more than just laudable goals. They're necessary for us to compete against a new plant in Canada, necessary for a plant in Pocatello to compete against a plant in Trinidad . . . for the Hermiston plant to compete against Caldwell for the next expansion, the next shipment of French fries to Pacific Rim countries.
"Energy efficiency is competing on a global basis and also competing on a plant basis," said Hawk.
Seattle's Birmingham Steel competes with steel-makers around the world, noted vice president/general manager Ray Lepp at a recent Association of Washington Business environmental conference in Seattle. "Energy costs have really a tremendous impact on our competitiveness," said Lepp. His firm is the largest single customer on Seattle City Light's system, consuming a monthly average of 32,000 megawatts. Birmingham Steel undertook conservation measures (with Seattle's help) as a means to lower costs and increase competitiveness, he said; these have reduced the firms' energy consumption per ton of steel production by more than 10 percent, saving in excess of $100,000 on monthly electric bills, a noticeable number.
"We pay a higher bill than my two major competitors in this area," in Oregon and Utah, Lepp told Con.WEB in January. "The other side effect of being good with utilities is it helps close that gap with my competitors."
Economic Standards for Energy Efficiency
While energy efficiency can provide real economic benefits for industrial customers, they also must pass economic tests. One of the most basic is simple payback for efficiency measures. Standards vary among industries and companies, but it's uncommon to go beyond two to three years, according to industrial energy engineer Gil McCoy of Washington State University's Cooperative Extension Energy Program. That criteria effectively lengthens with rising energy prices, he noted.
Boise Cascade, as one example, has its own corporate guidelines for spending on energy-saving measures. " . . . at a minimum, investments must provide a return on investment meeting the company's cost of capital. Discussions with financial analysts familiar with the paper industry and a review of Boise Cascade's annual report would suggest that a pretax return of 16 percent is needed to justify new capital investment," according to a February 2000 Con.WEB Conversation on Conservation article with Boise Cascade's then-purchasing director Norm Beckert.
These standards can be effectively lowered through financial incentives from utilities and governments, in such forms as rebates and tax credits. "That in many cases is a driver . . . to implementing a project," said Scott Stroup of Airometrix Manufacturing, which makes industrial compressed air flow-testing devices. "In a number of our cases the utility kicks in 10 to 70 percent of the project costs, and that has helped to get the ball rolling, absolutely."
Another important way to roll the energy efficiency ball is to highlight other advantages to a project beyond energy savings. Beckert noted that Boise Cascade financial guidelines are waived if projects are "required to meet safety, environmental compliance or asset protection considerations."
Indeed, for many industrial companies, energy savings are nice--but other benefits of efficiency are often much nicer.
"Historically, I've found out that what closes [a project] wasn't energy efficiency by itself, but either production, safety or environmental" aspects, said Tacoma Power's Craig. "If you can couple that with kilowatt-hour savings, they love it."
Blair Collins, former project coordinator with the Northwest Energy Efficiency Alliance, also stresses the importance of these non-energy benefits. Industrialists "want to do the right thing," he said, but other business needs may take precedence over energy savings. That's where the other advantages of efficiency make a difference. "When you find you have those and can improve productivity or reliability or some other need, energy is part of the game. It's difficult to push purely an energy thing in a region where energy is quite frankly very cheap," he said.
A prime example of multiple benefits from energy efficiency is the Siemens Solar Industries plant in Vancouver, WA. Siemens joined with the Alliance in 1998 to investigate potential energy efficiencies in the plant's super-hot furnaces where silicon is made into ingots. Furnace modifications including added insulation, a new top shield, rearrangement of argon flows and a continuous recharge system reduced electricity consumption 51 percent--they also trimmed argon use 85 percent, increased productivity 20 percent and created higher-quality ingots that produced a 5-percent improvement in the electricity performance of solar cells. (For more information, see an Alliance report.)
Other Industrial Conservation Issues
Other circumstances also affect industrial energy conservation.
One is resources. Industrial firms, like any other institution, only have so much capital (financial and human) to spread around.
"Many people don't understand . . . that even in large companies there's a competition for capital," said industrial consultant Noel Shelton. "The bean-counters hand out capital to that segment of the company that's going to buy them the best future."
Energy efficiency has no special cachet in this internal struggle, according to executive director Ken Canon of Industrial Customers of Northwest Utilities. "It has to compete for dollars [against] all other aspects of production. When a project manager is looking at an industrial conservation proposal, they're looking at it in the broadest of terms. What does it do to our electricity cost savings? That's obviously important. What does it do to maintenance savings? What does it do to the type of product as far as improving the product itself? . . . Are there any environmental improvements that come along with it? They are very broad-minded at looking at ways to justify those types of investments."
In addition to financial considerations, industrial energy efficiency also requires the time and attention of key people, and suitable information.
"We really have to find that person that's in the plant that can be an advocate for this," said Dunnivant. "If you've got one person in the plant that's a key champion for reducing the energy consumption or implementing change, then I think you've got a winner." He also thinks it's critical to find people with sufficient time to devote to efficiency projects.
Stroup often encounters skepticism toward novel approaches--"a generic barrier for all people bringing new ideas into an organization"--but he also believes information can overcome this inherent hesitation. "Basically what I've seen is it's an education process," he said. "When people are shown there are opportunities and they're cost-effective, they'll typically try to get them done. They will go after cost-effective conservation, unless there are some other issues that get in the way, like production or reliability."
Efficiency information, though, can be elusive, according to Canon. "In industry, sometimes what you'll find is that just finding the right information can be a challenge, especially with new technology. Finding good contractors, good consultants, sometimes can be quite a challenge."
WSU's McCoy believes the region's industrial energy conservation infrastructure has shrunk "tremendously" in recent years, with utility program reductions. "We're going to have to undergo a process in the Northwest where we rebuild our conservation delivery infrastructure . . . You need good, trained, experienced industrial auditors to look at compressed air, steam, pneumatic conveying, dryers, all different electrotechnologies; people who understand components but also processes . . . You can't just take somebody and give them a day's worth of training."
Production Rules
Regardless of the industry, the ultimate bottom line is production. That overarching interest influences the way industries look at energy during the power crunch, according to WSU's McCoy. "What we're seeing [from industries] is more questions regarding generation and backup power than we are an increase in questions of conservation. First, they're looking at not going off-line. One day's loss of production can [cost] you more than two decades worth of energy savings for conservation. It really catches their attention big-time."
Power reliability is certainly the highest energy priority for microelectronics firm, according to consultant Chris Robertson, who has worked with such companies. The same is true with many other industrial operations, agreed consultant John Vranizan. "Until recently energy efficiency--particularly electrical energy for industry in the Pacific Northwest--hasn't been very important, and that's simply because it hasn't cost them very much. What's important to them is having electricity available so they can operate."
In the same respect, efficiency projects that improve a plant's reliability can be hugely beneficial, according to Stroup. "If you save somebody an hour of downtime for a reliability issue, that could be worth hundreds of thousands of dollars. The energy conservation measure that did it may only save $5,000. In the end, you don't sell it on energy conservation." --Mark Ohrenschall
Northwest power planners and weather forecasters are not the only ones who have welcomed the region's mild (at least through June) summer. I have, too.
Our 10-year-old heat pump has died, leaving my family with no air conditioning until we figure out which replacement option makes the most sense: repair the condenser on the old unit, put in a new heat pump, or go to a high-efficiency gas furnace and separate air conditioner.
This should not be a tough decision, and it certainly shouldn't take a long time to make. While it's been unseasonably un-hot here in Walla Walla through late June, come August we will undoubtedly see our share of above-100-degree days. In addition, if we don't make a decision soon, whatever we decide on won't get installed until next year. This is not Seattle or Portland; anything involving a contractor of any sort takes more time here in southeastern Washington.
Since I work in the energy industry and know something about our current power situation and the existence of high-efficiency HVAC equipment, I have no excuse not to opt for the most efficient thing out there. But knowing about this stuff and finding the actual hardware are two different matters.
Heat Pump or Gas/Electric?
The more research I try to do, the more appealing the easy route--condenser replacement--begins to look, even though that new condenser would only have a one-year warranty. And even with a new condenser, the heat pump is still 10 years old and relatively inefficient compared to newer models. So from an energy standpoint, the easy route is not the best route. What I really have to decide is whether to stick with the heat pump or switch to natural gas space-heating and electric air conditioning.
A big point of debate is whether heat pump technology is really suited for Walla Walla, where winter temperatures drop low enough that the backup heat is often used. Some technicians say heat pumps are inefficient below 40 degrees; others say below 30 degrees. In any case, the temperature here regularly drops into the 20s and below on winter nights. And besides, shouldn't I put my money where my mouth is and switch to more efficient direct use of natural gas for space heating, rather than using electricity to do the same job?
But regardless of my personal commitment to Do the Right Thing, I also have to account for how that action affects our budget and whether the payback period makes sense. We have a couple of kids to get through college, after all.
If this were the 1980s, I'd call my local electric and gas utilities and ask their advice. But my electric utility does not provide that kind of information any more, and the gas company--which actually still has a local office--only has information supplied from local vendors. I finally called a neighbor who works at a nearby utility (not my service provider) with nothing to gain from my choosing electricity or natural gas.
"Ground-source heat pumps are the most efficient," he told me, "But they are real expensive, and you'd have to tear up your yard." Didn't sound like a promising option. "Newer air-source heat pumps are more energy-efficient than they used to be, but this still isn't the best climate for them. I'd switch to natural gas."
That's actually the advice I've received from two HVAC vendors who carry heat pumps as well as natural gas furnaces. (Is the profit margin higher on gas furnaces? How do I find out?) A third vendor was more positive about heat pumps, but also actually suggested installing a less efficient natural gas furnace (80 AFUE [Average Fuel Use Efficiency] versus 90 AFUE) because they have fewer maintenance problems than the high efficiency units.
I got the same cautionary advice from a local builder, who said he installs the 80 AFUE units because the 90 AFUE units have required more after-hours service. This information was disconcerting. A consumer who pays more for energy efficiency should not be penalized by touchy technology. No matter your commitment to efficiency, you really don't want your furnace to fail on New Year's Eve.
The builder also agreed with my neighbor about the ground-source heat pump as the most efficient option . . . and the most expensive. Then he threw out a new approach: install a high efficiency heat pump AND a natural gas furnace; use the heat pump for air conditioning and the furnace for heating, but switch to the heat pump when it's 55 degrees or warmer.
My Reeling Head
At this point my head is reeling. And I haven't even gotten into SEER ratings or HSPF factors--terms I learned on the Energy Star Web site.
Looking for the Energy Star label, an accepted sign of energy efficiency, ought to be a good shortcut. But the labels aren't always easy to find. I stopped by one HVAC dealership and browsed through the brochures on Lennox products. One of them carried the familiar logo, but the others didn't have the mark, even though they qualified. And while the Energy Star Web site is helpful, the list of qualifying products is overwhelming--either long and alphabetical or divided by categories I don't know, such as heating capacity/tonnage. (Perhaps my current heat pump is oversized. How do I find out?)
While my head may be reeling, at this point I imagine many of you readers are reaching your boredom limit. But before turning to a more scintillating Con.WEB story, consider this: if I am having this much difficulty figuring out which heating system to install, what about those average consumers who don't know much about energy efficiency? They are more likely to buy the least expensive and less efficient model and not ask many questions.
Several vendors confirmed that energy efficiency rarely comes up in conversations with customers; indeed, one vendor first gave me a bid for the standard air conditioner and furnace rather than the more efficient models. He said most of his customers want to minimize what they have to pay him and don't really think about what they might end up paying for electricity or gas over the life of the equipment--even though those costs might end up being more. If only there were a better way to work that information into the bid.
Give Me an Energy Audit!
What I really want, though, is a good old-fashioned energy audit, like the utilities used to provide in the early 1980s. Heck, I'd PAY for one. When I consider all the time I've spent trying to figure out what to do, and how an experienced energy auditor could have handled it all for me in a couple of hours, the opportunity costs definitely point to the energy audit being the better deal. Maybe as utilities talk about being more focused on customer service, they'll start offering energy audits again.
Meanwhile, if anyone has any sage advice to aid my consumer confusion, please e-mail me at Energy NewsData: jnoland@newsdata.com.
And stay tuned.--Jude Noland
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