Energy Round Table: Powering change

Energy Round Table: Powering change
Powering change
North Carolina companies and researchers are tackling energy-industry issue, including developing storage, neutralizing waste and integrating renewables.
According to the Washington, D.C.-based Nuclear Energy Institute, $1.2 billion of nuclear power generation materials and services are purchased each year from more than 1,100 companies based in the state. But it’s not the only player in the sector, which is growing with the addition of renewable energy sources, led by solar. Business North Carolina gathered a panel of energy experts to discuss how these additions will shape the state’s energy industry, especially in regards to workforce training, policy and capital.

The round table was moderated by Charlotte-based E4 Carolinas President David Doctor. Zurich-based ABB sponsored and hosted the discussion at its Smart Grid Center of Excellence in Raleigh. N.C. State University, Duke University, Richmond, Va.-based Dominion Resources Inc., UNC Charlotte, Research Triangle Cleantech Cluster and Statesville-based EnergyUnited Electric Membership Corp. provided additional support. The transcript has been edited for brevity and clarity.
Where is North Carolina, with regard to renewables?

JENNINGS: North Carolina is the fourth-largest solar generating state and third-fastest growing last year. So far, its fluctuating generation hasn’t compromised reliability, but managing the interconnection queue has been a big challenge because there are so many people in it. If the queue were faster, reliability issues would surface because of the intercon-nections in distribution. Another complication is that in an emergency, you tend to curtail load in order to maintain grid integrity. And, with generation interconnecting at the distribution level, you could be cutting load and generation at the same time, which kind of exacerbates the whole problem. These are our challenges, and with the tools available in North Carolina, we’ll solve them.

HUSAIN: To continue or accelerate this pace of growth, the ecosystem of education, workforce training, technology developments and controls must continue. Technology has to transfer from laboratory to market faster, too.

RACKLIFFE: In the states with the most solar installations, 75% of it is utility scale. In Hawaii, which was ranked ninth in 2014 by Washington, D.C.-based Solar Energy Industries Association, the situation is very different. It’s mostly third-party owned and residential installations. That’s made protecting and controlling their grid difficult. But where the most solar installa-tions were utility scale — California, Arizona and North Carolina — those issues haven’t surfaced. That’s significant in terms of how we integrate that renewables capacity and capability into the grid. North Carolina is sitting on some wind generation offshore that remains undeveloped. It could significantly change the energy landscape.

WHITE: Companies here invest heavily in research and development. Much of the energy technology shipped around the world was created by North Carolina-based companies. But at the end of the day, you need a market for what you sell. Renewable energy’s real value is as an alternative to building another giant 800- or 900-megawatt power station, not just offsetting kilowatt hours. Duke Energy would have a difficult time building a giant power plant in today’s regulatory and financial environment.

RAO: Solar isn’t the only renewable being explored in the state. Research Triangle Park-based RTI International, for example, has a pilot program that turns woody biomass into liquid fuels. North Carolina is the country’s third-largest producer of woody biomass, which is the waste created from timbering.

MURRAY: We’re interested in solar developments in North Carolina, particularly post-tax credit. North Carolina has a bit of an upcoming policy cliff, when the effective tax credit could fall from 65% combined federal and state to maybe 10%, depending on what happens. We’re in solar for the long haul; it’s not simply a tax credit play.  

What energy issues are being addressed in North Carolina?

HUSAIN: As a National Science Foundation- sponsored engineering research center, FREEDM explores technologies that will modernize electricity distribution on the power grid. With renewables, particularly solar in North Carolina, new distribution loads, such as electric-vehicle charging, are constantly being added to the grid. New approaches, such as moving from centralized generation — when one large power plant is used — to distributed generation — when many smaller plants supply electricity — could enhance reliability and resiliency under these new demands.

ENSLIN: EPIC faculty members are studying the environmental impacts of power generation byproducts and identifying beneficial uses for them. Technology is available to use these wastes. Coal ash, for example, can be mixed into uncured Portland cement, making the final product denser and more resistant to water and chemicals. We have to move more
of that type of technology, which is in laboratories now, to market. The recent Dan River coal-ash spill shined a spotlight on all waste streams. Even manufacturing solar panels creates waste. In Europe, India and South Africa, you can’t dump these wastes in a landfill. We are not doing the right thing with these waste streams. In North Carolina, we need an energy policy that embraces neutralizing and reusing these wastes.

JENNINGS: Duke Energy’s renewable distributed energy and renewables group works to create opportunities for the renewable-energy sources it helps develop. Its focus is solar, but it’s working with biogas, too. It’s examining policies that will expand the use of plug-in electric vehicles. It’s exploring opportunities to help customers who want solar but can’t get it now. That will strengthen the system as renewables expand, ensuring they are fairly costed for all customers, especially those who aren’t participating. There is a progressive waste-to-energy initiative underway, which is part of the state’s Renewable Energy and Energy Efficiency Portfolio Standard. It has been a challenge to meet for Duke Energy. Part of the problem is infrastructure, digesters that turn swine waste into a burnable gas. There are digesters in the Midwest that can create gas for North Carolina use. Mobile digesters are another option the group is exploring. They could travel here and make the process work.

WHITE: The Triangle region has been known for life sciences. Clean tech — which maximizes the use of non-renewable resources — is the next life sciences in regard to job creation. We have an un- believable base of clean tech companies in the Triangle involved in metering, transmission, distribution, data analytics and infrastructure. The cluster is one of two in the U.S. and 13 in the world. These energy companies are global players, and they’re here to do the right things and make money for their shareholders. Clean tech is big business. Philadelphia-based The Pew Charitable Trusts identified 96 Triangle companies that work in modernizing and improving the power grid, efforts referred to as smart grid. The clean tech sector created 2,922 jobs and $822 million in investment from 2009 to 2014. Pew predicts that $8.1 billion will be invested over the next 10 years and about 83,000 energy and clean tech jobs created.

NEWELL: Energy is becoming increasingly globalized. We need to frame North Carolina’s role and advantages in those terms. Duke University’s Energy Initiative, which launched in 2011, uses university assets to solve energy issues, here and abroad. It involves six schools: business, arts and sciences, law, policy, environment and public policy. There are degree programs, courses and co-curricular activities for undergraduate to Ph.D. students and professionals. The research side is focused on four areas. The first is energy data analytics, which helps companies and consumers turn massive amounts of information from burden to actionable insight. Analytics is a good fit for North Carolina, home to data-management companies such as Cary-based SAS Institute Inc. It also includes exploring energy materials, such as solar photovoltaic, and intertwining energy, environmental science and technology, such as building better sensors for measuring natural-gas emissions, so they can be reduced in a cost-effective manner. And finally, the initiative engages the business of policy. That’s done in part through serving government, so, for example, I’m on the N.C. Energy Policy Council.

RAO: Three years ago, Bob Koger, president and executive director of Raleigh-based engineering firm Advanced Energy, and I co-chaired a task force for the governor that examined state energy strategy. We discovered that before a natural-gas industry could be established here, we can profit from natural gas next door. That starts with the approximately 550-mile-long Atlantic Coast Pipeline, which will carry natural gas from West Virginia to customers in Virginia and North Carolina starting late 2018. It would be easy for a significant industry to take advantage of that supply. Here’s an example: We import every scrap of ammonia fertilizer in the state. You could make ammonia from ACP natural gas for about $160 a metric ton and sell it for about $600. That’s the definition of a profit. In that type of industry — converting natural gas into useful chemicals — about 60% of the workforce has a two-year degree. Not everyone needs a four-year university degree; two-year technicians can do a lot and be paid well for it.

RACKLIFFE: ABB is promoting high-voltage direct current and flexible alternating current transmission systems, grid-level storage and modernizing of transmission substations to improve grid reliability. The fastest growing grid modernization is analytics, especially those that examine grid reliability and asset health. There has been generation, unit commitment and load forecasting for a long time, but now we want to forecast residual demand with distributed- energy resources. The real growth is in managing and integrating distributed energy resources. We also are focused on integrating and managing microgrids, small power grids that stand alone or help the main power grid. Utilities are installing them to build resiliency, some at the direction of states, including New York and Connecticut, which saw their power distribution rocked by recent Northeastern storms.

How can North Carolina build its own natural-gas industry? What does it need? What would it look like?

RAO: We need the right people to see our strengths, and the best way for that is for the governor to get involved. It’s called convening. Take Texas as an example. Gov. [Rick] Perry brought together CEOs and chief technology officers of certain companies and told them, “We need additional industry in this sector.” And by God, when the governor calls, you all come. Once assembled, you expose them to the facts, which, in North Carolina’s case, include a tremendous educational system, an excellent rail system and two ports, one of which is deep water.

MURRAY: You’re not just building a natural-gas industry but also infrastructure and manufacturing. Natural-gas infra-structure is to economic development now what broadband infrastructure was 10 years ago. You need it to be a player in the game. Natural gas is a missing link. You have existing sources from the Gulf of Mexico and soon new sources from the Midwest and Mid-Atlantic thanks to the ACP, which is being built through our partnership with Duke Energy Corp., Charlotte-based Piedmont Natural Gas Co. and Atlanta-based AGL Resources Inc. That’s the best of both worlds, because you can buy whichever is least expensive. Infrastructure projects like this one provide other benefits, including billions in economic activity and thousands of high-paying construction jobs.

ENSLIN: The natural-gas industry brings advanced manufacturing, which offers decent-paying jobs. North Carolina is already home to a lot of advanced manufacturing, where workers, many with two-year degrees from community colleges, make valves and metering electronics, for example. We need skilled jobs, regardless if they require two-year or four-year degrees. Advanced-manufacturing companies need people with four-year degrees to design the plants, the processes and the products. But they also need those with two-year degrees to operate and maintain their factories.

HUSAIN: Creating a workforce of graduates with two-year degrees from community-college programs and others with four-year degrees from universities is a collaborative effort of universities, community colleges and centers, such as FREEDM. Together they can write the curriculums and training programs. When energy lost its luster in the 1990s, energy programs saw enrollment drop, faculty retire and jobs converted to computer engineering. But N.C. State and the other world-class education institutions in the state didn’t flinch. They maintained their energy-related programs, which encompass many sectors, including natural gas. That’s paying off now. N.C. State, for example, recently was awarded the federally funded PowerAmerica Institute, which will develop the next generation of advanced manufacturing of wide bandgap tech-nologies. It includes partnering with community colleges, because these are manufacturing jobs that require highly skilled workers.

What other issues is the energy industry facing? Can solutions be addressed here?

WHITE: Energy storage is a missing component, especially with renewable energy, because we all understand that we’re not burning something to consistently generate power from solar panels. Their output is at the mercy, to a large degree, of environmental conditions. That increases supply instability. Take a look at Germany, where all the nuclear power plants were decommissioned in a short period of time, and that put a tremendous amount of renewables online. They have unbelievable supply stability problems across the country. And to me, stability is as much about pricing as having power when you flip the switch. Batteries could create stability by storing energy during times of high generation and releasing it in the future, when demand is high. There’s a lot being learned about how not managing energy production from the utility side creates problems across large areas.

JENNINGS: We have small energy storage pilot projects, many in partnership with battery manufacturers, in Texas, Ohio and North Carolina. We also are looking at using small 20-megawatt generators to relieve constraints and solve problems for trans-mission companies, while taking advantage of favorable pricing at certain times. These generators may not directly take you to storage, but they could create opportunities for it.

RACKLIFFE: The biggest economic challenge the industry faces is generation. Centralized generation is expensive capacity. Creating distributed-energy resources that offset centralized generation capacity drives economic value. We need to provide the right incentives to grid-edge participants to leverage generation capacity. That will shift the industry.  But aligning distribution assets and resources with those at the transmission level is a tough task, at least right now. That’s because the policy and regulatory environ-ments are light years apart. Storage’s greatest benefit is uncoupling consumption from generation. Battery chemistry, not the power electronics, is the biggest roadblock to its use, and it’s the best way to make less ex- pensive batteries. There are other potential storage options, though they come with their own issues. We’re working with fly- wheel energy storage, a type of mechanical storage that is particularly well suited for rapidly changing voltages that can ruin batteries. Large-scale storage may be done with pump storage, but sites are limited. Compressed air is an option, but its econo- mics aren’t clear.

ENSLIN: Swiss Alevo Group S.A.’s GridBank, which is manufactured in Concord, is a substation level energy storage system, which is in its early developmental stages. There has to be an incentive for installing batteries. It doesn’t make sense for any company in this state to install them because neither the solar developer nor the utility wants to pay for them.

North Carolina-based companies are leaders in designing and inventing nuclear-energy technology. Will this generation method continue to be part of the mix?

ENSLIN: Nuclear is the future. It’s clean; it releases zero carbon dioxide. We have to go back to nuclear, and we have to go with smaller, modular nuclear power plants.  

RAO: The cost and time to build a traditional nuclear power plant is so great that distributed nuclear through the use of smaller plants is the direction to go. These 30- to 300-megawatt plants are safe. Some can produce energy for 10 years before the fuel rods need to be replaced. That happens about every three years in traditional nuclear power plants.

MURRAY: Using more natural gas will only help if nuclear generation is maintained. If you label coal 1, gas .5 and nuclear 0, and you get rid of the 0s and replace the 1s with .5s, the arrow doesn’t move. But if you have only .5s and 0s, you’ve made tremendous progress. The policy case for nuclear is pretty easy. It has low fuel risk. Its reliability is proven — running 93% of the time — as are its low operating costs and zero air emission. Public policy has been a boost for solar, especially the 35% tax credit under the renewable portfolio standard. If ever there was a technology to examine public policy for, it’s nuclear.

JENNINGS: You have to maintain the nuclear fleet. If we assume that the clean power plant is what we all think it’s going to be, then you have to maintain a consistent level of nuclear power, and then your trade-off for gas and coal makes up about half of what we need to do in North Carolina. I don’t think renewables can fill that void. If you phase out the nuclear fleet, you could have a huge renewable expansion and make no progress on greenhouse gases.

How should state energy policy evolve?

NEWELL: Virtually all of North Carolina’s energy is imported. There is some offshore oil and gas and shale gas here, but even if that’s commercialized — which is questionable because of the large oil and gas supplies available worldwide — the state will still be a significant energy consumer. North Carolina has huge intellectual and human capital. There are great universities and internationally renowned companies. We need to think globally, and we can do that through smart policy, smart markets and creating technology that uses and produces energy wisely. We tend to focus on each technology separately in regards to cost and emissions. We look at up-front financing versus long-term operating costs. Good business is thinking about what we’re trying to achieve, which is affordable, reliable, clean energy. Policies shouldn’t be technology specific but rather set business decisions in a direction that we want them to go. That way competitive technology wins the day.

MURRAY: Ideally it would be a federal initiative. Dominion CEO Thomas Farrell II has been clear that the country needs a national energy policy. Without that federal action, states are driving public policy. That’s good, because the energy environment in California, where rates are about twice what they are here, is very different from the one in North Carolina.

How would you fund energy ventures in North Carolina?  
MURRAY: The scale of capital for meaningful energy projects is far beyond the reach of venture capital. That’s why the approaches taken in Virginia and North Carolina, and South Carolina and Georgia for that matter, where private-sector investment and public policy work together, make sense. That’s a more appropriate model for any capital-intensive industry.

RAO: The money can be evaluated as long as we have the work. The Triangle can compete with Silicon Valley on talent, so I don’t care where the money originates — the farther away, the less interference, most likely. The numbers in the chemical sector of gas inversion are too large for venture capital, but private equity can play there.

WHITE: We can’t forget the entrepreneurial community. Who knows who will become the next Elon Musk, who could start another Tesla? Many of these type com-panies need access to capital. They also add to the number of companies here, which attracts interest in North Carolina. We need to pay as much attention to capital for entrepreneurial activities as 900-megawatt power plants.

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