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February 22, 2001

Power crisis calls for collective action

  • Would you rather have a warm building, or one without power for two hours each week? When the reliability of the power grid is at risk, a community response seems more likely and highly useful.
    • By DOUG BORS
    Sparling

    Anyone who is keeping up with the news knows by now that electric power is costing more and is less reliable than ever before. And it will get worse before it gets better.

    Ironically, this confluence of destructive market forces and rapid growth in power demand comes just at a time when business is identifying the problems inherent in the industrial and post-industrial economies.

    “Our ... future lies in building sustainable enterprises and an economic reality that connects economy, society and the environment,” write business leaders Peter Senge and Goran Carstedt in an article called “Innovating Our Way to the Next Industrial Revolution,” published in the MIT Sloan Management Review, Winter 2001.

    As the management books and magazines decry the need to build a sustainable future, the headlines announce direct results of unsustainable activity. For example:

    • The Seattle Times describes electric power at $500 per megawatt as an opportunity. (Dec. 26, 2000)

    • The Eastside Business Journal announces proposed data centers in the region that would consume as much power as Seattle. (Dec. 26, 2000)

    • The Eastside Journal tells us that California’s Public Utilities Commission had to prohibit California’s two largest utilities from cutting power to the 25 million people they serve. (Jan. 20, 2001)

    • Grist Magazine reports that the deregulation in California was not requested by residential customers, but rather, was driven by technology and industry, and by power companies in a tough spot. (Donella Meadows, Jan. 22, 2001)

    • The New York Times reports that President Bush is concerned about the power crisis and will propose legislation to make it easier to drill for gas and oil and to build power plants. (Jan. 30, 2001)

    It is all true. We are in trouble, including those of us in the Northwest. But that is not the half of it.

    President Bush is considering legislation to allow an expanded area for drilling on Alaska’s North Slope. Residential customers in California have taken it on the chin while commercial customers have failed to make any significant reduction in energy use. Rolling blackouts continue in California. Data center construction continues (though at a slower pace), and we expect spot prices above $500 per megawatt hour.

    So, where is the opportunity? Some see economic opportunities for power producers, powerbrokers and companies that produce energy-efficient components. I agree, but I see a greater opportunity. To fully understand, we need to consider two elements of the crisis.

    First, Donella Meadows (in Grist Magazine) touches on an essential element that has been eliminated as part of the deregulation in California. When the utilities had to invest in both power generation and transmission, they discovered it was often cheaper to invest in energy savings rather than new capacity. Hence the energy rebate programs. These programs have been particularly effective at maintaining low energy costs in the Northwest.

    But since deregulation, none of the now-separate parties has an incentive to push energy-savings rebate programs. Several programs remain because it is the right thing to do, but the economic incentive for conservation investment is gone for both the power generation providers and the California utilities.

    Second, in 1998 the MIT Power Lab wrote a paper that explored the connection between a volatile market and the fear of reduced reliability. The article basically tried to codify the economic value of reliability. The present energy market reflects those thoughts with a greater degree of clarity. The last few available watts — those needed just before some of the customers are cut off — are extremely valuable. So now, with deregulation, the market cost of power is no longer tied to the cost of producing power.

    We have too little power-generating capacity, and power generation plants are difficult to build. Also, simply building more power plants is not aligned with a sustainable future. Buckminster Fuller’s decades-old dictum said that companies must “learn how to live on our energy income (solar, wind, hydrogen) rather than off our principal (oil and gas).”

    Our greater opportunity, then, is to act together to redefine our common goals. In order to reduce the impact of this tragedy, we must act together immediately to an even greater extent than we have so far with our energy-saving measures. We must change the way we look at our future.

    For example, consider some possible long-term solutions. Wind, solar cells and distributed clean-burning fuel cells all hold promise for reducing the amount of fossil fuels we use to make electricity, and they have all been around for many years. However, we also believe that they do not compete with existing means on an economic basis because we did not decide to use any of these technologies in quantity.

    But when we decide that these technologies are the right thing to do, and we begin to utilize them on a grander scale, then continuing innovation will help reduce their cost. Again, though, this will require that we act together — not separately — with a common goal.

    Another example of how we must change our future outlook involves our short-term power problem. Portland Utility District is implementing a program for dispatchable generation that identifies existing standby diesel power generators and asks owners to turn control over to the utility. The utility then improves the owner’s fuel system, adds remote control, and agrees to use these generators less than 200 hours each year.

    The program has allowed the utility to identify 100 megawatts of capacity, and makes possible the reduction of peak demand at times when electricity costs are highest. Not a bad idea, even though it involves burning diesel fuel to meet peak demands. However, as a long-term solution, this environmentally unfriendly concept would not work.

    At a recent discussion about energy problems, I suggested this idea: What if every large commercial office building in Seattle was connected to the power utility via the building temperature control system?

    During hot days (or peak hours), the utility could ask each of these buildings to allow interior temperatures to rise, say, to 82 degrees. This would immediately reduce electric demand, but it also would leave many people a little too warm. Most important, it would decrease energy use when we need the decrease the most.

    One of the building developers responded, “No way! I will not mistreat my tenants by allowing my building to be uncomfortable. That would be a marketing advantage for other buildings that are consistently cooler.”

    Acting as an individual, I would agree with him. But if we act as a community and for the benefit of the community, then conserving energy would mean that we all would be warm together. I could ask the silly question, “Would you rather have a warm building, or one without power for two hours each week?” When the reliability of the power grid is at risk, a community response seems both more likely than usual and highly useful.

    A short-term agreement to reduce the cooling load at the request of a utility provides an incentive to build a cooling storage system that could cool a reserve water tank during the night to provide cooling during the day. Night cooling and storage systems are more efficient because the cooling system is borrowing cold from the night air instead of creating it from the day’s heat. This concept supports our dispatchable load reduction without warming tenants and generally saves energy.

    So, where is the opportunity? The opportunity is in responding to this crisis together — in showing that we can create great solutions through teamwork and consensus. Then, perhaps our future truly will lie in building sustainable enterprises and economic realities that connect our economy, our society and the environment in which we live.

    Douglas A. Bors is vice president, technology consulting and research, at Sparling. He also is a dreamer who would rather not see us turn off our computers because we ran out of power. Contact Bors at dbors@sparling.com.


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