Energy Round Table August 2013

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 Powerful Force

The North Carolina energy industry is shaping manufacturing,
education and technology as it prepares for the future.

Though it has a foundation in the Charlotte region, the energy industry is wired to all corners of North Carolina. The state is home to the largest utility in the country and companies that design, maintain or build everything from nuclear power plants to the wires that carry electricity to homes and businesses. The Charlotte Regional Partnership says the industry has added 6,100 jobs in its region since 2007. Business North Carolina recently gathered a panel of experts to discuss the importance of the industry and its future. Participating were Thomas Boothby, partner at Charlotte-based accounting firm Dixon Hughes Goodman LLP; Johan Enslin, director of UNC Charlotte’s Energy Production and Infrastructure Center; Bill Heitman, executive energy adviser at Central Piedmont Community College’s Center for Energy Training in Charlotte; Tim Holder, vice president for sales and economic development for Statesville-based EnergyUnited Electric Membership Corp.; Clarence Lyons, project manager of renewable resources for Palo Alto, Calif.-based Electric Power Research Institute Inc. North Carolina operations; Linda Nwadike, engineer with Stonington, Conn.-based Zachry Nuclear Engineering Inc.’s Charlotte office; and Teresa Helmlinger Ratcliff, interim vice provost for outreach and engagement and executive director of Raleigh-based N.C. State University’s Industrial Extension Service. The round table was sponsored and hosted by Dixon Hughes Goodman, with support from CPCC, EnergyUnited and N.C. State Industrial Extension Service. This transcript was edited for brevity and clarity.

What is the impact of the energy industry on the state’s economy?

Boothby: The industry has grown substantially over the last several years thanks to new organizations and political initiatives. There are almost daily announcements of jobs and new energy companies starting or relocating their headquarters here.

Holder: The Charlotte Regional Partnership says more than 20,000 people work in the industry now, just in its region. In the state, there are about 1,000 energy companies, and 250 of them are in the Charlotte region.

Heitman: The community college wraps its arms around the size of the energy cluster by organizing its members by business model — engineering, construction, manufacturing, power generation, distribution. That helps show the breadth of companies in the cluster.

Ratcliff: The spectrum is getting more colorful as renewable energy and its manufacturing come into maturity. The energy industry is like every other industry: It’s not just the people who generate and distribute. There is a supply chain that needs nurturing as well.   

Lyons: You can find startups and established international energy companies in North Carolina. Having points all along the growth curve speaks to the maturity of the cluster.                                                                             

What draws energy companies to North Carolina?

Boothby: It has a great environment for development, both startups and companies with new ideas. Com-
panies from all over the U.S. call us about North Carolina because they want to be here. Interest is especially strong in the renewable-energy industry.                   

Nwadike: Years ago I wouldn’t have thought Zachry’s nuclear division would have a Charlotte office. However, looking at the number of energy companies in the cluster, it was the right move. It makes sense to be in the same region as Duke Energy Corp. — a major nuclear-power generator — AREVA Inc. North America, URS Corp., Mitsubishi Nuclear Energy Systems and others. Charlotte is the place to be if you
are in the energy industry.       

Holder: Abundant Power Group LLC is relatively new in the region. It’s
a financial company that focuses on energy-efficiency programs and products, so you don’t readily associate them with the industry.                               

Enslin: ABB Inc. recently built a high-voltage cable plant in Huntersville. One of the reasons companies such as ABB locate here is the energy cluster. They’ve heard about it, and it’s growing.   

How does the industry prepare and collaborate to meet current and future needs?   

Lyons: Electric Power Research Institute’s partnerships with higher-education institutions are invaluable. They take ideas from a lab to power-plant tests, where real data is collected. EPRI is working, for example, on a remote-controlled crawler that finds cracks in concrete structures such as dams and nuclear plants. It is designed to be more effective and safer than having people climb scaffolding and check by hand. The project was a partnership between Charlotte energy companies and UNC Charlotte. Eventually, it will be commercially available. It’s innovation at work.                                                       

Enslin: The days of federal grants and the U.S. Department of Energy funding whatever we wanted to research are gone. I’m an engineer not a physicist. I believe research should focus on what industry needs in the next five years. There are great schools with great faculties in North Carolina that have done much beneficial research over the years. Applying that research is key to future success.   

Boothby: E4 Carolinas, the industry-led trade association for the cluster, hosts an emerging-leaders program of about 25 young folks that supports the energy cluster. Spending time touring and understanding the different energy operations and creating future leaders is what it’s about. I would be remiss to not mention the financial-services sector. There are banks, accounting firms and law firms where people are making a career practicing within the industry.                                                                                    
        
How does sustainable energy fit into the state’s future?                                               

Ratcliff: Companies want to become sustainable. They are becoming green — and not necessarily because it’s the best for the environment, but because it helps their bottom lines. Research develops efficiency, but it also discovers ways for manufacturing companies and smaller communities to control energy consumption. More manufacturing companies are interested, for example, in using some of their raw or waste products to generate their own power. There is no silver bullet. You have to continuously look for new options. Developing economies worldwide will become as reliant on energy as we are.

Holder: EnergyUnited spends
time each week with members of the commercial-industrial sector looking for opportunities for power generation. That desire continues to grow in com-
panies. It is mainstream. The more educated the general public and businesses become about it the more you will see it push the cluster forward.                                   

Boothby: There has been a convergence of education and business. From my experience, the people coming into the workplace want to work some place that is sustainable. Sustainability will attract the best talent. It’s an activist generation. They’re doing it individually, but as a group, it’s changing corporate America.             

Lyons: It’s a different generation when you can go to a bar and say, “I work in renewable energy,” and that’s
a pickup line. And it works.      

What about energy conservation?                                                       

Enslin: The benefits of energy efficiency are only now being uncovered. Almost every building in downtown Charlotte was built in the 1950s, ’60s or ’70s, so there are opportunities to improve their efficiency, such as improving insulation. Better regulation and efficiency standards are a must. It’s not an option anymore.                      

Ratcliff: Efficiency is mainstream. Light-emitting diode bulbs took off because they provide the same lighting from less energy and generate less heat than traditional bulbs. That reduces power needs for cooling devices such as air conditioners.

Boothby: Efficiency is rewarded in the tax code. There are significant incentives for making new buildings or remodeled space energy efficient. You’re leaving money on the table if you aren’t embracing it.             

Holder: It was said in the ’70s that energy would be free if nuclear came about. Today it’s mainstream to say that the cheapest kilowatt hour is the one you don’t have to generate. Utilities are moving toward a service-oriented business model. It’s about being an energy expert, helping businesses and homeowners maximize efficiency. EnergyUnited offers customers incentives to reduce use. Every customer who upgrades a heat pump receives money. It used to be about declining energy blocks: the more you used, the cheaper it got. Now it’s the opposite.

What restricts renewable-energy use in the state?     

Boothby: The next frontier of energy is storage and transfer. North Carolina needs to be at the forefront of that technology. Solar energy is the cheapest energy to produce, but in North Carolina it’s generated where energy consumption is least. Energy needs to be created where it makes most financial sense and then transferred to where it’s needed.  
Enslin: Renewable-energy use is limited without storage. Solar energy can’t go beyond 15% or so of capacity without storage because of production intermittency. If you have a system that uses 20% or 30% wind or solar energy, storage is a must — both hydro and battery — so operators can balance generation with demand. But you have to attract the businesses to support and develop those technologies.                                

What would you ask Gov. McCrory to do for the industry?  

Enslin: The bottom line is security. There needs to be one policy for the next 10 years. Figure out what works — and what is the best incentive for it — and keep it. Too many tweaks are being made, and that unsettles the market. North Carolina always had a proactive energy policy that pushed renewables and efficiency. For the last year, the state seems to be backtracking. It’s unfortunate because it will drive business away. Companies will go to states with proactive policies. North Carolina is going to have a difficult time if it continues on its present course. I’m disappointed that natural gas is on the back burner again. Other states are going to reap its benefits. North Carolina really needs to get back to natural gas, renewables, clean coal and nuclear. It’s a state that has the expertise and companies to make all of them work.                                               

Holder: Distribution and generation have a long planning timeline, about 25 years. Take this current General Assembly session, for example, when lawmakers tried to repeal the renewable-energy portfolio standard, which requires public utilities to include renewables in their generation portfolios. Companies spent the last five years investing millions of dollars and changing business models to meet it. Canceling it would’ve been a complete turnaround. North Carolina was one of the first Southeastern states to create an energy policy. It started the momentum for the cluster. We have to be careful with policies for natural gas. If horizontal fracking is given a green light, there needs to be an understanding of how we use water resources. Water is the next limited resource, so if we use water for horizontal fracking, policies will need to include more management of it.
                                         
What is the top workforce concern?          

Heitman: The average age of the workforce was at the top of the list before the recession. Since then it has been pushed to the side, but people keep getting older. It’s evident in the utility industry. In addition to tracking skills, CPCC tracks jobs posted by North Carolina energy companies. Duke Energy has led postings the last 12 months. You would expect that because of its size, but workforce attrition is driving it too. It’s predicted that between 2009 and 2015, 51% — that’s a national number — of utility-industry technicians will retire or be eligible for retirement. During the recession, most companies dumped their training programs. They still want experienced people, but no one is developing that experience. So community colleges must produce workers who can hit the ground running. Partnerships that offer money or time — lending experts to help train students — are critical ingredients to building a workforce to fill those jobs. State funding, local funding and tuition only go so far, but the need keeps growing. For example, CPCC’s welding labs are open six days a week to meet demand, and it still lacks space to train incumbent workers.

Lyons: Once companies fill those positions, they have to keep people there. Those entering the workforce want to know the relevancy of their work. They know they’re creating
a computer-aided-design drawing,
for example, but they need to see how it affects the bottom line and society. Not seeing that demotivates employees.

Holder: More than 60% of EnergyUnited’s outside technical or line-crew employees are within four to eight years of retirement. Many of them have 20 to 30 years of energy-distribution experience. How do you backfill that knowledge, especially when the system is changing? Working on today’s smart grid, which adapts to demand or overcomes outages, doesn’t require the same training as grids did 25 years ago. Without folks such as EPRI and community colleges we would be lost when it comes time to fill those positions with trained individuals.

How do you develop a new workforce for such a wide variety of companies?  

Enslin: There are educational institutions, a focus on developing new ideas and startups, and the banking industry, which all play into a positive long-term impact for the Charlotte region. It’s great to have large companies here, but that entrepreneurial spirit drives new technologies and the economy. EPIC’s mission is to train engineers and leaders for energy companies, but these people can adapt to new challenges as well. EPIC’s regular third-level class in power engineering this year had about 65 students over the summer and the same number in the spring. Traditionally there were fewer than 20 students in the program. It’s a good sign. But exposing the future workforce to the industry must start earlier. Planting that seed at the university or community-college level can be too late. You have to start early by engaging kindergarten through 12th-grade students in hands-on projects. I have final-year students studying electrical-power engineering who have never been in a power plant or seen a distribution substation. It can be difficult for them to relate when they start work in six months.

Holder: That’s the biggest thing that we face as an electric utility and one reason for being involved with EPIC. Graduates need to understand electricity distribution and today’s computer-controlled systems.

Heitman: CPCC is workforce-development oriented. One initiative that has traction is the Center for Energy Training. It allows deans from different disciplines — science, technology, education and math; applied technology; corporate learning — to meet with senior executives and explore companies’ needs. If there isn’t a matching training program the college adapts one. That might mean combining applied technologies and STEM, for example, or tweaking requirements for a certificate, diploma or degree. There is no better example of the power of this collaboration than Siemens Energy Inc. — President Barack Obama talked about it in his 2012 State of the Union address. I don’t think Siemens — and I think Mark Pringle, vice president of the company’s Charlotte energy hub, would agree — would be where it is without UNC Charlotte, CPCC, the state and the funding. It helped them hit the ground running.

Ratcliff: There is interest in nuclear-engineering degrees and the power portions of electrical and computer engineering. That shows the energy industry is seen as a viable career option.

Nwadike: Members of the cluster might be competitors, but they have the same goal: support the industry. The Carolinas’ Nuclear Cluster’s Leadership Energy Carolinas is also a means for developing the younger generation. LEC participants tour different nuclear companies in the region and meet policymakers and executives in the energy industry.

Lyons: It’s refreshing to see collaboration between government, private businesses, institutions and research in North Carolina. That builds a stronger talent pool. My home state of Alabama has great industries, but they are isolated. North Carolina has a vision for what it wants and many folks willing to buy into it. That gives it an advantage over other states.

How do you spread the word about the benefits of being part of the state’s energy industry?

Nwadike: Members of North American Young Generation in Nuclear — an association that offers networking and development to young pro-
fessionals in the industry — visit schools, talking to students about engineering, nuclear, electricity and careers in the industry. It’s easier for students to talk to someone closer to their age. It’s a movement that is going on in Charlotte. Many students want a career like what they see on television instead of energy or engineering. Having the younger generation share what they do might spark interest in working in the industry.

Heitman: There is a collaborative focus on finding the right skills and talents to feed the cluster. CPCC and energy companies are getting word to students. The program Career and College Promise allows high-school juniors and seniors to take college-level courses that track to degrees in growth industries, such as energy, for free. They earn college credit, and then when they get to the community college they can go on to an associate degree or a four-year institution. But it’s critical to keep the momentum going. More industry partners are needed to tell the story, especially to parents, teachers and career advisers. CPCC’s STEMersion program takes teachers on summertime tours of manufacturing plants that use a variety of types of engineering and advanced manufacturing, so they see how technology is applied to business.

Lyons: The National Society of Black Engineers and the Society of Women Engineers partnered to expose high-school students to the practical side of engineering. By the end their eyes lit up, and they were teaching us the engineering principles that we had taught them.