New York state of mind

The event featured many informative talks and presentations
The event featured many informative talks and presentations
Credit: WADE

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America’s distributed energy sector is going strong, with a focus on the resiliency of its systems in the event of natural or unnatural disasters, reports Ed Dodge from this year’s WADE/NYSERDA conference and expo in New York.

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The World Alliance for Decentralized Energy’s annual meeting and conference was held in Westchester, New York this year and was co-sponsored by NYSERDA, the New York State Energy Research and Development Authority. The event focused on the benefits and market development of distributed energy and a New York theme was scattered throughout the presentations.

Distributed energy provides multiple advantages to end users and the electric grid including resiliency against outages, reduced power grid congestion, improved emissions, fuel flexibility and efficiency and is a good way to introduce new technology to the overall power system. Adoption is strong and growing but there is enormous untapped potential in the market. CHP is a mature technology, but is not well understood or discussed outside of engineering and energy professionals. Government incentives and programmes have a significant role in educating the public and create significant impacts on adoption rates.

New York initiatives

NYSERDA is a leader among state agencies in promoting CHP and microgrids. Dr Dana Levy spoke about how NYSERDA has put extensive efforts in technology testing, financial incentives, education and training and working with vendors to get CHP systems installed and running. New York is the leader in the northeastern US with 75 microgrid deployments and 200 MW of installed microgrid capacity. NYSERDA has $100 million in its budget to promote and incentivise CHP and its complementary pair of CHP programmes offer incentives for systems 50 kW and larger. In August, Governor Andrew Cuomo announced a $40 million prize competition for the design and implementation of microgrids.

The US Department of Energy is also involved in promoting CHP through its CHP Technical Assistance Partnerships (TAPs). President Obama has set a goal of 40 GW of new US CHP by 2020. Tom Bourgeois made a presentation about the Northeast TAP that operates in New York and New England. The CHP TAPs provide similar services to NYSERDA, but throughout the entire country, CHP experts are available to provide unbiased information about technologies, project development, financing, electric and natural gas network interfaces and best policies. The northeast region has been a ripe area for CHP, as electricity prices are relatively high while gas prices are relatively low and there are cold winters, a good combination of factors for CHP.

Garry Brown, Commissioner of the New York Public Service Commission, spoke about the situation in his state. New York has one of the oldest power grids anywhere in the world, there are critical facilities that are 60 years old, and the whole system is in need of continuous upgrades and investments.

In response to these ongoing challenges, the New York State Public Service Commission has begun a reform initiative called Reforming the Energy Vision. This initiative will lead to regulatory changes that promote more efficient use of energy, deeper penetration of renewable energy and wider deployment of distributed energy resources such as microgrids and energy storage. The Commission is committed to empowering customers with more choice about how they manage and consume electricity.

A focus on resiliency

Superstorm Sandy, which hit the eastern seaboard in 2012, provided many examples of the need for greater resiliency and robustness in the nation’s infrastructure. The storm caused losses estimated between $30 billion and $50 billion. The two-day shutdown of the New York Stock Exchange cost an estimated $7 billion from halted trading, and Rutgers University estimated economic losses of $11.7 billion for New Jersey’s GDP. Much critical infrastructure was affected, including hospitals and healthcare centres, wastewater and drinking water facilities, police, fire and public safety, food distribution, telecom and data centres. Resiliency has become a top priority for policymakers as the need to ensure that centres of refuge and military facilities remain viable during disasters as well as maintaining business continuity and, above all, public safety.

A riveting example of the value of microgrids was provided by the story of New York University (NYU) and how its campus in lower Manhattan fared during Sandy. Sections of lower Manhattan were flooded and power was knocked out for days, but much of the NYU campus, with its combined heat and power system, remained lit and supplying hot water throughout the crisis. NYU was able to provide charging stations, hot showers and food for students, staff and neighbours.

The NYU microgrid's dual steam generators
The NYU microgrid’s dual steam generators
Credit: US Department of Energy

NYU’s cogeneration plant serves 43 buildings with hot water, 30 buildings with chilled water, and 26 buildings with power using an arrangement of turbines, generators and boilers and an interconnect to the Con Edison power grid. NYU’s system is a true microgrid that helps to provide reliable service to the campus while relieving demand from the utility power grid. When ConEdison lost power in the area, the NYU cogen seamlessly switched into island mode and remained up without a glitch. When power was restored days later, the system again seamlessly reconnected to the local grid.

The benefits of the microgrid extended far beyond the NYU community throughout the duration of the storm as city agencies utilised the cogen-powered buildings as command centres and community members were able to find a refuge with power and hot water. Looking forward, NYU plans to expand the footprint of the system by adding critical buildings, extending emergency lighting and upgrading equipment.

Change and challenge

Thomas Kuhn, president of the Edison Electric Institute, gave a keynote speech in which he discussed the evolution of the power grid from a hub-and-spoke centralised model to a two-way distributed model. There are many technical, financial and regulatory challenges to making this transition, but the industry is actively moving in that direction, driven by customer demands and public policy.

According to Kuhn, US electricity customers pay some of the lowest rates in the world, which means that new technologies and systems must be extremely competitive financially. Utilities are leading the charge in developing large renewable energy projects, though net metering rules need further updating to provide fairness and market efficiency for all participants. Smart meters are rapidly expanding, providing important data and facilitating demand response and increased efficiency. A robust grid is the platform for new technologies such as internet devices and electric vehicles.

Kuhn went on to say that the US should be cautious about moving too fast with change, or else risk disruptions. The nation can take lessons from Germany’s Energiewende policies that promoted renewable energy growth too quickly, leading to rising costs for customers, reliability challenges for operators, and no decrease in emissions as coal use remains stubbornly high. America has had success in recent decades in using market forces and smart regulations to significantly reduce pollution from power production even as power use has gone up. It is critical to be smart about technology integration so that the US can continue to strengthen the grid and make it more reliable and cost effective while simultaneously making it cleaner and more efficient, Kuhn concluded.

States’ investment

Increasingly, state institutions are working to promote distributed energy, CHP and microgrid investments. The New Jersey Resiliency Bank and the New York Green Bank are new institutes with this mission.

The New Jersey Energy Resilience Bank was organised post-Sandy to help finance infrastructure upgrades in critical facilities. During the storm many wastewater treatment and drinking water plants lost power as well hospitals and emergency response facilities. Using state and federal funds, the bank seeks to invest in system upgrades and distributed energy to make these facilities more robust.

The New York Green Bank is a division of NYSERDA. It is a new $1 billion state-sponsored financial entity focused on partnering with the private sector to invest in clean energy projects in New York state. It seeks to identify gaps in the market where conventional bank financing is too inexperienced or ill-equipped to evaluate new technology opportunities. The Green Bank is focused on resiliency and distributed energy, as well as opportunities that have not been thoroughly evaluated and modelled in the current markets.

Financing CHP

While CHP has been around for a long time and is a well-established technology, it often gets lost in the shuffle in discussions over alternative energy technologies despite its clear benefits.

According to David March of Entropy Investment Management, energy efficiency and alternative fuel systems rarely become priorities for CFOs and other financial decision-makers if the technology does not reflect their primary business or offer quick paybacks. Generally, a CFO who undertakes a sophisticated financial analysis on how to maximise the rate of return on investments and shareholder value does not see how energy efficiency investments make the grade. A primary reason is that the payback time is often more than 24 months, which most CFOs use as a cutoff time period. Sometimes showier projects such as solar panels or wind turbines are funded over more cost-effective efficiency projects because wind and solar are much more visible and able to be used in marketing literature, while CHP systems offer no particular visual impact. Energy investments need analysis that appreciates the long-term return on investment even if the payback periods are not as quick.

Entropy offers third-party financing to help enable CHP projects without major capital investments by the owner. CHP projects have consistent and high-quality rates of return, but it becomes a matter of crafting the appropriate financial instruments to bring the opportunity to fruition.

Future threats

James Woolsey, former director of the Central Intelligence Agency and well-known proponent of moving away from fossil fuels, gave the afternoon keynote address at the conference. Speaking via video link, his talk focused first on the geopolitical implications of reliance on fossil fuels provided by US adversaries such as Iran and Russia. He then focused on distributed energy and microgrids and the importance of a hardened and resilient electrical grid in the event of an electromagnetic pulse (EMP) attack. An EMP attack could be mounted with a basic nuclear weapon detonated miles up in the atmosphere on the back of a common missile. EMPs have the capacity to knock out electrical systems for many miles and a centralised power grid is vulnerable. Distributed energy systems and microgrids provide resiliency and could help power systems withstand this potential threat.

Awards and a field trip

Richard Ottinger, former Congressmen and Dean Emeritus of the PACE Energy and Climate Center, was given the WADE Lifetime Achievement Award for his long-term efforts at promoting distributed energy and energy security. He was one of the earliest environmentalists in Congress in the 1960s and authored a substantial body of energy and environmental laws, as well as being a founding member of the Peace Corps from 1961-64. After retiring from Congress he taught at Pace Law School where he founded the Pace Energy and Climate Center, which has made substantial contributions to energy efficiency and renewable energy research.

A conference field trip was made to the Whole Foods grocery store in Brooklyn, New York that is a flagship for energy efficiency. The store features CHP, solar energy, and an on-site greenhouse. Whole Foods partnered with NYSERDA to clean up a brownfield site in the Gowanus neighbourhood and implement the latest in energy efficiency technologies. The building was constructed with reclaimed materials, uses state of the art CO2 coolant refrigeration, and features a 157 kW CHP system that provides heating, chilled water and electricity even in the event of a power grid failure.

The solar carport at the Brooklyn Whole Foods market
The solar carport at the Brooklyn Whole Foods market
Credit: Urban Green Energy

In addition to all of these informative talks and presentations, the 2014 WADE Conference featured many technology updates and reviews from leading vendors such as Wärtsilä, Schneider Electric, Opra Turbines, Ener-G Rudox, Martin Machinery, Vanderweil, Energy Concepts, R3 Energy and more. Legal and policy issues were discussed with speakers from the Federal Energy Regulatory Commission, Duane Morris LLP, the Environmental Defense Fund, the Pew Charitable Trusts, the Brattle Group and others. The event was a great opportunity to meet industry professionals, network and learn about the latest updates in the distributed energy market.

Ed Dodge is a journalist based in New York.

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