Energy Management - The View from 2010
by Guy Dauncey
It is May, 2010. I live in Seattle, where I settled three years
ago, and I work as chief executive of Northwest BioPartners. BioPartners
is a network of 15 semi-independent companies based in the Vancouver-Seattle-Portland
corridor. Each of our companies has its own core capacities, and
they are held together by a shared interest in a range of biopharmaceutical
products. They work in the areas of genetic engineering, cell
line construction, microbial cell fermentation, mammalian cell
culturing, biomolecules purification, and so on – and they all
need power.
At last month’s breakfast round-table, the main topic of conversation
was the April power outages that were caused first by the freak
windstorms, and then by the flooding that followed the excessive
snowmelt after last winter’s blizzards. No fewer than six of our
partner companies experienced outages, lasting from a few minutes
to several hours. In the worst case, GenZio lost a month’s worth
of product when their back-up power supply failed, and the temperature
– which is critical for cell survival – fell by 8 degrees. Their
lawyers are suing their power provider for over $1 million, while
their power provider has launched a counter-suit claiming corporate
reputation damages because GenZio supposedly failed to follow
the back-up procedures. What a mess.
As we talked, it transpired that GenZio had recently switched
to one of the new arrivals, having been sold on a pitch of 6 9’s
power and a two year price stability guarantee. As we shared the
best and the worst of our power provider experiences, I was struck
by how low their expectations of a service relationship were.
"Just give me reliable power at a reasonable price and leave
us to get on with our business" seemed to be the prevailing
attitude.
It is my job to look out for our partners’ best interest, however,
so I have taken the time to research the profile of the ideal
provider, with a mind to negotiating an appropriate package and
a joint purchase agreement. With an annual turnover of $1 billion,
an aggregate demand of 9 gigawatt hours a year (pulling 3 MW),
and enormous growth potential, that should be worth some consideration.
After talking to the providers who operate in the Northwest,
and to each of the BioPartners, I have drawn up a list of eight
considerations, which will form the foundation of our negotiations.
That’s not to say we’ll get them all, but at least we know what
we’re shooting for.
No 1: Reliability
This came top of everyone’s list. Our companies want to know
that their power provider will be there, come hurricane, shareholder
meltdown or regulatory maelstrom. Too many of the BioPartners
had heard stories about businesses which switched to a new provider,
only to discover that they couldn’t survive a natural gas price
crunch, or to realize that they had diversified beyond the grasp
of their managers and gone belly-up, leaving some extremely angry
customers. As fall-back, the companies want legally guaranteed
back-up power from a fellow-provider, in the event of a disaster.
No 2: 6 9’s Power
In the same vein, they want power that is 99.9999% reliable,
so that outages, however temporary, become a thing of the past.
When pressed on the reasons, most mentioned global climate change,
and how the constant run of weather extremes was only going to
get worse. When asked how long they thought it would be before
global warming started to cool down, their answers were very pessimistic,
ranging from 50 to 500 years, with some fearing that it might
be too late to get the genie back into the bottle – or the carbon
back into the trees. They are accepting disasters as normal because
of climate change, and want 6 9’s assurance provision to protect
their needs.
No 3: Innovation
With that out of the way, however, the BioPartners are looking
for much more than a service provider, or a sales relationship.
When asked to describe their dream provider, they all said in
one way or another that they wanted an active partnership with
a company that shared their mind-set, and their excitement about
innovation. Having seen the benefits of partnership among themselves,
they want the same from their power company. They want a company
that is fresh-thinking, and right on the button, that will come
up with new ways to help them make better use of their power.
No 4: ‘Customers Matter’
Building on the last point, their fourth consideration was to
have a provider which would think on their behalf. Several referred
to negative experiences with the ‘hydrosaurs’, those large, dull,
central providers which had developed a lazy attitude over time,
which effectively said "We’re your power engineers, we know
what’s best for you." Into the trash, they said, with that
kind of service.
No 5: Energy Efficiency
With their power costing around 11 cents/kWh, and their yearly
bills averaging around $65,000 per company, the BioPartners all
expressed an interest in knowing about ways to save energy. They
want a provider which will keep them abreast of the latest energy
efficient technologies, equipment & systems, and offer them
discounts, rebates, savings plans, greenhouse gas reduction planning
advice, and energy design planning, to help them eliminate any
inefficiencies they might be carrying. Seattle City Light has
a reputation in the region for offering this kind of service,
which has raised expectations in the commercial and industrial
community, and the Northwest Power Planning Council places a big
emphasis on the potential to generate virtual power from efficiency
savings. They even have a device that cycles down the refrigeration
and lighting in vending units when they’re not in use, which would
otherwise run 24-7, and makes them much more efficient.
No 6: Independent Power Production
Many of the BioPartners staff have net metered solar shingles
on their roofs and Plug Power fuel cell units in their basements,
so they are familiar with exporting energy back to the grid. Some
of their kids have even assembled their own wind turbines at school,
and study power production in their maths and physics classes.
Now that the price of solar has fallen to $1 a watt, thanks to
mass production, renewable portfolio standards, and solar building
codes that require new homes to incorporate 2kW solar systems,
the solar revolution is truly underway. Even up here in the wet
Northwest, where we only get 1,000 hours of sunshine a year, the
effective price with an assumed 8% interest rate has fallen to
15 cents/kWh, which falls to 12 or 13 cents when you include the
exported summer surplus. Where the BioPartners’ premises have
roofs, walls, windows and parking areas that lend themselves to
solar power, they want a provider which will give them sound advice
on making the investment, and keep them informed on current technologies.
They also want to be kept abreast of technologies such as Beacon
Power’s high velocity flywheels, and ground-source heating for
new buildings.
No 7: Greenery
Over the past ten years, the market for biotechnology and genetically
modified product outside North America has taken quite a battering,
fueled by GM modified crops and organisms showing up hundreds
of miles away from their test fields and laboratories. Partly
as a result, but also because it is becoming increasingly difficult
to attract graduates and PhDs if your company lacks a social responsibility
profile, Northwest BioPartners has become very sensitive to social
and environmental issues. We have joined the Northwest chapter
of Business for Social Responsibility, and adopted a triple-bottom-line
approach, focusing on added social and environmental value, as
well as economic value. This means that as well as paying attention
to things like waste-stream recycling, organic grounds maintenance,
and resource-use, our companies pay attention to their greenhouse
gas emissions, and want to be associated with a power provider
which will give them the option of buying carbon-neutral green
power.
No 8: Dynamic Metering and Billing
It was about a year ago, when invited to a friend’s dinner party,
that I made my first acquaintance with the Wattbug – a delightful
little blue-green creature designed by Mutlu Inc, a Turkish company. The gadget sits on the table with its antennae tail in the air,
and displays information on household electricity consumption
obtained from an amperemeter in the fuse box. The current is represented
by an LED that flashes from the tip of its tail to its head, changing
from green to yellow to red as the current increases, and displays
a smiley when energy use is low, a sad face when it’s high. There
are several such meters on the market. The more sophisticated
indicate room-by-room energy use, compare it to last month’s consumption,
and provide a greenhouse gas read-out. For commercial and industrial
users, dynamic metering provides a real-time read-out of power-usage
in different load-centers, displaying cost and savings data. The
dynamic web-based electronic billing that accompanies the package
enables you to compare costs on a monthly and annual basis, and
obtain immediate cost and pay-back periods for different energy
efficient and independent power investments, based on current
price and usage. They even provide an email reminder when your
bill is due.
Next month, I will present my findings to the BioPartners at
our June breakfast round-table, and see how they respond. I have
already sent our specs to the leading energy providers in the
region, so I may even have something to put on the table, along
with the Wattbug. I know in advance how some will respond. They’ll
say, "I’m fine with the first two items on your list, but
what has the rest got to do with biomolecules?" I also know
that one or two will catch on immediately. It’s all about "the
vision thing": when you associate yourself with companies
of the highest quality, who are thinking ahead of the curve, there’s
a subtle process of transference that takes place, which stimulates
you to be more creative. I’m sure the new MBAs have a name for
it. And besides, it makes life more fun – which is not a mean
consideration, these days.
Guy Dauncey is a writer, futurist and consultant who lives
in Victoria, Canada. He is the author of "Stormy Weather:
101 Solutions to Global Climate Change" (New Society Publishers,
2001), which includes 15 detailed solutions for energy companies,
and "A Sustainable Energy Plan for the USA" (YES! Magazine,
Fall 2001). His website is www.earthfuture.com
