Author Archives: Harold Turner

About Harold Turner

www.linkedin.com/in/harold-turner-27973914 This tells you most of what you need to know. I'm now old enough now to write about what I know ..... or invite others to write about what they know.

Harold Turner

2017 NH Business Energy Education Series: Vol 18 – Purchasing Electricity directly from ISO-NE Guest Blog by Gus Fromuth

‘Direct-from-grid’ electricity: a cost-saving option

Hands-on purchasing gives larger users a chance to benefit from wholesale pricing

Guest Blog  by Gus Fromuth,   FREEDOM ENERGY LOGISTICS

 

It’s well known that the price of electricity is high in New England, and specifically high in New Hampshire. But even with that reality, there are solutions to mitigate the issue, specifically for heavy users.

During a four-day period from May 4 to May 7, when electricity pricing in the New England wholesale market reached an unusual low, many of the region’s largest wholesale energy users were actually paid to use electricity.

The average price of electricity was negative, so instead of paying for the electricity that they used, they received a credit for the amount that they used. This is something that all large users should be aware of; not many typical users are aware that there is a framework in place to navigate the grid and lessen the constant burden of electricity pricing.

In 2014, ISO-NE implemented policy enhancements to the wholesale energy market that allowed electricity prices to go beyond zero to being negative during certain hours. These changes allowed generators to submit price offers for each hour of the day based on their actual cost of fuel, including negative price offers.

At times of excess energy on the grid, certain generators have made operational decisions to continue producing free and even negative-priced energy rather than shut down and then restart again hours later. It’s called buying direct from the New England Power Pool via hands-on purchasing, and it’s a reality. Large-scale manufacturers are among the businesses that can actually benefit from these market movements.

Freedom Energy Logistics is working with its customers one-on-one to encourage them to take advantage of the “direct-to-grid” purchasing process based on those policy changes at ISO-NE.

One of our customers, Shipyard Brewing Company of Portland, Maine, recently reaped the benefits.

“We’ve been buying directly from the New England Power Pool for almost a decade now and have done extremely well,” said Paul Hendry, plant manager at Shipyard.

Simply said, while energy costs are indeed high, it’s a great time to be purchasing electricity wholesale.

How does this help the general New Hampshire resident? It’s economic development smart. We often hear that the cost of energy is among the leading barriers to businesses locating and operating in New Hampshire. Such positive results of business-friendly policy improvements and creative energy buying strategies are a welcome change in tune.

This article appears in the July 21 2017 issue of New Hampshire Business Review …….with permission to reprint by the author.

Gus Fromuth, managing director of Freedom Energy Logistics, is a founding member of the NEPOOL Market Participant End User Sector.

 

The Freedom Team

5 Dartmouth Dr. Ste 301
Auburn, NH 03032

P 603.625.2244
F 603.625.8448

2017 NH Business Energy Education Series: Vol 17 – Energy Efficiency Benefits NH Businesses: A Success Story by Brianna Brand

Energy Efficiency Benefits NH Businesses: A Success Story

 

Guest blog by Brianna Brand, New Hampshire Sustainable Energy Association Program Director

 

Although popular and highly effective, solar panels aren’t the only option to save on energy costs.

 

In fact, energy efficiency is a tried and true method to reduce energy consumption and lower energy costs with a rapid return on investment. Beyond the economic benefits, energy efficiency measures such as improved lighting, weatherization and efficient heating & cooling equipment can actually improve overall building comfort and productivity at home and at work.

 

Look no further for a success story than MilliporeSigma, a global company with 65 manufacturing sites worldwide and more than 19,000 employees. One of their largest manufacturing facilities is located in our own backyard: Jaffrey, New Hampshire, which produces precision filtration devices for use in the food and beverage, ultra-pure water and pharmaceutical manufacturing industry. The Jaffrey plant continuously implements energy efficiency measures targeted at reducing costs while working towards the company’s corporate goal of a 20 percent reduction in greenhouse gas emissions by 2020 versus 2006 levels.

 

MilliporeSigma first completed an energy assessment. This process evaluates building energy use and opportunities for improvement. Next, MilliporeSigma developed an implementation plan for the identified energy efficiency measures –resulting in a multi-year project to upgrade the facility – including swapping out fluorescent lighting with LEDs.

 

Lighting is an easy target for cost savings through efficiency improvements, especially considering it’s typically the largest single use of electricity in commercial buildings nation-wide, according to USDOE.  LEDs are a popular choice because they use only a fraction of the energy to produce the same amount of light compared to their fluorescent and incandescent counterparts.  This typically leads to a rapid and attractive ROI.  LEDs can also have an indirect bonus effect on air-conditioned or refrigerated spaces due to their significantly lower heat generation, thus reducing the load on cooling equipment.

 

“LED lighting is at a tipping point where its cost and quality makes for an attractive energy efficiency project at just about any of our facilities,” says Christopher Famolare, Global Manager of Sustainable Operations at MilliporeSigma. To date, 90 percent of the 300,000 square foot Jaffrey manufacturing facility has transitioned to LED lighting. Since it runs a 24/7 operation, in some areas of the facility, the lights never turn off.  So switching to the long-lasting LEDs not only saves on energy costs, but maintenance costs as well.

 

MilliporeSigma considers the LED project a part of its natural progression of investments in the facility, proven to positively influence productivity, employee engagement, and job satisfaction. “It’s a nicer place to work. Our employees can attest to that,” says Chad Gerald, Head of Engineering at the Jaffrey plant.

 

 

The upfront cost of the latest year’s LED lighting project was $177,000 which included the replacement of 2,578 lights. Although a large capital investment, MilliporeSigma secured $40,000 worth of utility rebates to help offset the cost. “We encourage our sites to leverage all available rebate and incentive programs,” says Famolare.

 

Rebates are available for businesses through NHSaves, a collaboration of the four NH electric utilities. The rebate programs are so popular that they are often oversubscribed halfway through the year. NH recently passed a new Energy Efficiency Resource Standard (EERS) to increase the funding and savings goals for the next three years, which will help more businesses save money on energy costs.

 

MilliporeSigma’s Jaffrey, NH facility didn’t stop at LEDs. They took on a project that hits home for their employees – aiming to help employees reduce their carbon footprint and save on fuel costs.  It involved the installation of ChargePoint electric vehicle charging stations, which are made available to employees and visitors free of charge.

 

“We’ve seen a significant increase in the number of electric vehicles at the site from all three shifts,” says Gerald.

 

MilliporeSigma began installing electric vehicle charging equipment at its facilities in 2014 and continues to grow the network as demand increases.  “Around the world, we have installed 42 electric vehicle charge ports and reserved 64 parking spaces for EV drivers, the highest concentration being in the U.S.,” adds Famolare.  Electric vehicles are becoming more and more popular, and expanded charging infrastructure around the state supports this growth. Companies that offer EV charging have a clear advantage when it comes to retention and attraction of talent.

 

Overall, energy efficiency projects like the LED installations at MilliporeSigma are an attractive option for the business sector to save on energy costs. New Hampshire’s recent EERS provides vital funding increases to the currently oversubscribed rebate programs, ensuring more businesses have opportunities to perform efficiency projects.

 

Brianna Brand, NHSEA Program Director

54 Portsmouth Street, Concord, NH 03301

[email protected]

(603) 22-NHSEA (226-4732)

 

 

 

2017 NH Business Energy Education Series: Vol 16 – HB1116 – The PUC Order On Met Metering is Delivered

HB1116- The PUC Order On NET METERING is Delivered, …………and now what?

 

Arguably, the biggest legislative battle in 2016 on the energy front in New Hampshire was Net Metering (see Post #5).  That process eventually culminated into the passage of HB1116, which required the New Hampshire Public Utilities Commission (PUC) to issue an order in 2017 on changes to the old law and pricing structures…….which it just did.  Below is a quick outline of the PUC’s order done by the New Hampshire Sustainable Energy Association (NHSEA).

 

Information provided by the NHSEA:

The PUC released their final Order on net metering on Friday, 6/23/17. It is a mix of the two filed settlement proposals, and is generally reasonable and will maintain a strong industry, is good for consumers, and makes positive conclusions about cost-shifting and the benefits of DER, but keep in mind we are still combing through it. Highlights from the Order and listed below. The full Order can be found on the PUC’s website here.

To explain and discuss the Order in greater detail, NHSEA gave a webinar as part of the Local Energy Solutions series on Monday July 3, from noon – 1:00. You can view the free webinar HERE.

 

  1. The new NEM rate begins on September 1, 2017. This date may be later if utilities can’t update their billing systems in time to reflect the new NEM regime. Customers must be given 30 days notice in advance of the new rate start date.  

 

  1. Grandfathering – all existing NEM systems are still grandfathered through 2040.  NEW systems (under new rate) also grandfathered through 2040. 

 

  1. Small systems ≤100 kW are still credited monthly at 100% of retail energy and transmission charges but only 25% of distribution charge; the customer will receive monetary bill credits instead of kWh credits (allowing cash payment if customer moves or annual credit balance exceeds $100)

 

  1. Large systems >100kW are still credited monthly at the default energy rate; bill credits now monetary instead of kWh.

 

  1. All customer-generators must pay non-bypassable charges (system benefits, stranded cost recovery, storm recovery) based on full amount of electricity imports without netting exports.

 

  1. Monthly Netting is maintained to measure net imports/exports – except all non-bypassable charges will be charged on all (gross) imports and will not be credited on any exports.  

 

  1. Value of DER Study: Eversource must perform a marginal cost of service study within twelve months (of Order date) to inform the Value of DER study. Value of DER study will focus on solar and small hydro and use a 10-15 year framework for the analysis. Staff will direct/manage the study, hire a consultant to help perform it, and will begin by convening a workgroup to develop scope of study within two months’ time of this Order.  Note: That meeting to form the workgroup is set for August 16, 2017 at the PUC.

 

  1. Statewide Cap- No new cap was set (so effectively the cap has been removed).

 

  1. Pilots – Four pilot programs are approved, including: Time-of-Use (Eversource and Unitil only), shared bill credits for low/moderate income customers, Real-Time-Pricing for one municipality (Lebanon), and a non-wires alternative pilot.

 

  1. 20% Onsite Use – If a customer-generator uses at least 20% of the system generation onsite, then they can receive the group net metering rates without registering as a group host and going through the GNM protocol with the PUC, etc. 

Practical bill impacts for a customer-generator with solar PV: An example from ReVision Energy (2017 Eversource Electric Rates):

  • Customer Charge (per month): $12.89 (unchanged)
  • Energy Charge (per kWh): 11.17 cents (still 100%)
  • Transmission Charge (per kWh): 2.39 cents (still 100%)
  • Distribution Charge (per kWh): 4.21 cents (now 25% = 1.05 cents)
  • Stranded Cost Recovery Charge (per kWh): 0.032 cents (no netting)
  • System Benefits Charge (per kWh): 0.356 cents (no netting)
  • Electricity Consumption Tax (per kWh): 0.055 cents (repealed in state budget)
  • Current net metering credit value (systems ≤100kw): 18.16 cents (excl. repealed tax)
  • New net metering credit value (≤100kW): 14.61 cents (80% current)
  • Difference = 3.55 cents (20% loss)

 

 Questions in the Order requiring response within 30 days (PUC will facilitate):

  1. Should the subsequent sale of solar array or property on which it is installed entitle the new owner to continue to be net-metered under the grandfathered tariff provisions?
  2. Should the subsequent expansions of/modifications to solar array be entitled to net metering under the grandfathered tariff provisions?

 

That was a quick, but enlightening, rehash of the full Order, which you can read here .  I would encourage you to also click on the link HERE and follow the NHSEA webinar to learn more about what it all means to you.  NHSEA has about a 30 minute presentation and another 30 minutes of questions and answers …….both parts will help you out if you want to understand net metering better in New Hampshire going forward.

 

Now, a few of my “business” opinions on what is ………and is not included in the order for the larger system sized “business” consumers:

1) There is no increase or decrease to the electric rates credited for projects >100KW.  Some of you may think that’s a good outcome …………not me.  Going to 101KW doesn’t automatically impact the utility’s distribution system, any more than 100KW did.  Basically, “small” projects got a 25% credit on Distribution System costs and “large” projects got a 0% credit.  The wires won’t know the difference going to from 100 to 101KW.  There are many small PURPA generation projects between 101KW and 5 MW that have been sitting on the utility distribution systems in New Hampshire for decades with no “costs” attributed to the distribution system because of these projects………. and any “costs” to the distribution companies to evaluate the interconnections or physically make the interconnections were paid for by the PURPA generators.

Additionally, small projects got a 100% credit for Transmission costs and large projects got 0% credit.  Going to 101KW doesn’t automatically put you into use of the Transmission system either. Same applies to the much larger PURPA generators unless their power was potentially being “wheeled” by agreement to other utilities outside of the locally connected distribution system via Transmission Lines ……….all of which is on paper since the actual electrons stay on the local system.  New Hampshire distribution companies routinely (daily) “wheel” PURPA project generation output to ISO-NE at no cost.

In fact, a clear case could have been made before the PUC that larger projects were entitled to see credits for some portions of the “wires” chargers too ………..at the very least Transmission cost, but there was no business consumer group at the table making that case! No organized group intervened on behalf of businesses who wanted to self- generate a portion of their electrical load >100KW and use net metering to economically optimize the size of their system ……….. and receive increased off-set credits for their self- generation when it exceeds their own use ( for instance, think about weekend solar generation for most businesses). The 101KW break point from small to large is a completely arbitrary level to change classifications ………..and the subsequent rates that go with it.

Remember, the New Hampshire Electric Co-operative increased their net metering (NEM) credit rates by 25% for projects >100KW over a year ago, while slightly decreasing their small project credit rates.  Take a look at their updated rates HERE. They aren’t regulated by the PUC.  They are “owned” by their members who pay the rates. That same magnitude (25%) of increase could have easily happened at the PUC as well in this order…………. but it didn’t.  Why, because nobody argued for it (NOTE: that is a win for the utilities, not the business consumers).

2) The maximum sized individual net metering project remained the same at 1.0MW (1000KW). Once again, that works for all residential properties, commercial properties, and smaller industrial properties ……..but large industrial companies are S.O.L. (my technical term)!  Again, no one was at the table advocating for the needs of the large industrial consumer to self- generate and lower their operating costs.  If a project was sized at 1001KW, it would not be eligible to net meter at all.

3) The one new (good) provision in the order for large projects deals with the 20% rule for self- consumption (i.e- if you consume >20% of the project’s output, you don’t have to register to act as a group net metering host, but you can function as one).  For properties that can take advantage of this provision, that’s one in the win column for you!

 

In general, think of this new (after September 2017) period of Net Metering as Phase IIPhase III will come along some time (years) down the road after the pilot projects and studies have been undertaken and completed, and there is more real NH data to go by for future modifications to net metering ……. like real time pricing effects, actual system benefits to DER determined, etc. etc. Meanwhile, let’s hope that someone takes the initiative to increase the allowable project size from 1MW to 5MW during next year’s legislative session so that large industrial consumers can see some meaningful benefits too, because they need more options than they have today for “competitive” energy supplies.

 

2017 NH Business Energy Education Series: Vol 15 – Solar PV Panels, can they help me? Guest Blog by James Hasselbeck of ReVision Energy

Solar PV Panels, can they help me reduce my energy costs?

Guest Blog by James Hasselbeck, New Hampshire Operations Manager for ReVision Energy

Business is booming in New Hampshire. We have the lowest unemployment rate in the country.  These jobs run the gamut from healthcare, government, education and, among others, skilled manufacturing and industry. This influx of industry has brought with it a concern from both business leaders and politicians that the cost of electricity in New Hampshire is prohibitively high, inhibiting potential economic growth in our state. While, on average, utility electric rates trend on the high end in New Hampshire, photovoltaic solar energy is a solution which is often forgotten or discounted, even though it provide reliable and cost-effective electricity to businesses, municipalities and residences across the state, in addition to diversifying energy sources and reducing transmission costs for all New Hampshire ratepayers.  

Our state’s solar industry has grown rapidly over the past decade. According to the Solar Energy Industrial Association (SEIA), there were more than 1,184 full-time New Hampshire jobs focused on solar in 2016 and more than 9,000 residents generating their home electricity with reliable, renewable energy on a daily basis.  A concrete example of this growth is Revision Energy, which has expanded from two guys operating with a pickup truck and garage in 2003 to a company with around 170 full-time employees and five locations throughout New England in 2017.  Solar is not just for homeowners, however. More and more businesses and municipalities are recognizing the substantial economic and social benefits of a solar energy system.

ReVision Energy and many other solar development companies have partnered with New Hampshire business and municipalities to install over 20 megawatts of photovoltaic solar energy capacity in 2016 alone. That’s over 70,000 solar panels in the Granite State! According to the Environmental Protection Agency’s greenhouse gas equivalency calculator, these solar installations are equivalent to offsetting nearly two million gallons of gasoline consumption or the carbon sequestered by nearly 17,000 acres of forest, each and every year. Aside from the significant environmental benefits, there is the real and vital economic benefit to the companies who invest in solar power, providing millions of dollars statewide in annual energy savings with no negative impact on utility ratepayers.

From an individual business perspective, the capital budget savings a photovoltaic system can provide are substantial. According to the US Department of Energy and US Energy Information Administration, commercial electricity rates in New Hampshire average 12.36 cents/kWh, and industrial rates average 11.82 cents/kWh. On average, the 40-year cost of energy from a photovoltaic solar system is less than $0.03/kWh, more than 75% savings from utility prices if they remain flat over the next four decades. If history is our guide, we can continue to expect utility electricity prices to increase, making solar energy systems even more economically attractive as future electricity rates rise.

How can solar provide such meaningful capital expense savings? An excellent question and one ReVision Energy commercial design representatives often hear. The primary misconception is, “Solar doesn’t work in New Hampshire,” which is unequivocally false.  The key factor in solar electricity generation is latitude. While we here in New Hampshire are blessed (some may say cursed!) with an alpine environment and latitude of 43 degrees, so is Germany at 51 degrees—a full 8 degrees farther north. A more accurate comparison is the French Riviera, well-known for sunbathing celebrities, which shares our 43-degree latitude.  In 2016, Germany was able to achieve 90%+ of the country’s electricity usage with renewables, where in New Hampshire we stand at less than 2%. So, we can be confident that our geography, climate and location is not our barrier to solar generation, but instead legislative policy and customer education.

Solar energy is a proven electricity generation resource in New Hampshire utilizing equipment with 25-year warranties to provide a safe and reliable energy investment. Factor in federal tax benefits (30% of project cost), tax depreciation incentives (20-30% of project value) and cash rebates from the NH Public Utilities Commission valued at up to 25% of the project cost. In short, the economics are extremely attractive, with commercial projects typically becoming cash flow positive in 4-6 years and receiving significant tax advantages along the way.  With no moving parts and minimal maintenance, a solar energy system can easily have a 40-year lifespan, essentially providing 34 years of free, carbon-neutral electricity.

Aside from immediate savings, solar energy systems provide significant value to businesses that are budgeting for energy-intensive operations.  While the deregulation of the state’s utility market has allowed for energy supply companies to provide competitive rates, they are, ultimately, subject to the variable utility market.  A solar energy system can eliminate that risk and variability and provide 40 years of reliable and bankable electricity expense costs that any CFO would appreciate.

A ReVision Energy customer, Mr. David Greer, CEO of Wirebelt Company of America in Londonderry, states, “Manufacturing companies have many cost centers, and electricity can be a large cost. Generating 40% of our own energy is like a huge relief valve. It is a cost center we no longer worry about, no matter what the electric utilities do with prices.”  Mr. Greer and Wirebelt, a fourth generation family-owned, ISO 14001 certified facility, has utilized solar as a method to reduce local operational costs in a competitive manufacturing environment.

In addition to material financial advantages, photovoltaic solar systems can also provide social and marketing benefits in a competitive business environment. Annette Lee and Nicole Carrier, co-founders of Throwback Brewery in North Hampton, saw both financial and consumer value in partnering with ReVisionEnergy on the installation of a 48kW array, which offsets approximately half of the brewery’s annual electricity usage and provides a visible and tangible differentiating factor from their competitors.

Many of us enjoy a tasty, craft-brewed beer. But a growing percentage of consumers are looking to spend their dollars with businesses that are making a tangible commitment toward social responsibility. This is also true for major retailers and buyers who are looking to realize new sustainability purchasing targets. Solar energy systems do just that in a highly-visible and authentic manner, while also providing significant financial benefits to businesses owners.

This, of course, is reliant on reliable and forward-thinking legislative action in our state.  While solar electric incentives are attractive, they are also uncertain in New Hampshire’s legislative environment. To continue the unprecedented job growth and commercial and industrial electricity savings, we require clear and deliberate legislative leadership.

There is another common misconception about solar energy, that it is dependent on government subsidies to be cost-effective. While the existing federal and state incentives improve the economics, that is not unique to solar as an energy resource. Conventional fossil fuel energy resources historically have received and continue to received billions of dollars annually in government incentives. Because solar energy is a long-term investment, long-term and forward-thinking legislative policies are important to the continued growth and success of our state’s renewable energy industry. New Hampshire has in place a 10-year energy strategy that focuses on modernizing the grid, energy efficiency measures, fuel diversity and choice and transportation options. We need our leaders to act on this strategic plan so all residents and business can share in the success of a clean energy transition, keeping our state pristine while providing the economic development opportunity we know is there. When dollars stay in the local economy, everyone benefits.  

Because of the rapid increase in solar demand and limited state funds in New Hampshire, the state rebate is currently on hold while the Public Utilities Commission (PUC) determines the amount of funds available for the new fiscal year that began July 1. ReVision Energy is cautiously optimistic that full or partial rebates will be available for projects under contract by September 1. In the event rebate funds are reduced, it will somewhat extend the payback period, though larger, commercial projects will still generate five- or six-figure savings and provide the least-expensive, long-term rate of electricity available while greatly reducing the reliance on fossil fuels.

In June, the PUC issued a long-awaited ruling on solar net energy metering (NEM). The rule is a compromise which resolves uncertainty around the Granite State’s solar energy policy, and reinforces the basic argument of solar advocates—that solar generates value for the grid well above wholesale rates – as well as calling for important pilot projects which will help regulators design future solar policy so that the market sends accurate price signals to ensure that distributed energy resources, such as solar electricity, continue to be deployed in a way that saves everyone money and also reduces pollution.

Solar electric systems in New Hampshire provide a unique opportunity for business to achieve the coveted triple bottom line: people, planet and profit. New Hampshire businesses who invest in solar can realize an immediate benefit to the people, with employees and customers who see their differentiating value in powering their operations with reliable, renewable energy. They see an intrinsic value to the planet in the positive environmental benefits via carbon reduction and distributed generation of a renewable energy resource. And, not insignificantly, profit in which a solar energy system in New Hampshire can provide important capital budget savings. ReVision Energy, a Certified Benefit corporation with locations in New Hampshire, Maine and Massachusetts, welcomes the opportunity to answer any questions. Learn more at revisionenergy.com.

James Hasselbeck, New Hampshire Operations Manager

603-679-1777

 

Throwback Brewery

Wirebelt Company  Rooftop Solar Array w/ReVision Energy electrician

 

2017 NH Business Energy Education Series: Vol 14 – What are “emerging technologies”, and can they help me?

What are “emerging technologies”, and can they help me? Answer: Depends on your age, and yes they can! Let’s face it, a lot of technological changes have occurred in the past 50 years of my working lifetime.  Consequently, your perspective on “emerging technologies” depends on your age.  It’s easy today to look at buildings (for example) that were built 50 years ago and mutter the words “What were they thinking?“, because of what you know to be true today.  However, a great deal of that “change” has come from both real time emerging technology and higher costs for energy products (electricity & fuels).  The miracle of the Free Market: the ebb and flow of supply and demand can produce amazing results.  Sometimes progressive thinkers invent things before we can dream them up, and once invented, we want them immediately.  Sometimes WE are the ones who clamor for answers and inventors respond with the solutions.  When it comes to producing energy and using energy, for the most part, change has evolved over the past fifty years more slowly than in other industries due to the “disruptive” nature of the commodity market changes …..as well as the governmental shift from monopolized markets to regulated markets to unregulated markets. We are all still waiting for the free, perpetual energy machine to reach the market!  And yes, from time to time we see “government” stepping in with programs or incentives to push us in a particular direction…………. or regulate us in such a way to accomplish the same thing.

On the energy supply side, we have seen dramatic swings in the pricing, origins (location), and extraction methods for crude oil.  Natural gas, once almost an afterthought, is now a global commodity with the expectation of large volumes of liquefied natural gas (LNG) to be exported around the globe from the US….. due to recently developed fracking extraction technology.  Massive sized wind turbine farms dot the landscape all over the globe, as do its sister renewable energy technology, solar PV farms.  Behind the meter PV systems are growing like wildfire on residential, commercial, and industrial rooftops all around the world. Nuclear energy, once the expected salvation for “cheap” electrical energy in the 1960’s, became politically impossible to site after numerous concerns for safety and health in the US….. but due to recent R&D capital infusions by wealthy entrepreneurs, may make a comeback in the future if it can compete financially.  Also away from the heavy environmental regulations of the US, hydropower energy has continued to expand to provide fossil fuel free electricity to millions of people around the globe, many of whom never had any electricity before.  Coal, once a staple of both fuel and electricity production, is now a dirty word in the American culture, and devoid of a cost effective “clean technology” scrub, may be discontinued completely in another 25 years in the US ………with coal exports headed outside the US to more emerging economies.  Once only known for building materials and firewood, trees have turned into Biomass (wood chips) used for both generating electricity and running boilers for heat and process steam……. not to mention processed wood pellets for stoves and boilers. Geothermal energy, used mostly in relatively smaller scale applications so far, has enormous potential for larger use.  Fuel cells, creating both electrical and thermal energy are in use already and will continue to expand as the technology and pricing continue to change.  Throw in new battery storage technology for storing excess energy (mainly from full run renewable generators like wind and PV), and the energy world continues to evolve. All of this has happened in the last 50 years with the cycle of “change” getting faster.

On the consumption side, we have witnessed a continuous education of the users of energy over the past 50 years to “conserve” or use less of all of these energy commodities. Cars, trucks, buses, homes, factories, office buildings, etc ………all using less fuel and/or electricity today.  Some of this change is driven by “government”, but a great deal is also driven by a combination of economics and societal change.  It is no longer acceptable to “waste” energy if the same task or product can be done more efficiently.  Entrepreneurs and product developers understand these dynamics, and the pace of “efficiency” changes has increased dramatically over the past 20 years.  Talk to a typical millennial and you will find they know no other mantra ………and they are just now entering into the front end of their highest earnings/spending years.  Government has assisted along side that trend line as well.  Industry is beginning to see a price flattening of the energy supply side of fuels and electricity on a regional basis, and there are significant regional differences based upon the costs of production of these commodities on a regional basis.  The further away from the source, the higher the “transportation” costs are going to be ……….in addition to any government taxes, fees, or policy costs that are regionally or locally applied.  Clearly, the costs for the transmission and distribution of electricity in the ISO-NE territory are on the rise in a largely monopolized industry……. and those costs will increase even more if outside security threats force greater “hardening” of our electrical grid system ………. leading to even more, smaller distributed energy resources (DER) to reduce the risks. Hint: You will be reading more about “microgrids” as time goes forward.  What is the risk to your company if the grid you are connected to goes down for any length of time?

If, as a business, you exhaust your ability through competition to lower the commodity pricing of your energy, you are left with five basic options:

  • Move/expand your operations to a lower cost region of the country or the world
  • Take actions to use less energy and/or less “peak” priced energy where you already are located
  • Do nothing, and pass the costs on to your buyers (if you can)
  • Do nothing, and pass the costs on to your shareholders (if you dare)
  • Become a direct participant (purchaser) of electricity in ISO-NE

We have certainly witnessed these options, or combinations of these options, play out in New Hampshire and expect to see more of that in the future.  That assumes (see Blog Post #12) that government continues to fail to provide any creative solutions on the industrial electrical rate relief front.

Aside from than moving away to another region, becoming an ISO-NE participant, or doing nothing, the last option is to cut commodity use.  Most of those (cutting consumption) options require the use of your own capital, and installing new technology.  Be sure that you have exhausted your ability to cut supply costs through competition, even if that also requires bringing in a third party buyer like a Freedom Energy Logistics type company (Blog Post #10) to accomplish it …. or going directly to ISO-NE as a direct purchaser. We have already talked about undertaking an internal energy plan (Blog post #8): and incorporating energy efficiency (Blog post #9): and using alternative fuels like Biomass (Blog post #13) from Froling Energy.  The most unpopular thing I have to tell any industrial operation is, quite frankly, the need to get past the normal criteria for internal paybacks of 18-24 months for use of your own capital when doing some energy improvements………understanding that its a tough sell for Wall Street.

Private Equity held companies have more flexibility to take (investment) actions that are “out of the box”, as do closely held and/or family held enterprises.  Whatever capital intensive changes you do make, they are likely to give you financial benefits for the next 20-25 years, or sometimes longer.  That is a decision only you can make.  If I had any magic energy bullets to give you ………I probably wouldn’t be writing this blog for you today because I would be way too busy spending my $$millions or playing golf or both!  Cheers………. HT!

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