Climate and Energy
"I'd put my money on the sun and solar energy.
What a source of power!
I hope we don't have to wait 'til oil and coal run out before we tackle that."
- Thomas Edison
 

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