Energy leaders need to take a page from inventive industry chiefs 100 years ago and embrace a new era of innovation to move the country away from a carbon-dominant energy supply. For a highly regulated, often insular industry averse to change, that means facing significant disruption and the need to reshape the business model.
CPS Energy, the nation’s largest municipal utility, already has embraced that disruption and begun to build a new business model.
That’s why San Antonio and CPS were chosen by Advanced Energy Economy to co-host the second in a series of nationwide meetings of innovators, industry CEOs and regulators to look to the future and think Big Change.
Advanced Energy Economy, not exactly a household name outside the industry, is a Boston-based national association of progressive-minded businesses founded by successful new energy entrepreneurs and investors. The organization seeks to reset the public conversation about “advanced energy” and to influence policymakers at both the national and local levels. Read more about AEE here
AEE leaders were here along with the leadership of MIT’s Industrial Performance Center, a university-based enterprise “dedicated to the study of innovation, productivity and competitiveness in the U.S. and around the world.” Read More about IPC here. As CPS Energy project manager Tracy Hamilton wrote in the utility’s Energized blog Tuesday, the AEE is part academic think tank, part energy business accelerator and together AEE and IPC are thinking very big:
“Hemant Taneja, a managing partner at General Catalyst Partners, co-founder and chairman of AEE, says the group’s vision is a ‘prosperous world that runs on secure, clean and affordable power.’
“AEE engages the entire range of players in the energy industry, from utilities and their regulators to elected officials and policy experts, and of course, the advanced energy companies working to create solutions to some of the industry’s most pressing challenges.
“Taneja partnered with Tom Steyer, a hedge fund manager and political activist, to found AEE. Taneja then teamed up with Dr. Richard K. Lester, who founded and has headed up the Industrial Performance Center at MIT for almost 20 years, to convene utility executives, energy innovators and state regulators to help develop a framework for innovation in the power sector.”
The first meeting was held at MIT in Cambridge, and among those present was Cris Eugster, CPS Energy’s executive vice-president and chief strategy and technology officer. That led AEE and IPC to seek a regional venue for its next meeting. CPS’ growing profile and the large Texas energy market led organizers here.
(CPS ratepayers and business leaders interested in the rapidly evolving energy picture locally should bookmark the CPS Energizer blog at www.blog.cpsenergy.com, which regularly reports energy news not available in the mainstream media. Full disclosure: Monika Maeckle, my wife, recently accepted a postion at CPS Energy as its director of integrated communications.)
In sum, a lot of energy brainpower was convened in San Antonio for the one day meeting. Afterwards, some of the principals, including CPS Energy CEO Doyle Beneby, participated in a conference call with journalists at home and abroad. So what does the emerging new energy economy look like? Beneby said it looks a lot like what the Palo Alto-based Electric Power Research Institute has predicted by 2050: Goodbye, coal. Hello, solar, wind and other renewables. Welcome back, nuclear energy.
“The EPRI PRISM model forecasts out to 2050. I don’t think they accounted enough for natural gas, but it suggests that coal is going to die, and will be replaced by three things: nuclear, demand response and renewables,” Beneby said. “Will that mean small modular reactors, or utility-scale nuclear? I don’t think we know yet.”
Beneby said as much in an interview last week with Platt’s Energy Week, in which he also discusses the pros and cons of “net metering” and “fairness across the customer base,” a topic of significant interest to San Antonio’s growing solar community.
Talking about today’s work to accelerate the move toward renewables, Beneby said the industry tends to be “uber-conservative,” and that the emphasis for decades has been on delivering ratepayers a reliable and affordable energy supply. Those performance standards have to be maintained, he said, at the same time new technologies make new services and options available to the consumer.
Energy leaders today have to maintain high service standards and control costs, but also grapple with the need to reduce greenhouse gases, address climate change, and find ways to eliminate the country’s dependence on coal. The natural gas boom and low prices help, but ultimately renewables have to become more affordable and available. It all adds up to an equation with considerable complexity.
Moving quickly to embrace sustainable alternatives to the current energy mix is imperative, Beneby said. CPS on his watch already has moved to shutter two aging coal plants by 2018, and last year purchased an existing natural gas plant to help fill the gap. CPS also entered into an agreement with OCI Solar Power, now based in San Antonio as part of the deal, to construct a $1 billion panel manufacturing plant to supply panels to the 400-megawatt solar power plant network here. The network should be fully operative by 2016 and produce enough electricity to power 80,000 homes, or about half the power now produced by the two coal units.
“I think we have to get some new ideas and get them in test beds,” Beneby said Tuesday, suggesting he is ambitious to launch additional initiatives.
I asked the AEE leaders here Tuesday if they thought an increase in nuclear-generated energy would be part of any post-coal energy economy. CPS Energy gets about one-third of its current energy supply from the South Texas Project nuclear facility near Bay City, which has long been ranked one of the nation’s most efficient and safe nuclear facilities.
Plans several years ago to expand the plant were derailed after it was disclosed that CPS administrators had withheld the true cost of the project from City Council and the public. That disclosure led to a loss in confidence in the expansion and a change in leadership at CPS. The nuclear plant disaster at the Fukushima Daiichi meltdown in Japan in March 2011 brought all U.S. nuclear expansion plans to an indefinite halt.
“The nuclear plants in operation in this country today displace what would be 700 million tons of carbon otherwise generated,” said Richard K. Lester, the founding director of MIT’s IPC and the chair of the university’s department of nuclear science and engineering. “It’s very hard to see how that displacement could be achieved in any other way. Nuclear was not part of our discussion today…but it’s my view that there is no way to reduce greenhouse gases and carbon emissions without an emphasis on nuclear expansion going forward.”
Beneby agreed: “The assumption is that coal will be gone and that nuclear will be an important facet of the new mix in the years ahead.”
For readers who oppose expanded nuclear capacity, energy analyst and blogger Chris Nelder was on the Tuesday call. He takes a very contrarian view in his many articles on the subject to those predicting a resurgence in nuclear-generated energy.
The Obama administration has supported renewed federal loans to support nuclear plant expansion and is backing the design of a mini-nuclear plant prototype that could be produced in the hundreds for domestic use and export. Advocates say the units would be manufactured domestically, unlike traditional nuclear power plants, and would be safer and less expensive. None of the minis will be available commercially for at least several years. Here is a recent NPR broadcast and video on the development of the minis.
The energy story in San Antonio used to be about reliability and rate. Now it’s also about Big Change.
Full disclosure: The Arsenal Group conducted a four-month review of CPS Energy communications for the utility starting in June 2012. Monika Maeckle, a former member of the The Arsenal Group and wife of Robert Rivard, now works at CPS as its Director of Integrated Communications. This disclosure was published Sept. 26, 2013 in response to an Express-News inquiry.