Green Power Retail Marketing in California

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Green Power Retail Marketing in California
August 25, 1997

Dr. John Schaefer, a good friend and professional colleague of mine, has long experience in the utility industry and in renewable energy in particular. Some of you may know him from his time at EPRI.

As you know, January 1, 1998 will mark the opening of the California retail market, and John has established a new company, Clean Power Works (CPW), to be an “Energy Service Provider”, marketing “green” electric power.

The note attached below was prepared by John, who is interested in collaboration with and consulting for utilities elsewhere. I thought CPW and John could provide a useful window into the workings of the green power market as it is evolving in California. CPW might conceivably offer a foothold in green power and an opportunity for a learning experience (not unlike the education U.S. utilities are getting in the UK, though obviously on a vastly smaller scale).

Feel free to contact CPW directly.

(Note: I have no business relationship with CPW nor has any been discussed, though the possibility at some point in the future is not precluded. EB)

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Clean Power Works at a Glance

Clean Power Works (CPW) is initiating a program to sell pollution-free, renewable (wind, solar, geothermal, hydro, biomass and biogas) electricity to customers who are willing to pay a few cents extra per kilowatt-hour. Residential electricity sales in California are approximately $7 billion, and CPW intends to capture $36 million of this market by 2003. Greater penetration is possible if supplies expand rapidly enough.

Selling renewable electricity is a new business because until now electricity customers have had no choice; electricity has always been supplied by conventional electric utilities operating as regulated monopolies. As of 1998, restructuring in California and soon in other states will offer customers the opportunity to choose their preferred electricity supplier, in the same way that telephone customers now choose long distance telephone service. Electricity will be delivered physically through the existing grid, for which the distributing utility will charge its cost of service. For CPW’s expected market in California, monthly electric bills will be 10 to 20 dollars higher than they would be with polluting sources.

When offered an informed choice, evidence shows that many customers will switch away from polluting sources. For more than ten years, customers have shown in survey after survey that a majority prefers and is willing to pay extra for electricity that does not pollute. This fraction ranges as high as 70 per cent, depending on which survey and where it was taken. In successful small scale green pricing programs, three utilities (Detroit Edison, SMUD and Traverse City) with programs like CPW’s have had more willing buyers than the utilities had capacity to serve them.

CPW will contract with the most economic of the renewable electricity sources, add a margin to cover costs and profits, and sell electricity aggressively to customer segments with a known interest in environmental issues.

Clean Power Works has immediate access to tens of thousands of such customers who have already demonstrated by their buying habits their preference for environmentally friendly sources. Beginning with those customers and intense sales efforts in areas where response is expected to be most positive, CPW expects to attain a strong market position by the end of 1998.

The tumultuous 1997 deregulation experience in California demonstrates that lessons must be learned by participating but that they need not be costly or risky. CPW has concluded that the pollution-free or “green” market can be more effectively and profitably served in cooperation with utilities than in competition with them. As a result, Clean Power Works seeks both consulting opportunities and collaboration with utilities in other states, where deregulation lessons can be applied with less risk.

CPW was incorporated as a California C corporation in 1997. Its founders are:
— John Schaefer, a Ph. D. engineer with 20 years experience
in utilities and renewable energy R&D; and
— David Katz, founder of Alternative Energy Engineering, one of
California’s largest suppliers of renewable energy products.

CONTACT:
P. O. Box 1225, Santa Cruz, California, 95061
jcschaef@igc.org . 408-471-9337 fax: 408-471 9336.

Web site at http://www.alt-energy.com/cpw

NY Times article: The Private-Sector Life of a Government Lab

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RECOMMENDED READING — On the front page of (8/23) Saturday’s NY Times business section, there was an extensive article on the relationships between DOE National Labs and private industry.

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August 23, 1997 The Private-Sector Life of a Government Lab By CLAUDIA H. DEUTSCH

[G] oodyear Tire and Rubber Co. wanted to predict, without weeks of test drives, how its tires would perform under various conditions. So it went to the Energy Department’s Sandia National Laboratories in Albuquerque, N.M., for help. “Their computer models show how a nuclear weapon will react to different conditions, so why shouldn’t they show how a tire will react?” said William Sharp, president of Goodyear’s global support operations.

A federal weapons laboratory might seem an unlikely partner for a tire maker, but with the Cold War over and military spending shrinking, Sandia is putting out the welcome mat to private industry. And U.S. corporations, which have emerged in this era after downsizing as far more willing to turn to outside sources, are lining up to tap into its technology storehouse.

They are using Sandia to develop new manufacturing processes, to run what-if simulations on new products, to solve environmental problems. In the process, they are helping Sandia move beyond its once single-minded focus on the arms race.

For example, a consortium of 17 casting and forging companies, recognizing that few young engineers were joining their industry, asked Sandia to help it simplify software so that employees who were not engineers could create and test new casting equipment. “None of us have the time or money to do this ourselves,” said Robert Kervick, chief executive of Komtek, a casting company in Worcester, Mass.

And Motorola asked Sandia to run reliability tests on computer chips without using the standard chemical cleaning agents — the chlorofluorocarbons that destroy the atmosphere’s ozone layer. “Customers feel more comfortable buying a product whose reliability is verified by a government lab,” said James Landers, a manager in Motorola’s Space and Systems Technology Group.

For Sandia, the money pouring in from its corporate partners helps keep many of its 7,642 employees — about 800 fewer than two years ago — gainfully employed. But the real winner, Sandia insists, is the U.S. economy. “National security starts with economic security, and that means helping our industries compete,” said Paul Robinson, Sandia’s president.

Sandia (pronounced san-DEE-uh) is not the only Energy Department lab sounding that theme. Although documents emerged last week indicating that some of the labs, including Sandia, are still hard at work on new or modified designs for nuclear arms, private-sector projects are nonetheless occupying an ever-larger share of their time.

Los Alamos, Oak Ridge, Lawrence Livermore — the heart, lung and brain of the Manhattan Project’s atomic bomb and its progeny — all have been accelerating their industrial endeavors since 1989. That was when Congress removed many of the legal impediments that had kept them from transferring intellectual property or licensing technologies to private industry.

Brookhaven National Laboratory on Long Island, N.Y., which is grappling with environmental problems caused by the leak of radioactive tritium from a research reactor’s storage tank, is looking to commercialize its medical and environmental technologies.

In the last eight years the labs have written more than 3,000 Cradas — the acronym for cooperative research and development agreements — that spell out who pays for what, and how the results can be used. Some call for companies to foot the entire bill in return for proprietary rights to anything that is developed.

But more typically, the labs chip in some cash, retain the rights to the resulting technology and give the corporations that contributed several years of free, exclusive use.

The federal labs, even when shrouded in secrecy, have always intermingled with industry. Many of them have been managed by private corporations — under contract to the Energy Department and its predecessors — for several decades. Sandia, for one, was run by AT&T for nearly 44 years and is now managed by Lockheed Martin.

But while all of the labs are devoting more time and resources to projects in the private sector, the effort seems most crucial at Sandia. Unlike Oak Ridge, which has always been a multipurpose energy lab, Sandia’s raison d’etre has always been the arms race.

And Sandia, which designs the non-nuclear components of nuclear weapons, also is responsible for stockpiling spare parts and for maintaining the existing supply of nuclear weapons. So, unlike Lawrence Livermore and Los Alamos, which design and develop nuclear warheads, its duties have not lessened much with the end of the Cold War.

Even so, Sandia’s operating budget is slowly being whittled away. It was down almost $50 million this year, to about $1.28 billion, and Sandia expects it will drop to $1.1 billion in 1999. And a lot of those cuts have come out of the money available for use as matching funds for industrial projects.

In 1995, Sandia got about $100 million from the government for those purposes; it received $56 million last year and $20 million this year. Warren Siemens, Sandia’s director of technology partnerships, doubts it will rise above that again. “Apparently Congress has said, ‘Oops, this is corporate welfare,”‘ Siemens said.

So, while most of the laboratories are looking for ways to apply their existing technologies to corporate use, Sandia is the most willing to develop new processes for industry, with the hope that the companies will kick in most of the costs.

Right now, for example, Sandia is working with a consortium of electronics companies on a project to miniaturize certain types of semiconductor chips to handle 30 times more functions than they typically do now. It is collaborating with numerous manufacturers on ways to cast tools directly from powdered metals.

And it is encouraging industry to tap into its supercomputer — a machine that Sandia says is 300 times more powerful than Deep Blue, IBM’s chess-playing champion — not only to answer questions about products and processes but also to suggest what questions should be asked.

“We hold the record for speed of computing,” Siemens said. “We have great strength in microelectronics, and these are exactly the areas companies look to for help in making products more reliable.”

Progress in convincing industry to chip in has been slow. Five years ago, about $9 million of Sandia’s funds came from industry. Last year corporations provided $27 million. But Siemens thinks private funding will hit $35 million this year, and soar to $100 million by 2000.

And Sandia wants more from industry than simply money. Since it can no longer afford to hire many new researchers, it must rely on industry to keep abreast of new technologies.

Moreover, industrial projects often have implications for the military. “It’s a lot cheaper to maintain an Air Force whose planes need less rebuilding or repairing,” said Gernant Maurer, vice president of technology for Special Metals Corp., a maker of nickel-based superalloys that is part of a consortium working with Sandia to develop defect-free alloys for engine aircraft.

Similarly, weapons and satellites are loaded with semiconductor chips. “Our nation’s defense systems rely on semiconductors, and it would not be great if they had to buy all those chips from overseas,” said Chris Daverse, manager of national resources for Sematech Inc., a nonprofit research consortium of semiconductor makers and equipment suppliers, which has signed on for numerous projects to develop lower-cost production methods and contamination-free chips.

Sandia’s new reliance on industry comes at an opportune time. Companies have grown more comfortable with the idea of outsourcing all kinds of tasks, so letting outsiders work on their research is not as radical as it would have been in the do-it-yourself ’80s. Moreover, many have formed strategic alliances with suppliers and competitors, which has made them less averse to sharing their technologies with others.

“The thinking is, it is better to get half the rights to a product that is first to market, than all the rights to one that comes in late,” said Mary Good, a former undersecretary of commerce who helped set up a project for the auto industry and several national laboratories to develop a fuel-efficient car.

If repeat business is a sign of satisfaction, the corporations that have tried it clearly believe they have gotten their money’s worth. Goodyear, which has completed four cooperative projects in which it used computer modeling to predict how different tread designs and materials would perform, just signed on for its fifth Sandia project. It is aimed at analyzing and improving rubber processing technology.

A deal between Delphi Saginaw Steering Systems, an arm of General Motors Corp., and Sandia to develop better finishing processes for auto parts has metamorphosed into a Detroit-wide project to develop electronic controls for industrial heating and hardening processes.

“We’ll save tens of millions just by eliminating destructive testing,” said James Farago, Delphi’s supervisor of controls engineering. “And we’re going to get better insights into the materials we use.”
Copyright 1997 The New York Times Company

Battery Market Studies from Sandia

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Battery Market Studies from Sandia
Aug 14, 1997

Sandia has issued two new reports on markets for batteries:

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“Photovoltaic Battery and Charge Controller Market and Applications Survey”, Hammond, Turpin, et.al, SAND96-2900, December 1996

Surveys were conducted with PV system integrators, battery makers, and PV charge controller makers, to a) quantify the market for batteries shipped (in 1995), b) quantify market segments by type and application, c) characterize controllers used in PV systems, d) characterize operating environments for storage components in PV systems, and e) estimate the market in the year 2000.

In 1995, worldwide shipments for PV batteries totalled $300 million, with a U.S. accounting for just over 10%. In either case, system integrators account for no more than 14% of batteries sold for PV.

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“Battery Energy Storage Market Feasibility Study”, Akhil and Kraft, SAND97-1275/1 and SAND97-1275/2, July 1997. (The first, 1275/1, is a short version of 25 pages. The second, 1275/2, is the long version, with about 200 pages, which will be available sometime in September.)

The purpose of this study was to quantify the energy storage market for utility applications by surveys of electricity providers, battery storage system vendors, and others. Specifically, goals were a) to gather perceptions in the battery energy storage (BES) and utility industries on desired features and comparison with other storage options; b) to estimate BES markets through the year 2010; and c) to provide Sandia and DOE with inputs to the Energy Storage System Program effort.

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Reports can be obtained through NTIS or directly from Sandia. Send requests to Imelda Francis, 505-844-7362, fax 505-844-6972, or: igfranc@sandia.gov.

UFTO Various – August 1997

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Several items of general business—-

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 650-328-5670
| Palo Alto CA 94301-3041 fax 650-328-5675
| http://www.ufto.com edbeards@ufto.com
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1. NEW AREA CODE 650
UFTO, along with most of the 415 area code except San Francisco, has a new area code, 650. The new code took effect August 2, but the old code will continue to work for several months.

2. Reminder: I’ve received just one set of revisions to the UFTO “Technology Needs of Utilities” document. Everyone committed to doing at least a quick edit of this June 95 document, to bring it up to date. Take it with you on vacation!

3. We’ve had some very positive comments the EdF Electrical Equipment report (sent to UFTO companies in early July), which is most gratifying. Thus far, however, there’ve been no takers for the “SME Catalogue”. Surely somebody in your company wants to see it, right? Let me know who to send it to.

4. Several conferences are set for this month and next.
Here are some reminders.

—-Aug 25-29——–Washington———-
EPRI-DOE-EPA Combined Utility Air Pollution Control Symposium; ;
(See UFTO Note June 3)
Details at http://www.epa.gov/ORD/conferences/airsymp.pdf.

—–Aug 26-28———Morgantown WV——–
“Fuel Cells ’97” Review Meeting
This is the annual DOE-EPRI-GRI Fuel Cell conference
Complete information and agenda at: http://www.fetc.doe.gov –>”Events”

—–Sept 29-30———Washington——–
Dawnbreaker 97
Recall the 40 or more technology startup stories sent to you in an UFTO Note Oct 23, 1996? (Also in the UFTO database). This is an annual DOE sponsored investors conference to present SBIR awardee companies who are looking for money, partners and customers. The crop of deals this year doesn’t look particularly exciting, and I’m not currently planning to attend. However, if one or more of you do think it worthwhile (and would be able to cover expenses) I’d certainly go on your behalf.

The complete set of abstracts (tantalizingly without company names) can be found at http://www.dawnbreaker.com/graphics/abstate97.html

—–Sept 22-24———Boston——–
Technology 2007
I am tentatively planning to attend on behalf of UFTO. This has always been a great opportunity to talk to lab and government reps in person and to meet promising startups.
See http://www.abptuf.org/T2007

Hybrid power system splits petroleum fuel for fuel cell and IC engine

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Subject: UFTO Note – Hybrid power system splits petroleum fuel for fuel cell and IC engine
Date: Mon, 21 Jul 1997
From: Ed Beardsworth

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| http://www.ufto.com edbeards@ufto.com
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Hybrid power system splits petroleum fuel for fuel cell and IC engine

Procyon Power Systems Inc is developing an innovative hybrid power plant that combines an internal combustion engine and a fuel cell. The system features a unique proprietary fuel processor that extracts a portion of the hydrogen from the hydrocarbon fuel for use in the fuel cell. The remaining carbon-rich fuel is used in the IC engine.

As a power system for vehicles, the fuel cell delivers high power, while the IC engine handles the base loads. This combination gives an overall fuel efficiency about 2 1/2 times current vehicle engines, coupled with ultra-low emissions. The company has filed a patent application for this hybrid system concept. In addition to vehicle applications, Procyon is also exploring use of the system for stationary distributed power generation.

The fuel processor uses pyrolysis (thermal decomposition in the absence of oxygen) to split the hydrocarbon liquid fuel, and avoids the need for complex gas separation and filtering. A patent application has been filed for the processor.

This breakthrough technology was proven in tests at Pacific Northwest National Lab in December 1996, which showed that 20% of the fuel could be converted to hydrogen without coking. The process heat requirement is a small fraction of the total fuel energy content. As it converts only a portion of the fuel to hydrogen, the process is much cheaper and simpler than partial oxidation or steam reforming.

The Atkinson cycle engine has greater thermal efficiency at low loads than conventional Otto engines. (Otto engines use identical compression and expansion ratios and have a 10 to 1 peak to average power rating, giving better efficiency at full power. In the Atkinson cycle, the volumetric expansion ratio is much larger as compared with the compression ratio, resulting in the best efficiency at a fraction of peak load.)

Thus the Atkinson engine doesn’t have the wide power range of the Otto cycle, but this is exactly what is wanted to provide base load in this hybrid system approach. In a timely confirmation of Procyon’s approach, Toyota recently announced that its new production battery-hybord will also use an Atkinson cycle IC engine.

The company is seeking investment capital to continue its development.
Contact:
Gary Noland, President
Ambrose Manikowski, Vice President
Allen McKee, CFO

Procyon Power Systems Inc.
Alameda CA 510-864-3179 fax 510-864-3180
procyonpwr@aol.com

Distributed Generation–Recent Developments

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Subject: UFTO Note – Distributed Generation–Recent Developments
Date: Tue, 15 Jul 1997 09:44:38 -0700
From: Ed Beardsworth

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| http://www.ufto.com edbeards@ufto.com
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Distributed Generation–Recent Developments
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Several new developments of note in the Distributed Generation (or Resources, Power, Utilities — whichever term you prefer). The field seems to be warming up considerably, and several key events scheduled in September.

** CADER – Calif. Alliance for Distributed Energy Resources
Conference Sept 15-17, San Diego

** DPCA – Distributed Power Coalition of America
Annual Meeting, Sept 10-11, Washington DC

** Distributed Generation Forum (GRI)
Second Forum Meeting, Sept. 30

** EPRI Web site

** “N Amer. Distrib. Gen. System Markets”, Frost & Sullivan

** Distributed Utility Associates

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** CADER – California Alliance for Distributed Energy Resources

CADER is an alliance of public and private organizations formed in 1996 to identify and develop specific solutions to the deployment of Distributed Resources. Initially set up with the help of the California Energy Commission, it is a self-managed organization.

Mission Statement: A consortium of manufacturers, users, energy service companies, engineering firms, utilities, power providers, research organizations, regulators, financial institutions, and others committed to facilitating the successful entry of clean, energy efficient Distributed Resources into a competitive electricity energy market.

CADER CONFERENCE SEPT 15-17, 1997, San Diego CA

CADER will host a three day conference to explore economically and environmentally viable alternatives to grid-based power systems. Key energy industry experts from across the country will assemble at this first-of-its-kind meeting to debate how distributed resources figure into the rapidly changing electricity marketplace.

The conference, entitled “Distributed Resources: Addressing the Challenges”, will take place September 15 through 17, 1997 at the Catamaran Resort Hotel, 3999 Mission Blvd., San Diego, California 92109. Hotel reservations are available by calling the hotel directly at 619-488-1081 or 800-288-0770.

The San Diego conference will highlight the latest technology developments such as photovoltaic solar systems, fuel cells, storage technologies such as flywheels and batteries, and advanced gas turbines. In addition to site visits and technical sessions, conference participants will discuss an array of environmental, regulatory and market-related issues.

Speakers invited to the CADER Conference include: Governor Pete Wilson; Congressman Dan Schaefer; California Senator Steve Peace; Amory Lovins, Rocky Mountain Institute; Federico F. Peña, Secretary, U.S. Department of Energy; and David Freeman, Trustee, ISO/PX.

Conference technical sessions will focus on the following areas:

Energy policy
Incentives and market rules
Legal, institutional and regulatory issues
Siting and environmental regulatory streamlining
Land use planning and computer tools
Manufacturer/technology issues

The conference builds on the success of CADER’s pioneering efforts to ensure the economic competitiveness of Distributed Resources and will focus on how distributed generation systems can provide local distribution utilities, end-users, independent power providers and energy service providers with another generation choice, improved power quality and more reliable service.

Contact Connie Bruins, California Energy Commission
(916) 654-4545 cbruins@energy.state.ca.us

Complete details and extensive documentation, and details about the conference, are available on the website

http://www.energy.ca.gov/CADER/

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** DPCA Distributed Power Coalition of America

DPCA is a new advocacy group whose mission is to remove regulatory impediments that block distributed power or tilt the rules against its optimal use, through direct mail, testimony to Congress and regulators, and building a grassroots network. It will be technology and fuel neutral.

Its founding was initiated by Solar Turbine and 3 utilities, PECO, NIPSCo, and SCE, and is being incubated at the INGAA, a gas pipeline industry organization (see below). Other members include PSE&G, Allison, Capstone, Stone & Webster, Columbia Gas, and Pan Energy-Duke. A kickoff meeting was held on May 12.

The first Annual Meeting is scheduled for September 10-11, Washington DC. The purpose is to begin a dialogue between the distributed power industry and government decision makers from DOE, FERC and Congress. Speakers include A.J. Bennett Johnson, former US Senator; Anthony Prophet, President Allied Signal Power systems; Christopher D Maloney, VP and General Manager, Unicom Resources; Henry Linden; David Rohy, CEC; and others.

For agenda and registration information,
call Ms. Cris Richards, 202-626-3226 fax 202-626-3241

Contact:
R. Skip Horvath, Executive Director, DPCA
555 13th St. N.W., # 300 W
Washington, D.C. 20004
202- 626-3225 fax 202-626-3241
shorvath@ingaa.org

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INGAA –Helping Companies Today Build for Tomorrow
http://www.ingaa.org

The Interstate Natural Gas Association of America (INGAA) is a trade organization that advocates regulatory, legislative and individual positions of importance to the natural gas pipeline industry. INGAA’s membership includes virtually all of the interstate natural gas transmission companies operating in the United States, as well as comparable companies in Canada, Mexico, Europe, Asia and South America.

INGAA’s members include 30 U.S. interstate pipelines, six Canadian interprovincial pipelines and 13 international pipeline companies. Membership opportunities are extended to other segments of the natural gas industry through INGAA’s Associate, Financial Affiliate, International Affiliate and Foundation membership programs.

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** Distributed Generation Forum (GRI)

(from GRI press release on their website)

Representatives from 26 electric and natural gas industry organizations, power generation equipment manufacturers and the federal government have created a forum to examine the benefits of expanded use of distributed power generation in the increasingly competitive electric market.

The Distributed Generation Forum members will evaluate the potential for distributed power generation – primarily natural gas-based applications – to help energy-service providers identify cost-effective ways of meeting their customers requirements. Onsite Energy Corp., Carlsbad, Calif., and George C. Ford & Associates, Princeton, N.J., will assist the forum by analyzing the potential impact of electric industry restructuring trends on the distributed generation market and evaluating market applications, equipment performance and cost targets related to electric industry deregulation.

In simplest terms, distributed generation integrates small modular power generation units (typically 25kW to 25MW) into a utility’s power grid, or transmission and distribution system. Expanded use of gas-fueled reciprocating engines, gas turbines and fuel cells – strategically placed between central power stations, substations and energy customers – could provide power to extend a utility’s power grid.

GRI and others think there is great potential for the distributed generation concept to offer a cost-effective means of meeting growing peak demands for a utility’s existing customers while serving new commercial or industrial customers,” said Dan Kincaid, power generation business development manager for Gas Research Institute and member of a steering committee that created the forum. “Though distributed generation has seen limited applications to date, the forum will seek to fully develop the economic and operational benefits for providers and distributors of electricity and their customers.

GRI’s goal is to ensure that gas-based distributed power generation will provide attractive, cost-effective energy service for the evolving electric power market,” Kincaid said. “Such a contribution will ensure that electricity users, gas utilities, power generators and distributors will benefit as the electric power market continues to evolve.”

Other forum participants are Allison Engine Co., AlliedSignal Inc., Collaborative Advanced Gas Turbine Program-LLC, California Alliance for Distributed Energy Resources, Caterpillar Inc., Coltec Industries, The Consumers’ Gas Company Ltd., Cummins-Onan, Distributed Power Coalition of America, Duke Power Co., Electric Power Research Institute, Elliott Energy Systems Inc., Illinois Power Co., International Fuel Cells Corp., Peco Energy Co., Southern California Edison Co., Southern California Gas Co., Solar Turbines Inc., Southwest Gas Corp., Transalta Utilities Corp., Union Electric Co., U.S. Department of Energy, Westinghouse Corp., and Woodward Governor Co.
——

The forum was first offered in Nov ’96, at the suggestion of another GRI industry group, the Gas Engine Technical Advisory Committee. The first meeting was held in May ’97, and the next meeting is scheduled for September 30. The third meeting will be held in February ’98

The primary benefits of membership are the dialogue at forum meetings that results from addressing precompetitive issues affecting distributed generation, and the increased understanding of this new generating practice provided through the immediate access to the assessment results funded from member fees. This information will be available to non-members after one year.

The membership fee is $10,000 for 1997, with a 1998 fee that has not yet been established. The forum is not seeking additional members, but will accept new members that join prior to the September 30, 1997 meeting.

Questions should be addressed to:

Dan Kincaid, GRI Business Development Manager, Power Generation
773-399-8338, dkincaid@gri.org

Paul J. Bautista, GRI Program Team Leader, Distributed Generation,
773-399-5460, pbautist@gri.org

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**EPRI Website on Distributed Generation

Provides information about EPRI programs and links to other sites

http://www.disgen.com

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** “North American Distributed Generation System Markets”
Frost & Sullivan, Report: 5578-14
March 26, 1997, 331 pages, $2950

(from Frost & Sullivan website and press release)
According to recent strategic research from Frost & Sullivan, North American Distributed Generation System Markets have seen a shift occurring since the early 1990s towards on-site distributed power generation. Electronic control systems are now allowing for remote dispatching, and combustion turbine engines are smaller, more powerful and have increased energy efficiency.

The distributed generation technology market is in flux as utilities and other energy providers await federal government pronouncements concerning deregulation of the electric power industry. The best way to navigate this rocky period successfully is to understand what to expect and be prepared to act. This report’s detailed comparative energy-demand projections and unique economic methodology for calculating energy costs can equip companies for this path.

A detailed four page summary of the report is available via fax.

CONTACT: Ben Lerich, Frost & Sullivan,
415-237-6508 fax 415-961-5042
blerich@frost.com http://www.frost.com

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Distributed Utility Associates

DUA provides analytic, technical and policy consulting to utilities, technology developers and energy research organizations, with an emphasis on the Distributed Utility concept and electric industry restructuring. DUA also provides evaluations of prospects for and impacts from utility application of advanced renewable, efficiency and storage technologies.

Mr. Joe Iannucci, DUA’s principal, is a recognized leader in the DU field, and is an active contributor in many of the distributed generation and storage programs around the country. He did a study a couple of years ago: “Gas Industry Distributed Utility Market Analysis,” January 1996, funded by GRI, which is available from DUA.

Joe Iannucci, Principal 510-447-0604 fax 510-447-0601
Distributed Utility Assoc. dua@ix.netcom.com
Livermore CA

Reliability TF draft Interim Report

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Subject: UFTO Note – Reliability TF draft Interim Report
Date: Fri, 11 Jul 1997 11:12:59 -0700
From: Ed Beardsworth

— advance copy just received from contacts at DOE —

————————————————————–
| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| http://www.ufto.com edbeards@ufto.com
————————————————————–

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The attached file contains a draft Interim Report that will be discussed and marked up at the July 23 – 24 meeting of the Secretary’s Electric System Reliability Task Force.

Please note that this draft has not yet been reviewed by the Task Force members.
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DRAFT

Dr. Walter Massey
Chairman, Secretary of Energy Advisory Board
c/o Morehouse College
830 Westview Drive, SW
Atlanta, Georgia 30314

Dear Dr. Massey:

The Task Force on Electric System Reliability of the Secretary of Energy’s Advisory Board is writing to provide you interim comments on several issues important to the maintenance of reliability. Although the Task Force has not yet completed its deliberations under the Secretary of Energy Advisory Board’s Terms of Reference, its members are aware that the Department and the Administration may be making decisions on these issues and we want to be as helpful as possible.

As you know, the 24-member Task Force is a diverse group representing, for example, electricity producers, marketers, state agencies, consumers, environmental advocates, reliability organizations and academia. Not surprisingly, with such differing perspectives on changing and complex issues, it is not easy for the group to rapidly reach a consensus. Naturally, not every member agrees with every detail of this report.

We certainly all do agree, however, that the maintenance of system reliability must be a high priority and that the mechanisms for ensuring reliability must be changed to accommodate the changing electric market.

Since its establishment in January, 1997, the Task Force has convened in four open meetings. Thus far, we have focused primarily on issues relating to the bulk power transmission grid and in particular security issues—that is, questions about the operation and maintenance of that system–rather than the adequacy of supply or generation. We will be assessing a number of additional issues at future meetings.

The Task Force appreciates the opportunity to provide the Department with this Interim Report and respectfully submits the preliminary findings and recommendations contained therein.

Sincerely,

cc: Federico Peña
Elizabeth Moler

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Secretary of Energy Advisory Board
Task Force on Electric System Reliability

Interim Report

July 24, 1997

Background

This report makes recommendations regarding the security of the Nation’s bulk power system consisting of generation, transmission, and control facilities.

Electric reliability can be divided into two areas: reliability of the distribution system and reliability of the bulk power system. Bulk power system outages affect large areas and can have significant regional and national implications. Further, the rules for assuring reliable operation of the bulk power system can have an effect on the transactions occurring on the system. Federal regulators have responsibility for economic regulation of electricity in interstate commerce, including wholesale transactions involving most of the nation’s generation and transmission facilities, within and across state borders. An issue introduced by competition in bulk power markets is the need to assure reliable system operations in a competitively neutral way. While everyone agrees that system reliability must be maintained as a feature of a competitive electric industry and must be under the direction of experienced expert operators, not everyone agrees about how to resolve reliability issues in a manner that does not discriminate for or against certain participants in competitive bulk power markets.

While states have an interest in the performance of the bulk power system, state regulation has tended to focus on distribution system outages, that generally have only localized effects and are frequently characterized as being related to end-user customer service, which is an area of state jurisdiction. States have traditionally also had regulatory responsibility for economic and planning approval for certain generation facilities and recovery of their costs and siting approval of both generation and transmission facilities within the state.

Bulk power system reliability has two components: adequacy and security. Adequacy implies that there are sufficient generation and transmission resources available to meet projected needs at all times, including peak conditions, plus reserves for contingencies. Security implies that the system will remain intact even after planned and unplanned outages or other equipment failures occur. Most view transmission adequacy and system security as “public goods” that benefit all buyers and sellers of electricity, and which exhibit monopoly characteristics. While the market will likely play a role in providing certain services that are needed for transmission adequacy and system security, these are the areas of greatest national interest from a reliability point of view and the primary focus of this report.

Bulk power system reliability has historically been the responsibility of the electricity industry, as opposed to the government which has only indirect jurisdiction primarily through economic regulation of wholesale electricity sales by the Federal Energy Regulatory Commission (FERC). The Department of Energy and the FERC also have some limited authority under certain circumstances to order transmission, require interconnections, make reliability recommendations and collect information. The industry, through the North American Electric Reliability Council (NERC), a self-regulating organization traditionally made up of electric utilities, and the ten regional reliability councils establish reliability standards and monitor compliance. While these organizations have been effective in a world of vertically integrated electric utilities, there is concern today about the voluntary nature of their membership, their dominance by utilities, and the inability to mandate and enforce compliance among their members and other industry participants.

Further complicating reliability issues is incomplete jurisdictional authority. As mentioned above, the NERC and the regional reliability councils have jurisdiction only over their members. There are also thousands of municipal, cooperative, and power marketing utilities that are not subject to FERC or state jurisdiction.

Similarly, we recognize that the bulk power system is an international system. We recognize that the NERC, as a body that includes U.S., Canadian, and Mexican members, has a unique role in setting and monitoring international reliability standards and that close cooperation will be required between national, state, and provincial regulatory agencies that may be given authority for reliability oversight.

Reliability Institutions

The electric utility industry traditionally has been vertically integrated, fully regulated and composed of a limited number of entities. These entities were similar in makeup, in their investments in the bulk power system, and in their expectations for grid operation and use.

In this environment, three institutions evolved that are the focus of this report.

NERC – In 1968, the North American Electric Reliability Council was formed in response to the 1965 power outage that blacked out the northeastern United States and Ontario, Canada. For over two decades, NERC’s mission has been to promote electrical system reliability and thereby prevent further such occurrences. The NERC has been a voluntary, industry-constituted governing body that develops standards, guidelines and criteria for assuring system security and evaluating system adequacy. The NERC has been funded by regional reliability councils which adapt the rules to meet the needs of their regions. Through the work of its ten regional councils and one affiliate council, the NERC has largely succeeded in maintaining a high degree of transmission grid reliability throughout the country. Historically, the NERC has functioned without external enforcement powers, depending on voluntary compliance with standards and peer pressure.

System operators – Today the country is served by approximately 150 separate control areas, each with its own system operator. The operators of these systems rely on communications with each other, access to essential system information, and real time monitoring and control of certain facilities to maintain system reliability. When an emergency occurs on the system, the control area operator takes action — both through communication and direct physical action — to ensure the integrity and security of the system. These people take and direct others to take the actions necessary to “keep the lights on” and to protect against damage to the entire system in the event of emergencies.

FERC — The Federal Energy Regulatory Commission is the federal agency with jurisdiction over the bulk power market, including interstate transmission systems. As part of these responsibilities, the FERC is implementing policies to assure that the owners and operators of bulk power transmission facilities under the agency’s jurisdiction provide non-discriminatory service to all power suppliers in wholesale power markets. Historically, the FERC has not had to involve itself with regulating reliability functions. Increasingly, some parties are calling upon the FERC to begin to exercise its current authorities by addressing reliability issues that intersect with the commercial needs of the industry.

At the onset, we note that the electric industry is changing and, indeed, has already changed in several respects: wholesale electric markets are opening to competition under open access transmission tariffs; several states containing more than one-third of the nation’s population have decided to permit retail consumers to choose their suppliers (nearly all of the remaining states are studying retail competition); energy companies are merging and establishing innovative joint ventures; new competitors are entering markets, and new institutions are forming (e.g., independent system operators; power exchanges; spot markets).

These trends indicate that in the future, market forces will determine when, where and what type of generation sources will be built and which energy trades will be transacted. Also, it is apparent that the nation’s transmission grid will be used by a larger number of entities for many more transactions. There are challenges regarding maintenance of traditional reliability levels in this new environment.

While the traditional reliability institutions and processes have served us well in the past, these institutions and processes need to be modified to assure that reliability occurs in a competitively neutral fashion, without favoring one or another set of market participants. To attempt to accommodate these new reliability issues that arise with competitive markets, today’s existing reliably institutions, and most notably the NERC, have undertaken a number of new initiatives including expanding their membership to include new market participants in addition to those long-standing members drawn from the electric industry. The Task Force welcomes these changes.

Task Force Findings

The Task Force has reached consensus on several key points:
1) Restructuring of the electric industry offers economic benefits to the nation and may result in a more efficient electric industry

2) While the changes brought about by restructuring are complex, the reliability of the system need not be compromised provided appropriate steps are taken. Transmission grid reliability and an open, competitive market can be compatible.

3) The viability and vigor of the commercial market must not be unnecessarily restricted. The market forces being introduced now depend on fair and open access to the transmission grid.

4) Commercial markets should develop economic practices consistent with the ingenuity and mutual interest of the participants. However, grid reliability must be maintained through disciplined technical standards and practices.

5) Reliability standards must be clear, transparent, nondiscriminatory, enforceable and enforced. Compliance must be mandatory for all entities using the bulk power system.
6) Regulatory oversight is necessary to ensure compliance with reliability policies and standards and to resolve disputes.

7) It is reasonable and practical to build on the experience and reliability standards developed by the NERC over the past 28 years. However, these standards as well as NERC’s own system of governance must be modified to accommodate the complexities of the competitive market.

8) Grid reliability depends heavily on system operators who monitor and control the transmission grid in real-time. In order to assure competitive use of the grid, system operators must be independent from owners of generation and transmission; they should have no commercial interests in electricity markets.

9) Bulk power systems are regional in nature and can and should be operated more reliability and efficiently when operators are coordinated over large areas.

10) The reasonable and necessary costs for maintaining the reliability system should be fully recoverable and equitably distributed.

11) Transmission grid reliability is a North American issue; the reliability relationships with Canada and Mexico must be preserved.

Task Force Recommendations

The Task Force recommends that:

1) The NERC expedite — to the fullest extent possible and consistent with assuring sound results — the modification of its governance structure to assure fairness and lack of domination by any single industry sector.

2) The FERC undertake a review of existing NERC policies and standards that affect the operation of an open wholesale market and undertake a review of NERC’s organizational structure and governance. This proposed role for the FERC is important in order to make reliability standards enforceable and to assure that reliability standards and practices are not misused in ways that would be discriminatory in the competitive market. Given the considerable demands currently faced by the FERC, additional resources may be required by the agency in order to undertake this role.

3) Federal legislation may be useful to clarify FERC’s authority and responsibility for overseeing and setting and enforcement of reliability standards.

Natural cooling via roof water spray

/0 Comments/in , /by

Subject: UFTO Note – Natural cooling via roof water spray
Date: Fri, 11 Jul 1997 13:19:33 -0700
From: Ed Beardsworth

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| http://www.ufto.com edbeards@ufto.com
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Natural cooling via roof water spray

Roof Science Corp. has developed a system called WhiteCap which can meet 50%-100% of a commercial building cooling loads in arid or semi-arid climates, by radiating heat to the night sky to cool the roof and water which is sprayed on the roof. (Note this is radiative, not evaporative cooling.) The cooled water is collected in a storage tank to provide cooling during the next day. It thus substantially reduces both energy and peak electric demand for indoor comfort control.

In the last few months, NREL committed to completing their test case study at the Nogales Border Station, under the DOE New Technology Demonstration Program. Results will be promulgated among 2,000 federal energy managers. Also, three private developers have committed to include WhiteCap in new buildings.

The company projects profitability in 2-3 years, and is seeking investment and business partners.

Contact:
Mark Berman or Richard Bourne
Roof Science Corp., Davis Energy Group, Davis CA
916-753-1100 mjberm@davisenergy.com

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The following is excerpted from Roof Science’s business plan:

WhiteCap was developed by the Davis Energy Group (DEG) with support from the California Energy Commission, the U.S. Department of Energy, SMUD, and PG&E. The systems use a natural cooling phenomenon to satisfy 50 to 100% of commercial building cooling loads in dry climates. The clear summer night sky is cold; 20-30° F equivalent as a receiver of radiant energy from the earth. Water sprayed at night on roofs facing the sky can often be cooled to 55° F when daytime temperatures exceed 100° F. After night-cooling on the roof, the chilled water is filtered and stored for next-day use. The three WhiteCap system types facilitate integration with most non-residential buildings. Economics are very favorable, generating zero to three year paybacks. Added fire safety, automatic roof cleaning, and utility incentives which recognize peak load reduction further enhance WhiteCap value. WhiteCap also offers substantial environmental benefits by reducing ozone depletion and global warming.

Technology Status: Seven full scale WhiteCap projects are operating as of April, 1997. The largest is a 27,000 ft2 state office building in Los Angeles. Four have monitoring systems which generate continuing performance data verifying effective cooling performance. Recent projects have shifted from “on-roof” to more marketable “off-roof” water storage. This change has required re-engineering and testing of some components. New designs promise even better performance, reduced costs, and additional patent protection. The most immediate technology goal is to demonstrate the new designs in several large (50,000 ft2+) “flagship” projects.

The Market: The primary WhiteCap market is new and retrofit low-rise buildings with low-slope roofs in the Western U. S. This is a very large market; the new construction opportunity alone is roughly 100 million square feet per year in the Western US. The highest growth rates are occurring in locations where high cooling loads offer significant opportunities for WhiteCap. Many existing buildings with central systems are WhiteCap candidates because CFC-based cooling systems must be replaced per the MontreaI Protocol. Underlying market conditions for RSC should remain positive, and electric utility deregulation should enhance WhiteCap’s prospects.

Competition: RSC has relatively strong patent protection on WhiteCap technologies and there are no direct WhiteCap competitors. Two patents have issued and two other applications are being prepared. Inertia is strong in the construction industry, and conventional systems will continue to be strong competitors in the future. Electric utility and government activities are expected to influence the industry toward WhiteCap.

The Company: RSC was formed in 1992 as an “incubator” firm in the Sacramento Technology Development Center, to move WhiteCap from R&D status to a commercialized product. After five years of part-time continuing development and demonstration, the company is now poised for success.

Marketing Strategy: RSC provides engineering services and specialty components for WhiteCap projects. Initial marketing efforts have generated a clear picture of preferred markets which are, in ranked order: (l) local new office projects; (2) Federal and State government retrofit projects; (3) “high tech” industrial facilities; (4) “green” buildings, and (5) schools. Marketing efforts will continue to focus on key Northern California projects with profit potential through 1998. RSC will use current contacts with major commercial building firms to generate new sales. Free publicity, sales agents, advertising, and licensees will be all be used to rapidly increase sales beginning in 1999.