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Assessing the Curve Cyrus Noë Con.Web, November 26, 2002

Energy Technology Showcase Conference:
Problems, Economic Puzzles, Positive Action

It is my opinion that energy industry chief executive officers and policy executives in North America would have done more for the betterment of their companies and the industry generally by attending the Energy Technology Showcase 2002 in Portland Oct. 21-23 than by doing whatever else they had scheduled. As a conference organizer, I concede that I may be accused of some bias in this opinion. But I stand by it nonetheless.

[Editor's note: Energy NewsData's new Energy Prospects newsletter offers continuing coverage of energy technologies, including more from the Showcase conference. For more information visit the Prospects Web site>.

Serious State of Affairs
The energy industry is in a serious state of affairs, and doing as well as it is only on account of habits and inertia. The U.S. secretary of energy is a political concierge, smiling at the guests and doing nothing of substance. The assistant secretary for energy efficiency and renewable energy, Dave Garman, chose at the last minute to present management awards rather than honor a previous commitment and come west to talk to Showcase. The assistant secretary did not have the courtesy to find a substitute speaker. And for the record, U.S. Department of Energy management at an awards level is clearly an oxymoron.

Meantime in Portland, we heard and learned from among others: Tom Casten, Mark Crisson, Dave Freeman, Carl Weinberg, Anne-Marie Borbely-Bartis, Tina Kaarsberg, Joel Gilbert, Alison Silverstein, Dick Reiten, Jack Robertson, Amory Lovins and Ralph Cavanagh. The featured speeches by Casten, Crisson, Freeman, Gilbert, Silverstein and Reiten were likely the best you would find at any energy event these days.

The shortage of energy affairs leadership is proclaimed far and wide. I would like to see an energy leadership board of trustees made up of the president of the World Alliance for Decentralized Energy (Casten), the president of the American Public Power Association (Crisson), the chair of the California Power Authority (Freeman), the inventive CEO of Apogee Interactive (Gilbert), the senior advisor to the chair of FERC (Silverstein) and the chair of the American Gas Association (Reiten).

But it's time to quit listing the distinguished cast and talk about the Showcase event itself. The theme was the status of energy technology in 2002, and it was clear over the three days that this status can't be seen as just a series of technical achievements and shortfalls.

Casten based his keynote on his study that shows the economics of resource investment favor distributed generation over central station by significant margins. But equally important, he pointed out, are regulatory deterrents and financial problems. A complex of provisions growing out of managing electricity as a franchised monopoly are, in Casten's view, effectively useless and a controlling constraint on capturing the benefits of distributed resources.

Uneven Progress
In several panels the Showcase status reports indicated that the resources themselves continue an uneven progress toward solid development, successful demonstration and significant deployment.

A small systems panel chaired by Mike Hacskaylo, administrator of the Western Area Power Administration, made that clear. Steve King of PNGC Power, who has tended cranky fuel cells in the field, was candid about their shortcomings. Ron Horstman of Western, whose purview ranges across that power marketing administration's 700-plus customers in 15 Western and Central states, had stories of distributed energy resource success due as much to small-system customer initiatives as to technology.

But presentations by King and Horstman show that the promise of distributed resources to distributed power systems remains as bright as ever. In the economic context established by the Casten study and in Lovins' book, Small Is Profitable, the useful promise of distributed generation remains as bright (and general) as ever. It is the timing that remains uncertain, in part because of the barriers.

DOE's Anne-Marie Borbely-Bartis brought up the problems of energy project financing in her opening panel remarks--an observation echoed by later speakers. There is a crisis of liquidity in power plant financing, and many remaining lenders are on the small side and are not familiar with the industry. The relationship between this dangerous state of affairs, however, and the benefits of what Lovins calls the "right size" for power resources, was not developed directly in Showcase discussions. But several speakers pointed out that utility system cash flows could be good sources of the kind of lower-order capital needed for downsized resource investments.

One illustration of "right-sized" investment I noted in Amory Lovins' presentation had to do with putting a gen-set at a substation. A 50-megawatt machine could take as long as two years to order and install, but a 10-MW machine could be available in a week or so. He calculates the investment cost to be the same.

Hydrogen as Hard Currency
Dave Freeman flew to Portland to speak at the opening night dinner. His speech did not dwell on the energy problems that beset California and the Western states. He concentrated on what he thinks people need to know to mitigate what Freeman and others see as the dangers of increasing foreign oil dependence. How many people, Freeman asked, know that their cars can run on hydrogen?

Freeman is making plans to give hydrogen fuel intelligence substantially higher national visibility. He thinks that current H2 writing and advocacy is mired in devilish details that obscure this core fact: cars run just fine on hydrogen. The hydrogen-powered Volkswagen bug and generator exhibit at Showcase was closed after dinner, but I sent him away with a brochure for the developer, Hydro Environmental Resources.

Conference participants were not able to ride the H2-powered VW bug because of logistical problems, but the vehicle was on hand and was started up periodically. HERI demonstrated its basic hydrogen generators as well. Whether its essentially chemical formula for generating H2 from water and other ingredients is the ultimate market-maker is yet to be determined. But it does represent a major technology vector on creating a hydrogen fuel era.

And even if the fuel cell remains the check in the mail that seems never to get there, hydrogen is increasingly becoming hard currency in anyone's energy technology showcase. Methanol, natural gas and liquefied natural gas (LNG) are important in and of themselves and as H2 feedstock.

It is likely that the electric revolution we are prefiguring in Showcase and in Energy Prospects is, apart from renewables, basically a refueling of energy production. We are moving from using hydrocarbons as primary combustibles to using them as feedstock for making H2. And among hydrocarbons, we prefer those that provide cleaner combustion.

Hydrogen Possibilities
There are other ways to make hydrogen. One of the advantages of a big conference like Showcase is its opportunities for networking with other energy minds. Some say as much information is conveyed in the hallways as on the dais. Jack Robertson chaired the economics panel and reported on one H2 idea that he formulated during a hallway conversation on the second conference day.

During his time at Bonneville Power Administration as acting and deputy chief executive officer, Jack was the lead on BPA's involvement in new technologies. One such technology was using surplus hydro to make H2, so that more energy cost was not involved in throughput than was earned in output. At night, the Northwest hydro system is characteristically able to generate lots of power for which there is no market. BPA, at Robertson's initiative and with the Electric Power Research Institute's help, investigated making H2 factories at the dams--in effect, finding a way to store surplus energy.

Jack told the audience that he and his hallway advisors conceive of moving surplus hydropower over idle transmission and distribution lines to a hydrogen load center. The load center could be a post office vehicle parking lot, where trucks have been converted to run on hydrogen. The H2 would be separated from water by electrolysis and stored in tanks, while oxygen could be packaged and sold, or even vented. This in a sense is distributed generation of H2 possible in a hydro system--or even by wind turbines running at night.

There was talk at Showcase of finding on-the-ground ways of using technology to get the industry out of its semi-paralysis. Robertson pointed out that H2 auto fueling is one way that could be demonstrated with off-the-shelf hardware at nominal setup costs, operating savings and revenues for BPA.

Looking Ahead
We had a conference-ending summary panel on programming issues for a one-day Showcase Forum event in six months. We hope that what we all think are important issues and actions are ones that accord with what the feds are planning--although I am not too hopeful.

Government ought to play a role here, but at the moment the best and maybe the only thing the Bush administration could do to head in a positive technology direction would be to send Spencer Abraham off to be ambassador to Austria and appoint Dave Freeman secretary of energy. Not likely, since Dave is a Democrat, but I have named his board of advisors above, and that's ahead of the curve if there turns out to be one.