Matt Brunk
Matt Brunk has worked in past roles as director of IT for a multisite health care firm; president of Telecomworx,...
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Matt Brunk | October 19, 2009 |


Energy: Updates You Need To Know

Energy: Updates You Need To Know Making one's own power is not only green but it's a smart move that will keep businesses running.

Making one's own power is not only green but it's a smart move that will keep businesses running.

Businesses must still consider building their own power plants. Making one's own power is not only green but it's a smart move that will keep businesses running. In spite of the unexpected decline in electric prices, some companies are still moving ahead with greener solutions.The problem with electric pricing is that most electricity is purchased on contracts and the falling wholesale rates will take a long time to benefit consumers. The contracts and tariff rate discounts for corporate electric consumption isn't likely to tally up significant savings either. When you mix in government intervention and buying power on futures, hedging becomes riskier than taking what you get. The energy experts aren't able to pin the falling electric prices entirely on the down economy. Consumption is down and there's never been more federal backing of alternative energy incentives. Morgan Stanley and Citigroup alone just invested $100 million each in wind farms. Spain-based Iberdola SA obtained $500 million of U.S. federal cash grants for wind projects in the U.S. Then, BP's CEO stated that the U.S. is the land for wind power, and Iberdola is thinking $3 billion as a minimum investment in the U.S.

The State of New Jersey's largest utility PSEG is cleverly outfitting existing power poles with solar panels, making New Jersey second only to California as the highest producer of solar energy. Fedex is installing a 2.42 Megawatt system on its roof in Woodbridge, NJ making it the largest rooftop solar PV system in the U.S.A. Fedex CEO Fred Smith is also co-chair of the Energy Security Leadership Council (ESLC). Costco, Google, Microsoft and WalMart are early PV adopters.

The U.S. general public including businesses are more aware about energy, efficiency/conservation and environmental concerns and key indicators:

--Atmospheric levels of CO2 are at dangerous levels and rising. --Fossil fuel is not unlimited and is a "dirty" fuel. --Consciousness and decision making involving energy has changed. --Public attitudes from 9/11 and foreign oil dependence remain strong influencers. --Mounting international pressure for participation in green initiatives.

I asked a certain CTO whether or not he explored alternative energy and I didn't get a very warm answer. I also asked a well known manufacturer whether or not they were interested in using "waste heat" to generate power and they had that "deer in the headlights look." (Electra Therm is the world's first viable waste heat generator.)

In case there's any doubt about energy change, you can look to Capitol Hill where they are scrapping their 100+ year old coal fired plant to burn natural gas instead and then you can read in the WSJ about the overabundance of coal supplies. Being competitive also means being green, efficient, energy wise, conservationist and maintaining a sense of change in the energy landscape. T. Boone Pickens was right about offsetting oil with wind and natural gas and Bill O'Reilly was right about traders manipulating the price of oil/gas (futures). Professor Lawrence Katz, PhD, a consultant of LK Consulting and a professor at Palm Beach Community College and Broward Community College was also right when he stated: "PV costs have declined, and will continue to decline ~40% over the next 3 years; worldwide production has increased 41% in 2006. The two major drivers are improved technology and low-cost production in China, and PV (photovoltaic) prices are expected to decrease from the current price of $3.80 USD per WATT down to $1.40 per WATT by 2010."

Unlike the SMBs, large enterprise can entertain alternative energy adoption much faster and on a different scale. The problem still remains with the existing policies and tariffs for purchasing energy favoring large enterprise. Until these policies change by rewarding less energy consumption then widespread adoption of alternative energy by larger enterprise won't grow as fast. The incentives are certainly there now but the policies still contradict the greening effect. Large enterprise would be wise to take advantage of the incentives now, along with the discounts they already enjoy on higher electric consumption rates. It's not a green binge that I'm suggesting, but let's be realistic, who doesn't want to double dip for benefits?

The experts also think that it will take years to produce new energy to replace conventional sources of coal and oil. According to the 2005 Hirsch Report, "more than a decade of intense implementation will be required for world scale impact, because of the inherently large scale of world oil consumption." Small steps are in motion ranging from research in algae for energy to reflective solar arrays that produce heat at extreme temperatures. There's a huge span of work in energy that is sure to bring about more changes. Businesses can align as viable green partners by providing products and services that eliminate people needing to make conscious decisions that change their behavior, resulting in less energy use. More challenges include making products that are sustainable, meaning that once the product is exhausted, a part of or the entire product will then be recovered to make new products.

Oil prices continue to rise slightly and demand is back to 2005 levels according to the International Energy Agency and inventories are abounding. Oil is used for a fraction of electrical production in the U.S. market. If the greening effect catches on in government, commercial and residential U.S. sectors oil demand could be pushed back even further to earlier levels. There are differences in the metrics and I want to use the U.S. Energy Information Agency data on all oil imports to the U.S. because they are very revealing:

--2006 Oil imports dipped below 2005 & 2004 --2007 Oil imports dipped below 2006 & 2005 --2008 Oil imports dipped below all years from 2007 - 1999 --2009 Oil imports for a 6-month average show an average 4% decline over 2008

It appears that the decline of U.S. oil imports is slowing and it could signal that oil used for production will grow. With high unemployment and low consumer confidence, alternative energy adoption runs the risk of stalled adoption rates in spite of the federal government's incentives. By the way--Canada is our top supplier of crude oil and petroleum.

The U.S. is 58% dependent upon foreign oil and we produce 42% of what we use. So being less dependent upon foreign oil means:

--We must find ways to produce more oil, --We must find ways to use less oil, --We must find ways to substitute petroleum with alternative energy, --We must find ways to substitute petroleum-based products

Whether or not we can become self-sufficient and sustain producing our own energy and products without the use of petrol remains challenging. This is why conservation and efficiency are the greatest benefits for the near and long term future. Being energy self-sufficient means being independent, competitive and secure. Arguably- the above list rattles some folks. The tension between government, consumers and businesses results from energy is in demand, and how we use it requires significant changes creating even more tension and debate. The general consensus is it will take years (decades) to wean our country off of oil (see page 4 Abatement Curve) unless radical changes occur and rapidly. It is possible with advances in technology and changes in consumer and business behavior, but it remains challenging while world carbon levels in the atmosphere continue to rise.

We should expect to soon see and hear about major tax offsets that won't happen all at once. Government takes in a lot of revenue from "fossil fuels" including punitive taxes labeled as "environmental" which have nothing to do with fixing or cleaning the environment and only to do with revenue. Just like with telecom/Internet legislation we are going to experience the government trying to get a grasp on alternative energy. If everyone had a thermal solar panel on their roof to make their own hot water there would be huge amounts of energy savings and vast amounts of lost tax revenue. The tax offsets are the losses of revenue that result from making our own clean energy, conservation and efficiency gains. Where will the government tap to make up for those lost revenues? Keep a watchful eye on the fed's influence and push to get everyone on "market based" electricity rates then watch your rates go up not because of the cost of power but because of taxes--just like in gasoline.

Building your own power plants is more likely in your immediate future, and that brings on new ideas, problems and solutions. According to the Union of Concerned Scientists, our new energy economy has the potential to save $255B by transitioning to cleaner energy sources. Now, think of the government as a hosted solution sucking tax revenue each month in lieu of you carrying any responsibility other than to pay taxes. Which is crazier -paying dues to the feds and state/local municipalities for premiums on energy forever, or minimizing the impact and risk that energy plays on business by making some or all of your own energy?

What still may await us are higher energy prices in spite of all the efforts we make on the green front. The federal and state deficits require cash. Energy is shifting towards other means of supply. When folks adapt electric or hybrid vehicles you can bet that the rate increases will carry new or increased government surcharges. You see the government won't let empty pots remain empty. They will try to fill them again.

Building your own power plants is more likely in your immediate future, and that brings on new ideas, problems and solutions. According to the Union of Concerned Scientists, our new energy economy has the potential to save $255B by transitioning to cleaner energy sources. Now, think of the government as a hosted solution sucking tax revenue each month in lieu of you carrying any responsibility other than to pay taxes. Which is crazier--paying dues to the feds and state/local municipalities for premiums on energy forever, or minimizing the impact and risk that energy plays on business by making some or all of your own energy?Making one's own power is not only green but it's a smart move that will keep businesses running.


Check out this recap of Enterprise Connect Orlando 2017, and register now to join us in 2018 and save $200 off or get a Free Expo Plus Pass.

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