A Hero’s Tribute

By Mark Glaess, Manager
Minnesota Rural Electric Association

Andy Reichwein was among lineworkers from the Minnesota-based Connexus Energy who joined thousands of other linemen from across the United States to restore power to storm-stricken co-ops earlier this month. The brotherhood that is the nation’s lineworkers left their homes, left their families, left their attendant tasks to attend to the hundreds of thousands of co-op members located in Arkansas, Missouri and Kentucky who saw electric lines littering roads and ditches. No national headlines hail the sacrifices Andy made, nor do these linemen ask for such.

John Thain, by comparison, is the former Chairman of the New York Stock Exchange and the last CEO and Board Chairman of Merrill Lynch. Among Thain’s notable accomplishments were losses exceeding $25 billion yet paying $4 billion in bonuses, including pocketing $10 million and dropping $1.2 million to spiff his office. Those deft corporate decisions netted him an invitation from the New York Attorney General Andrew Cuomo. Cuomo likely expressed the same disbelief, as did Congress, when the CEOs of Chrysler, Ford and General Motors taxied into Washington D.C. on their individual corporate jets to plead for $25 billion in loans to reinvigorate the companies they drove into the abyss.

The hundreds of thousands of rural electric consumers who lost light, heat, and fresh food in the Southeast are among America’s less fortunate. Minnesota’s electric cooperative members, for example, record a per capita income 20% below the state average. It’s likely a sadly similar statistic in your state too. Through the Rural Economic Development Loan and Grant program, the nation’s co-ops create jobs and opportunities. The National Rural Utilities Cooperative Finance Corporation, or CFC, by the way, made that program available obtaining, with National Rural Electric Cooperative Association’s assistance, federal guarantee of their loans with the interest savings going to create the $1 billion loan/grant program.

Matthew 23 records the Sermon on the Mount where Jesus observes as you have done “to the least of them, you have done to me.” That becomes our calling, and the calling of each electric cooperative. We are to take care of the poor. That’s the reason we promote programs designed to assist the least of them. It’s also the reason why NRECA framed “Our Energy, Our Future,” to clearly state the co-op’s case for affordability in the face of climate change legislation and other cost pressures on electric rates. FDR also makes the case for this co-op philosophy when he once observed: “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide for those who have little.”

John Thain and others lost billions of dollars of those he never knew. Andy Reichwein died while trying to restore electricity to folks he never knew. A tragic accident snapped the pole Andy was straddling sending him to the ground along with a transformer which hit him in the head. Andy leaves behind a wife, a four-year old daughter and friends who grieve his death. The bucket trucks that accompanied this fine young man to his funeral also signified the depth of our program’s convictions – raising high the poles to carry the current providing both light and hope to the least of them. That also makes Andy Reichwein among the very best of them.

Let's all pause to think hard about this.

It's all about energy and infrastructure. Finally.

Okay, it may not be ALL about energy and infrastructure, but finally it looks like we've got people paying attention to infrastructure engineering rather than just financial engineering. President-elect Obama's stimulus plan appears to go in the right direction. I'd argue it's not enough, of course, and that we need more on research and development and more for energy storage in particular (to support those renewables!), but it's something. Here are some of the details (list from WSJ):


Highlights of Economic Recovery Plan
Spending

Energy
$32 billion Funding for "smart electricity grid" to reduce waste
$20 billion + Renewable energy tax cuts and a tax credit for research and development on energy-related work, and a multiyear extension of renewable energy production tax credit
$6 billion Funding to weatherize modest-income homes


Science and Technology
$10 billion Science facilities
$6 billion High-speed Internet access for rural and underserved areas


Infrastructure
$32 billion Transportation projects
$31 billion Construction and repair of federal buildings and other public infrastructure
$19 billion Water projects
$10 billion Rail and mass transit projects

Attention Obama and McCain: Electricity Matters!

I've tried numerous times to get through to the candidates, but so far, none of them are knocking at my door seeking my advice. I've sent books to every member of Congress who sits on a committee that has anything to do with electricity and infrastructure. I've traveled across the country speaking to groups large and small talking about the state of the electricity industry, and I know there are many out there who share my concerns about our electricity future.

I also know there are many pressing issues on our candidates' and current legislators' minds, but electricity must be considered a "front and center" priority if we are to grow our economy, maintain our national security, and address energy independence and global climate change.

So, I've put together a set of talking points. Whether you agree or not with every single point, share them with friends and colleagues, send them to your elected representatives, and work to get the candidates--and America--talking about electricity.

Talking Points

:: It’s time to talk electricity!
Because during a time of political change everyone will be talking about:
Climate change energy independence, skyrocketing costs for commodity energy sources, inadequate transmission infrastructure, and unrealistic demands for renewables and conservation

:: Electricity is absolutely critical to our economy and to our modern lifestyles.
- Nothing substitutes for its convenience, cleanliness (at the point of use), and versatility.
- It is the product at the base of our entire infrastructure, and therefore a critical part of our national security. Electricity’s role in national security, whether we’re talking about a terrorist attack or a natural disaster like Katrina, gets little attention from inside or outside the industry.

:: Electricity is the one energy that is Invisible—Except When It Isn’t There.
- Nobody cares or thinks about electricity until their lights go out or their rates skyrocket.
- When you don’t know the cost of something, you can’t understand it’s value and you have no incentive to regulate/change your patterns of consumption.

:: When it comes to infrastructure, Americans suffer from the long-term consequences of short-term thinking.
- We pass short-term palliatives (ethanol, wind production tax credits for two years, etc) and lurch from election cycle to election cycle instead of adhering to a long-term policy or plan, granted one that needs to be modified as we go.

:: When it comes to infrastructure, Americans suffer from the long-term consequences of short-term thinking.
- The industry has always been structured to pay more attention to supply than demand, and to pay more attention to building the “next thing” rather than achieving superior performance from the “last thing.”
:: Transmission, although critical to every kind of electricity generation and distribution, is becoming an example of the “tragedy of the commons.”
- We are setting ourselves up for unrealistic expectations for wind because many of wind depends on transmission, storage and many of its strongest proponents can’t seem to distinguish between a kilowatt and a kilowatt-hour.

:: Energy storage is essential!
- Optimizing our existing infrastructure and ensuring a viable and cost-effective pathway for large-scale renewable energy requires a new piece of the production and delivery value chain, energy storage, accompanied by a supply chain that doesn’t even exist yet.

:: We need infrastructure engineering—not financial engineering!
- Our electricity infrastructure has become the victim of financial engineering. Our ability to manage assets diminishes as our infatuation with managing balance sheets grows.

:: The solution to addressing global warming is elegantly simple.
- Use nuclear power combined with more renewable energy supported by energy storage technologies to move away from coal for electricity production and toward clean, renewable energy for electric vehicles.

Here’s the “How to Prevent Lights Out” Plan:
(1) Expand our nuclear power capacity with nuclear fuel reprocessing. Nuclear is the most economical way to meet the constraints we face on the production side of the electricity value chain and it helps address global warming and helps speed the move from petroleum-based transportation to electricity-based transportation.

(2) Fix and expand the transmission grid. In the book I try to convey how downright dysfunctional transmission seems to be right now. We should not have a grid characteristic of the “third world.” And that’s what engineers who know it well call it, not just me. A chain is only as good at its weakest link and for electricity production and delivery, that link is transmission.

(3) Make sure every ratepayer has an advanced meter that displays the price of electricity (preferably on their refrigerator!) and how much is being consumed, and allows utilities to interact with users to manage demand. We cannot successfully manage electricity demand without these consumer tools, and this day to day knowledge of the value of the product. These meters must become two-way interactive point devices for automating demand management.

(4) Limit Liquefied Natural Gas (LNG) imports, or better yet, abandon the idea for electricity production. Do we really want the bedrock of our economy, and our infrastructure, subjected to the same geopolitical vagaries as petroleum and that boasts a 20x more potent warming agent than carbon dioxide?

(5) Use coal intelligently by extracting its full value of coal at the mine site. We must learn to think of electricity as one of several byproducts of coal and mine-mouth processing facilities as coal refineries. Shipping coal that is mostly water thousands of miles across the country doesn’t make sense.

(6) Fund a massive development program for electricity storage. As important as renewable energy sources (solar and wind) are to carbon-free electricity and to moving to electric vehicles powered by renewable sources, they will only gain a minimum of traction and will be subsidized into eternity if we don’t solve the problem of intermittency, and get the public to understand the difference between a kilowatt and a kilowatt-hour. And, they will wreak havoc on our transmission and distribution grid. Electricity storage has many other benefits, too; they facilitate electricity markets (all other commodities make use of storage to moderate supply and demand), make the transmission grid more robust, and improve our infrastructure security (think strategic petroleum reserve).

(7) Shift money and emphasis from the left side (the production side) of the value chain, to the right side, the consumption or demand side. Markets and deregulation really could work and help manage demand, but they have to be instituted far more intelligently than the last time we went through this.

(8) Federalize the backbone of the electricity infrastructure in the same way almost every other critical industry—health care, banking, airlines, home mortgages, transportation, etc—is backstopped by the federal government (e.g. consider only the impending bailout of Fannie Mae and Freddie Mac)

(9) Make electricity part of everyday discourse. Let’s not get bent out of shape just when the lights go out. If everyone sustains their engagement with this unique, ubiquitous and ever so valuable product, then we will surely have a more rational future with it. At the very least, it needs to be as important as gasoline prices and petroleum in public and political discourse.

(10) Concentrate on infrastructure engineering—not financial engineering! Increasingly, the destiny of the electricity industry is controlled by the financial industry on shorter and shorter time horizons. This is exactly opposite what you want for sensible, long-term infrastructure investment.

Whether you agree with all the points or not, the important thing is to get America talking about electricity infrastructure. Please help get America talking...

What happens now?

Most people outside the electricity industry are startled to learn that it is the largest industry in America. When you say "energy," most people think ExxonMobile--not the electricity cooperative on the edge of town. As I've railed so many times, people just don't "think" about electricity.

Now, more than ever, it's time to start thinking--and thinking hard. The electricity industry relies on debt to finance at least half of the cost of building power plants. So, what happens to the electricity industry now that free-flowing credit has come to a screeching halt?

What politician will want to add the costs of carbon to the price of anything today?

How will wind projects fare? The same firms that have been financing and developing these projects are the same ones we're reading about on the front pages of our favorite news outlets, the same ones begging to get their hands in the Fed's pockets.

Both John McCain and Barack Obama talk about the need for new nuclear power--McCain talks about a building 45 new plants by 2030. But, if building one new plant means borrowing millions of dollars for construction costs, how is even one new plant going to get off the ground? Right now, businesses can't get short-term loans to cover payroll, let alone millions for such a major construction project.

If investors were skittish about financing the debt for nuclear plants six months ago, how do those firms feel today. Investors are poorer today (as I type the market is down 305 pts at 8273) and many about to become quasi-socialized. Oh, and now that the Fed is guaranteeing all of the bad debt from the mortgage business financial engineering, it just adds that to the growing deficit from fighting wars on two fronts, and not getting any control over spending. The only "bright" spot is that as consumers stop buying foreign goods, our deficit will shrink...but, on the other hand, as American consumers stop buying foreign goods, the whole global economy shrinks....)In other words, the government is broke unless the Fed's pocket stretches halfway around the world to China and Japan. But in our "world is flat" global economy, when we tank they, tank too.

The bottom line is, the electricity industry one of, if not THE, most asset intensive industry in the country and without debt financing, nothing new gets built.

Here's what I think:

(1) Regulated utilities are king--they can still raise money by raising rates and secure their long-term investment needs,

(2) companies who own assets like power plants or gas reserves are princes-when all of the debt inflated value is wiped out, they still own some real things with value,

(3) competition in electricity is dead-even Warren Buffet is investing in utilities because they are regulated, stable income producing businesses,

(4) the financial engineers, who move from one source of trading volatility to another, will move to carbon trading. In five to 10 years, that will be the next Wall Street scandal,

(5) we will likely see a massive infrastructure building program here, not unlike the 1930s, and, signaling the final death knell of globalization--at least for electricity--the government will direct this program towards energy independence--nuclear, clean coal, wind, solar, coal-based refineries, ethanol, and all the rest will be subsidized to the hilt.

The grand experiment in privatization, deregulation, unfettered free markets, etc, is over.

It’s time to talk electricity!

This election cycle it is critical to get the candidates talking about the future of electricity in America.

Electricity is SO fundamental to our economy and our modern way of life that most people don't even think about it. The industry has done such a good job that today we have (relatively) affordable, reliable, robust power available to homes and businesses. But, if we don't address the challenges facing the industry, the future of affordable, reliable, and robust power may not be secure. The challenges are many, the solutions complex. Climate change policy, energy independence, skyrocketing commodity costs, inadequate transmission infrastructure, incessant demands for renewable energy, and conservation all affect electricity policy, and become de facto back-door electricity policy.

The future of our economic well-being and competitiveness depends on crafting a smart electricity policy--not only reacting to our challenges with a hodgepodge mess of initiatives that are neither well thought out or feasible. So, right now, take the time to write a letter to the editor, craft an Op-Ed piece, write or call your elected representatives and make your voice heard!

Talking Points on our Electricity Future

:: Electricity is absolutely critical to our economy and to our modern lifestyles.
- We have to manage the impact of all of these environmental and economic pressures on our electricity infrastructure.
- Nothing substitutes for its convenience, cleanliness (at the point of use), and versatility.
- It supported our entire infrastructure, from server farms to water supply, and therefore is a critical part of our national security.


:: Electricity is the one energy that is Invisible—Except When It Isn’t There.
- Voters and ratepayers have to think about electricity before their lights go out or their rates skyrocket.
- Unlike gasoline, consumers don’t see the price of electricity, so they cannot respond viscerally to it. When you don’t know the cost of something, you can’t understand its value and you have little incentive to change behavior. Right now, electricity rates are escalating everywhere but most of this is to pay for the excesses and the deficiencies of past deregulatory and competition programs! Future rate shock will pale in comparison and we won’t be paying for the right things unless voters get engaged now!

:: When it comes to infrastructure, Americans suffer from the long-term consequences of short-term thinking.
- We pass short-term palliatives (ethanol, wind production tax credits for two years, etc), or legislation that spends more time in court than in practice, and we lurch from election cycle to election cycle catering to narrow special interests instead of adhering to a flexible but long-term policy or plan.

:: Transmission, although critical to every kind of electricity generation and distribution, is becoming an example of the “tragedy of the commons.”
- We are setting ourselves up for unrealistic expectations for wind because many of wind depends on more transmission
- Transmission is the smallest component of value in the production and delivery value chain but represents the greatest investment and infrastructure gap for long-term reliability, security, and price stability.
- Transmission knits our national grid together but a terrorist attack on a key interconnecting substation can black out half the country. We must protect the grid for what it is, the linchpin for survival and comfort.

:: Energy storage is essential!
- Optimizing our existing infrastructure and ensuring a viable and cost-effective pathway for large-scale renewable energy requires a new piece of the production and delivery value chain, energy storage, which requires substantial RD&D funding.

:: We need infrastructure engineering—not financial engineering!
- Our electricity infrastructure has become the victim of financial engineering. Our ability to manage assets diminishes as our infatuation with managing balance sheets grows. Financial engineers have been extracting money from the nation’s electricity infrastructure, and little of it is put back to work.

: We must begin to address global warming now! Addressing global warming can be elegantly simple.
- Use nuclear power combined with more renewable energy supported by energy storage technologies (both carbon-free sources) to move away from fossil fuels for electricity production and revamp the transportation infrastructure for electric vehicles.

Winter temperatures in the August heat

Sometimes in this great game of energy consumption and environmental impact, all you can do is plead for someone to just pay attention.

Unlike most of our posts here on the larger vision, new technologies, and policy frameworks, this one simply describes the last two days I spent in Chicago. In sum: It is August and I was freezing.

Not outside, mind you. A few years ago, I was in Chicago in August when it was cool enough for a light winter jacket. No, this time, I was indoors. Literally, everywhere was over-air-conditioned. And I asked around. I was by no means the only one freezing.

I was in the Hyatt Hotel O'Hare, a large meeting room at the Stephenson Convention Center at Rosemount, a charter bus to Wrigley Field (Yes, I believe this is the year Cubs fans will no longer have the curse to blame their poor showings on year to year), and the Field Museum. Everywhere, the AC system was doing refrigeration, not cooling.

I am used to being over-AC'ed in Houston. But that's a city that proudly proclaims to be the energy capital of the world, in production and consumption. But Chicago? This is the city that increasingly is referred to in the same breath as "green cities," "cities that work," cities making a collective effort to inculcate green building design into the urban psyche.

I suspect I know the reason, but it's really only an excuse. It was cooler than normal for August. Spaces are commonly over-air-conditioned in the summer under these conditions. Or, in the case of the Field Museum, it could have been a combination of the unseasonably moderate temperature and smaller number of crowds in the space.

My question is, why isn't anyone paying attention and doing something about it? It seems all it takes is for a facility manager to dial back the control system or change the settings if the control system is automated.

Chicago this week seemed like a city where gasoline costs $1.50 a gallon, they have a special deal on petroleum for the low, low price of $25/barrel, and electricity rates are still frozen at 1995 levels.

So, the next time you are talking up green building design, renewable energy mandates, demand side management, energy independence, and the horrors being inflicted on all of us by global oil companies, let's remember that we're not part of the solution until we start paying attention.

Energy storage: It's time to get excited!

For years, I've been speaking and writing and (sometimes, even) ranting about the sad state of our electricity grid. Now, I'm really getting frustrated. Every day I learn about some new effort to wean ourselves from coal by putting up huge windfarms or solar arrays. Everyone is on the solar and wind bandwagon, but still no one is talking about transmission. Or at least talking about it realistically. It's easy to say we're going to put up X number of miles of new transmission, but getting the permits, access to the land, and dealing with private owners and multiple state governments isn't so easy.

We all know that to meet our nation's demand for electricity, wind farms and solar arrays are going to have to be huge. And they are, more often than not, going to be located at some distance (often hundreds of miles) from where the electricity demand is located. Think North Dakota and Chicago, or West Texas and Houston. If we truly want to shift our dependence from coal to renewable wind and solar, we need a grid that will support the shift--one that reaches from North Dakota to Chicago and West Texas to Houston. But, beyond that, simply extending the grid only solves one of the problems.

The other problem is intermittency. No matter what wind proponents tell you, intermittency is a problem. Ask any grid operator. The physics of operating the grid demand that the electricity fed into it NOT be intermittent. A surge or sudden drop in electrons can actually cause the system to trip offline. I don't think anyone running a business or a home wants to depend on intermittent electricity --we all want quality, usable electricity 24/7. The point is that the electricity generated by the wind farm, for instance, has to get to the demand center and it has to be fed onto the grid in a way that does not disrupt the physics of the transmission wire...it's a little more complicated than saying, oh, some electrons have arrived, let's dispatch 'em on the wire and ship them out to neighborhood A or factory B.

So, not only do we need a new network of transmission lines to get energy from the remote source to the demand center, we also need a way to solve intermittency. But what gets me so frustrated is that the solution to making solar and wind installations economically viable and physically dispatchable is energy storage--and yet, when was the last time you heard anyone get really excited about storage?

We'll I'm excited about storage. In fact, I'm really excited. I believe storage is the key to changing the way we think about electricity, global warming and energy independence. Storage has the potential to change how we live our lives. I'm not just talking about large scale storage that enables renewable energy; I'm talking about energy storage in all its sizes and all its possibilities.

Today, the world’s electricity system is essentially a massive network we are all plugged into. Everything we depend on that runs on electricity must be plugged in. Even our small modern conveniences—our cell phones or laptops—must be plugged in and recharged. We live lives connected to the grid.

Tomorrow, however, the traditional, one-way, electricity grid may be, literally, a relic of the past. Instead of being attached to the grid, we can set ourselves free with powerful living, transportation, and communications storage devices that allow us to use the grid simply as a base charging station. Our storage devices will both draw electricity from and feed electricity into the base station. And the base station will be fed by sustainable wind, solar and thermal energy that relies on bulk storage devices to make them both economically and physically viable.

In fact, the key to addressing global warming and our dependence on foreign oil is energy storage. Energy storage increases the ability of solar and wind to meet our energy needs, therefore reducing our dependence on coal. With more wind and solar feeding our base charging stations, energy storage eliminates coal from the equation and enables the electric transportation revolution. The electric transportation revolution eliminates our need to import oil from nations that don't necessarily have our best interests at heart. And, beyond all that, powerful energy storage devices open up a vast new world of possibilities for how we live, work and play in the future. Energy storage is central to addressing our current challenges and to enabling a sustainable future. It's past time we all got excited it!