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Building Your Own Power Plant?

Worldwide oil supplies are limited and costs will continue to rise for energy. Greenness, to a degree, is mixed with opinion, facts and judgment calls about whether or not our carbon footprints can be reduced. Most will agree that environmental change is inevitable. But keeping the juices flowing is still a business matter that just can't be neglected or ignored.

According to the International Energy Agency, "high energy prices will continue for the next few years." OPEC's cartel of 8 expects to earn $1 trillion in profit this year. The development of China and India as rising economic powers and the shift of economic power from the U.S. and Japan to China and India is also contributing to tight energy supplies, according to the Financial Times. Forecasters don't see any return to previous years' energy prices nor do they see any softening in prices anytime soon.

Google invested in solar photovoltaics (PV) in a big way and Microsoft did the same in 2006 because of the frequency of rolling blackouts. Then, Costco found that they could produce 20% of their energy by installing solar PV in more than a dozen stores in California and Hawaii and this was to offset the 1.9 billion kilowatts of energy used in 2007. Costco also stated in their monthly consumer publication (Costco Connection July, 2008) that their solar PV investments were the right thing to do and financially justified.

Now, whether or not you agree about the environment, carbon footprints and offsets - I am fairly certain that most agree keeping the business powered up and running is a good thing. After the efficiency and conservation efforts have been exhausted within your organization, you may then want to consider building an alternative energy (AE) plant.

So are you ready to take on building your own power plant? You may discover, as we have, that efficiency and conservation only goes so far and once you reach a plateau, then the next step may lead you to look ahead and consider adopting alternative energy (AE). Energy demands continue to grow; the grid is an old, and aging plant isn't as efficient as it could be, and even worse is its reliability factor. Controlled brownouts continue to roll and plague unprotected gear and companies with or without backup power generation. Companies (except agriculture) using backup generators pay premiums to operate and maintain them. So backup generator power isn't cheap, IT power needs are outpacing the grid's ability to keep up, and shortfall (sizing/output capacity) could crop up on some existing backup systems already in place. The costs associated to operate and maintain backup generators tally up, so blending in supplemental AE may offer greater stability to the infrastructure, and since most are already using batteries vs. flywheel systems, an AE solution is much easier to integrate. The prospect shifts to: Do we generate and store our own energy or do we reverse/net meter to offset our consumption costs?

Making your own energy from alternative (renewable) sources is attractive, but the costs remain high in building power plants using solar PV. The good news is that solar PV prices are expected to plunge from $3.80 per watt to $1.40 per watt by 2010. Plan to add some form of alternative energy plant(s) to your infrastructure.

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Can utility companies keep up with demand? The Wall Street Journal has reported on this issue for years- read the investigative reporters and editors' collection of diaries here. In short, the utility grid can't keep up, hasn't kept up and won't keep up in the near future. Secondly, you can legitimately claim green or even bragging rights and this isn't exactly a soft benefit. Also consider there's a growing expectation among consumers that are driving what they buy based upon green or environmentally "correct" companies.

Providing energy solutions is profitable for us, and being able to offer solutions with reliable metrics (benefits, costs, performance) isn't a bad thing either. Our big payoff a year ago was when the industry experts in energy and real estate said that we could expect returns on our property investments and when we did; they were over 55 percent above what the realtors expected or originally appraised.

Green buildings do sell and very well, and offer other benefits while commanding higher resale prices in any economy it seems, at least for us. Now I need to add that we didn't add an AE solution to our former building. Instead, we improved its efficiency (reduced operating costs by more than 50%) and made it easily adaptable (by simple improvements) for AE. Green buildings (commercial or residential) are still relatively new. So being prepared for technological changes and which ones to deal with, accept or ignore will continue to play a role in the level of success that adopters of AE experience and achieve. Planning isn't an option and engaging the energy challenge head on will open up a lot of avenues for change. The US Green Building Council is an excellent online source.

How and When? Currently solar PV, solar thermal (hot water), wind, geothermal and waste heat are some alternatives to explore. Wind is by far the oldest and cheapest of the technologies, geothermal is relatively still expensive and solar PV prices will come down by 2010, according to the industry experts and analysts.

Concern: Federal tax incentives for wind, solar and geothermal are set to expire December 31, 2008 and a disagreement between the House and Senate continues on about these incentives. According to the IRS, to qualify for the federal tax incentives you must have the system installation completed before December 31, 2008. The Solar Energy Industries Association (SEIA) is lobbying for an 8-year extension of the commercial investment tax credit under Section 48.