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PCAST Report – Energy R&D in 21st Century

Federal Energy R&D in the 21st Century

The famous “PCAST” report is now available in hard copy and on-line.

This presidential panel, operating under the Office of Science and Technology Policy (OSTP) in the White House, reviewed all federal government energy R&D, in the context of restructuring and declining industry R&D budgets.

It concludes that R&D can accomplish a lot to reduce the cost of supply, increase productivity and support diversification of export. The recommendations emphasize efficiency, renewables, and public education.

Hardcopies can be obtained directly from OSTP
–contact N. Kelly by email at kellyn@nrel.gov, or fax 202-651-7502

The entire report is online at
http://www.whitehouse.gov/WH/EOP/OSTP/Energy/

The first part of the executive summary, and the cover letter to the President are included here:

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REPORT TO THE PRESIDENT ON
FEDERAL ENERGY RESEARCH AND DEVELOPMENT FOR THE
CHALLENGES OF THE TWENTY-FIRST CENTURY

PRESIDENT’S COMMITTEE OF ADVISORS ON SCIENCE AND TECHNOLOGY
PANEL ON ENERGY RESEARCH AND DEVELOPMENT

NOVEMBER 1997

EXECUTIVE SUMMARY (introduction)
The United States faces major energy-related challenges as it enters the twenty-first century. Our economic well-being depends on reliable, affordable supplies of energy. Our environmental well-being—from improving urban air quality to abating the risk of global warming —requires a mix of energy sources that emits less carbon dioxide and other pollutants than today’ mix does. Our national security requires secure supplies of oil or alternatives to it, as well as prevention of nuclear proliferation. And for reasons of economy, environment, security, and stature as a world power alike, the United States must maintain its leadership in the science and technology of energy supply and use.

All of these energy-related challenges to the well-being of this country are made more acute by what is happening elsewhere in the world. The combination of population growth and economic development in Asia, Africa, and Latin America is driving a rapid expansion of world energy use, which is beginning to augment significantly the worldwide emissions of carbon dioxide from fossil fuel combustion, increasing pressures on world oil supplies, and exacerbating nuclear proliferation concerns. Means must be found to meet the economic aspirations and associated energy needs of all the world’s people while protecting the environment and preserving peace, stability, and opportunity.

Improvements in energy technologies, attainable through energy research and development, are the key to the capacity of the United States to address—and to help the rest of the world address —these challenges.

Many of the energy R&D programs of the Federal government, which are primarily conducted by the Department of Energy (DOE), have been well focused and effective within the limits of available funding. But these programs, taken as a whole, are not commensurate in scope and scale with the energy challenges and opportunities the twenty-first century will present. (This judgment takes into account the contributions to energy R&D that can reasonably be expected to be made by the private sector under market conditions similar to today’s.) The inadequacy of curren energy R&D is especially acute in relation to the challenge of responding prudently and cost-effectively to the risk of global climatic change from society’s greenhuse-gas emissions, of which the most important is carbon dioxide from combustion of fossil fuels. Much of the new R&D needed to respond to this challenge would also be responsive to the other challenges.
SYNOPSIS OF MAIN RECOMMENDATIONS

To close the gap between the current energy R&D program and the one that the challenges require, the Panel recommends strengthening the DOE applied energy-technology R&D portfolio by increasing funding for four of its major elements (energy end-use efficiency, nuclear fission, nuclear fusion, and renewable energy technologies) and restructuring part of the fifth (fossil fuel technologies). We also recommend better coordination between the Department’s applied energy-technology programs and the fundamental research carried out in the program on Basic Energy Sciences; increased Department efforts in integrated analysis of its entire energy R&D portfolio and the leverage the portfolio offers against the energy challenges of the next century; targeted efforts to improve the prospects of commercialization of the fruits of publicly funded energy R&D in specific areas; increased attention to certain international aspects of energy R&D; and changes in the prominence given to energy R&D in relation to the Department’s other missions, coupled with changes in how this R&D is managed.

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PRESIDENT’S COMMITTEE OF ADVISORS ON SCIENCE AND TECHNOLOGY
WASHINGTON, D.C. 20502

November 4, 1997

The White House
1600 Pennsylvania Avenue N.W.
Washington, DC 20500

Dear Mr. President:

PCAST endorses the report’s findings that this country’s economic prosperity, environmental quality, national security, and world leadership in science and technology all require improving our energy technologies, and that an enhanced national R&D effort is needed to provide these improvements. The inadequacy of current energy R&D is especially acute in relation to the challenge of responding responsibly and cost-effectively to the risk of global climatic change from society’s greenhouse gas emissions, in particular, carbon dioxide from combustion of fossil fuels.

PCAST recommends focusing the government’s energy R&D on projects where high potential payoffs for society as a whole justify bigger R&D investments than industry would be likely to make on the basis of expected private returns and where modest government investments can effectively complement, leverage, or catalyze work in the private sector.

The report recommends an increase, over a five-year period, of $1 billion in the Department of Energy’s annual budget for applied energy-technology R&D. The largest shares of such an increase would go to R&D in energy efficiency and renewable energy technologies, but nuclear fusion and fission would also receive increases. The composition of the R&D supported on advanced fossil-fuel technologies would change in favor of longer-term opportunities, including fuel cells and carbon-sequestration technologies, but the overall spending level for fossil-fuel technologies would stay roughly constant in real terms.

The proposed total for FY 2003 would return the DOE’s real level of effort in applied energy-technology R&D in that year to about where it was in FY 1991 and FY 1992. In constant dollars, the average real growth rate would be 8.3 percent per year.

PCAST respectfully urges that you increase your efforts to communicate clearly to the public the importance of energy and energy R&D to the nation’s future, and PCAST recommends that you clearly designate the Secretary of Energy as the national leader and coordinator for developing and carrying out the national energy strategy.

The report also makes recommendations for improving the Department of Energy’s management of its energy R&D portfolio, including the naming of a single individual with responsibility for the whole portfolio and reporting directly to the Secretary.

The energy R&D portfolio PCAST proposes will be of crucial importance in meeting that challenge. Many of the energy-technologies that will help with the problem of climate change, moreover, will also help address other energy-related challenges, including reducing dependence on imported oil, diversifying the U.S. domestic fuel- and electricity-supply systems, expanding U.S. exports of energy technologies, reducing air and water pollution, and reducing the cost, safety and security risks of nuclear energy systems around the world.

Sincerely,

John H. Gibbons
Co-Chairman
President’s Committee of Advisors on Science and Technology

cc: Vice President Al Gore

CURC Technology Conference

I attended this conference last week, and here is a brief account of what transpired there. Let me know if you want additional information on any part of it.

California Utility Research Council Technology Exchange Conf.

November 3-5, 1997
Hyatt Regency La Jolla, San Diego, CA

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CONTENTS:
– Background and Final Agenda
– Conference Highlights – Summary of Presentations
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<<< Background and Final Agenda >>>>

— Who is CURC?
CURC (California Utility Research Council) was established by the California Legislature in 1981 to:
• Promote consistency of utility RD&D programs with state energy policy
• Prevent unnecessary duplication of research efforts
• Encourage the free exchange of information related to utility RD&D projects, where appropriate
• Identify opportunities for research coordination between energy utilities and for joint funding of RD&D projects of benefit to California ratepayers

CURC Board includes representatives from the CPUC, CEC, PG&E, SDG&E, SCE, and SoCalGas.

— Background
Restructuring of the electric and natural gas industries is having a dramatic effect on the energy RD&D landscape in California. Previously, most of this work was funded by ratepayers and managed by the four largest investor-owned California utilities: PG&E, SCE, SDG&E, and SoCalGas. Supplemental funding for California RD&D interests was provided by GRI, EPRI, and DOE.

Restructuring is providing new opportunities for collaboration of energy RD&D efforts. Recent California legislation (AB1890) has made available $62.5 million per year for public interest energy RD&D to be managed by the California Energy Commission (CEC). Utilities will continue to fund ratepayer RD&D activities, although on a lesser scale. It is also expected that there will be an increasing interest in shareholder-funded technologies by energy companies seeking a competitive advantage. Finally, restructuring will have a direct effect on programs offered by EPRI, GRI, and perhaps even DOE.

— Purpose The 1997 CURC Technology Exchange Conference will help attendees better understand how all of the energy RD&D pieces will fit together in a restructured environment. The conference will also provide participants with an overview of technology trends and energy RD&D collaboration activities which benefit California. Attendees will get a first hand look at how the California PIER (Public Interest Energy Research) program will be implemented. Just as important, individuals will have an opportunity to network directly with peers and funding agencies.

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AGENDA

Tuesday, November 4
8:30AM- Opening Remarks-Frank A. Spasaro (CURC Chair)

9:00- California Public-Interest Energy Research
(PIER Program Evolution, Overview of Objectives, Strategic Plan)

David L. Rohy, Commissioner, California Energy Commission
Kip Lipper, Chief of Staff to Calif Senator Byron Sher
John White, Center for Energy Efficiency & Renewables

10:00AM- California Utility RD&D Programs
(Program Focus, Technology Trends, Collaboration Opportunities)

Frank Spasaro, Southern California Gas
Jim Reilly, Southern California Edison
Mike Watanabi, Pacific Gas & Electric
Kurt Kammerer, San Diego Gas & Electric
Bud Beebe, Sacramento Municipal Utility District

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2:00 PM- Other California Energy RD&D Programs
(Program Focus, Technology Trends, Collaboration Opportunities)

Jim Cole, California Institute for Energy Efficiency
John White, Center for Energy Efficiency & Renewable Technologies
Andris Abele, So Calif Air Quality Management District

3:15PM- Private Investment RD&D Opportunities
Maurice Gunderson, Nth Technologies
John Burns, Scripps Consulting Group
Paul Pechersky, SAIC

5:00-8:00 PM-Reception, Poster Sessions

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Wednesday, November 5

8:30AM- Keynote Presentation:
Mark Bernstein, Office of Science & Technology Policy, Office of the
President

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9:30 AM- National Energy RD&D Funding Agencies
(RD&D Program Highlights, Technology Trends, Collaboration Opportunities)

Renee Guild, Elec. Power Research Institute
Bill Burnett, Gas Research Institute
William Noel, U.S. Department of Energy
Joan Woodward, Sandia Lab
Robert Schock, L Livermore National Lab

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11:00 AM- The Customer Perspective

Mike Carliner, NAHB
Carl Weinberg, Weinberg & Associates
Richard Sperberg, On-Site Energy
Ron Ishii, Technology Committee Chairman, CADER
Richard Brent, Solar Turbine Systems

2:00 PM-PIER Program Implementation Status

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CURC Conference Highlights (prepared by UFTO)

SUMMARY–
PUBLIC INTEREST PROGRAMS UNDER CALIF. UTILITY RESTRUCTURING

AB 1890 and SB90 have laid a path for “public interest” programs, but
it’s not straight. It’s been a tumultuous process so far, and there
are still many issues to resolve.

There are 3 distinct pots of money to be collected from ratepayers as
part of the competition transition charge (CTC-includes stranded
asset financing) for public interest benefit programs, to be spent
over the next 5 years:

Public Interest R&D (PIER) — $252 million
Renewables — $540 million — production credits, not grants or development funding
Efficiency — $872 million — “market transformation”

Each one has its own separate administration and governance, and all three are a “work in progress” even as the programs swing into effect, with “transition plans” to bridge the big differences between the past and the future. The roles that California utilities will play in each program are yet to be determined, in the transition and over time.

It’s quite a complicated story–don’t hold me to the exact details. A great deal of information is available on the CEC (Calif. Energy Commission) website: http://www.energy.ca.gov/

Efficiency
— Overseen by a ruling Board appointed by the CPUC (Calif Board for Energy Effic–CBEE), which will exist for only four years. The Board will select administrators. This was planned for October 97, but it didn’t happen. Utilities will do the administration for the next 8 months, as an interim arrangement. Administrators will deliver services through competitive contracting with “service providers”, e.g. ESCOs. The purpose is to stimulate the private sector ESCO industry to be up and vigorous and successful by the end of the four years. http://www.cbee.org/

Renewables
— CEC will run this program, with funds collected from IOU ratepayers. (Public utilities are to raise a corresponding amount separately.) Through production credits and rebates, the goal is to facilitate development and encourage consumer driven self-sustaining market-based growth in implementation of renewables. The money is allocated into categories of existing, emerging and new technology, with different bidding processes for each. Funds are further allocated to various technology areas (wind, biomass, solar, etc.). QF’s under fixed contract and utility owned facilities are not eligible (unless divested and not covered under CTC). http://www.energy.ca.gov/energy/renewables/

PIER
— Mission is cleaner safer energy supply. To develop science and technology not provided by the private sector. Five subject areas are: efficiency, environment, renewables, advanced generation, and strategic research. The CEC is dealing with the Legislature about what administrative processes and reporting are necessary for appropriate stewardship of the funds.

Transition project funding proposals from utilities, CIEE and EPRI are currently being reviewed. (A complete list of proposals and initial evaluation scores were published November 5 and appear on the CEC website). These awards will be decided in Jan ’98, at the same time as proposals are due for the 1st general solicitation, which will be issued in December.

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

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The CURC CONFERENCE provided a wide ranging set of presentations:

– California Program Evolution (Legislature, CEC, etc.)
– California Utilities R&D Programs
– Other CA Energy R&D Programs
– Private Investment R&D
– National R&D
– Customer Perspective
– AB1890 Implementation
– Keynote 1 – Karl Rabago, Environ Def. Fund
– Keynote 2 – Mark Bernstein, OSTP, Exec. Office of the President

——————
– California Program Evolution (Legislature, CEC, etc.)

Overview of the history, rationale, goals and current status (see above, and websites)

“R&D is a blind date with knowledge” D. Rohy, CEC Commissioner

——————
– California Utilities R&D Programs

Each of the IOUs and SMUD presented their programs and response under restructuring. SDGE and SCE plan a vigorous continuing program in public interest, utility and competitive R&D. Competitive R&D is shareholder funded, to create shareholder value. PG&E, having distributed and decentralized (or “destroyed” – one speaker suggested picking any “d-word”.), its R&D programs, appeared less ready to take part. SMUD talked about their sustainable/renewable commitment.

(Resolution may be nearing on a definition of “utility” R&D — i.e. included in wires charge rates. General idea is that the regulated “wires” business — all that would remain of the old utility — would have R&D needs not covered under the other two categories. However no-one seemed to have any idea what it would include, and budgets are apparently non-existent.)

(Also, the Calif ISO was to have set aside a budget for transmission- related R&D, but that’s fallen through the cracks as the ISO struggles with much more urgent matters of getting ready for operation on January 1.)

——————
– Other CA Energy R&D Programs

The Calif Institute for Energy Efficiency (CIEE) presented its program and strategy, and described the LBL/CIEE air-duct leak sealing technology as an example of how collaboration can work. Originally funded by utilities, their continued existence was in doubt. They’ve submitted proposals to CEC for projects in ’98, and to be a “Center of Excellence” in ’99. http://eande.lbl.gov/ciee/ciee_homepage.html

So. Coast Air Quality Mgt District runs a technology program funded by DMV funds, grants, and fines. They also offer opportunities for collaboration. Andris Abele, 909-396-3250.

——————
– Private Investment R&D

Nth Power, a new VC fund specializing in strategic utility technology, described the difference between old and new utilities and how competition requires differentiation of products and services. Venture Capital is emerging as a tool to make these available, but not to everyone. http://www.nthfund.com

Scripps Consulting does earlier stage deals, providing funding and vital management support to startups and help in structuring ventures with big companies. John Burns, 619-546-4708
” Blessed are the dealmakers, for they shall feast on the bread of the less-quick.”

SAIC — Infotech Opportunities in the New Electricity Market. They handle much of the IT work at some major utilities. Outlined key success factors in IT partnerships. Paul Perchersky 562-463-8939

Frank Wessel, UC Irvine research physicist, described a completely new concept for fusion power generation, based on energetic particle beam injection into a toroidal magnetic field. He is looking for funding sources.

——————
– National R&D

EPRI – outlined objectives, and criteria for a successful partnership, implicitly positioning EPRI as highly qualified to manage some of the PIER program.
GRI – on brink of major restructuring, with “dispersed benefit” program, maybe with public funding, and “targeted” programs, with flexible funding options and focused product development.
DOE – outline of the several technology “office” programs in Energy Efficiency, i.e. Utilities (renewables), Transportation, and Industry.
Sandia – introduction to the Lab’s industry collaborations and extensive programs in energy
LLNL – ditto

——————
– Customer Perspective

> NAHB – did a customer preference survey indicating that customers are less interested in energy matters than one might like to think, a point of view that NAHB has apparently been pushing for some time. Carl Weinberg – former head of R&D at PG&E – outlined consumer rationale and reasons why there are “only three ways to go” are high efficeincy conversion of clean fuels, renewables, and energy efficiency.

> On-Site Energy – a “traditional” ESCO for 10 years, sees definitions blurring, as ESCOs evolve from energy efficiency providers to total service providers. Find customers fixated on price to such an extent that they have to portray savings from reduced consumption in terms of an equivalent lower price.

> CADER – Overview of Calif Alliance Distrib Energy Resources. (See UFTO Note July 15) Their big conference was held on Sept 15-17, and a draft report was distributed then. Final report to be issued in next month or two (Will be sent to all members. Check website for further information: http://www.energy.ca.gov/CADER/ Lack of widely accepted grid interconnection standards seen as big obstacle, and lengthy customized review procedures. Customer benefits may not overlap with distribution grid benefits.

Solar Turbine – Market research indicates that buying criteria for adv. turbines different in the US, compared with elsewhere in the world, with emphasis on first cost and reliability. Growing attention to emissions and efficiency, and “reliability availability maintainability-for the duration” (RAM-D).

——————
– AB1890 Implementation
Brief overview–summarized above.

——————
– Keynote 1 – Karl Rabago, Environ Defense Fund
Very lively presentation, describing the new drivers (environmentalism, telecomm, demand growth, etc.) and contrasting conventional industry ideas with the “new view”. Notes the “cost” and “willingness-to-pay” view of renewables misses the significant revenue opportunity available through premiun pricing. Also noted that technologies are successful when they “disappear” (e.g. motors, computers in appliances). New organizations are networks not heirarchies. Growth of the “no-asset” utility. Need constant innovation, creative destruction.

(Quote attributed to a leading environmentalist:
“Using nuclear power to reduce greenhouse gases is like
using crack cocaine to give up smoking cigarettes.” )

——————
– Keynote 2 – Mark Bernstein, OSTP, Exec. Office of the President
Discussed recently released PCAST report on Energy R&D recommendations. Review of all government energy R&D and interviews with 80 utility R&D managers (Any UFTO companies?). Energy R&D can reduce supply cost, increase productivity, and diversify exports trade. Recommend increased emphasis on efficiency and renewables. Relegate fusion to long term basic science. Maintain existing nuclear fleet and capability for non-proliferation. Advanced fossil. Public education.

President’s Climate Change Proposal – binding targets by 2008 to 1990 levels. $5 billion in tax cuts and R&D. Developing country participation. Work with industry.

Near term: credits for action, tax cuts, R&D, consultations, encourage efficient products, federal procurement of new technology to set example, electric restructuring legislation (incentives for carbon emission reduction), etc.

Technology strategy–advances needed to reduce emissions, technology exists to do it, also need improvements, breakthroughs can come later. Need to be innovative–e.g. to get 21st century buildings, could set up “regulation-free zones”. Industry look to fuel cells, microturbines, efficient motors. USDA to do more on biofuels.