running the numbers: how to green our energy sooner

plan do check act

Can we talk about KIUC’s Strategic Plan and its target of 50% renewables by 2023?

IMHO, we should have no trouble exceeding that goal and making our energy cheaper at the same time…raising the bar even higher.

I see three ways to get’r done. First, dramatically cut our energy use through efficiency initiatives. This is the only way to cut our costs in the short-term.

Second, get much more aggressive in lining up power supply partners, to ensure timely action by ‘green’ energy entrepreneurs. And, third, invest directly in ‘green’ generation and storage tech, to capture the full benefits of a distributed system.

As we unpack these strategies in turn, you’ll see how this approach could make going ‘green’ not just easier, but also cheaper.

Now, the kewl thang about strategy is…it’s dynamic. Whenever your competitive situation changes, your strategy will need a tweak.

Just so in strategic planning for our electricity: KIUC’s competitive situation has changed dramatically in recent years, as runaway fuel prices, accelerating global warming, and increased dependence on fossil fuels have significantly raised the stakes for a standalone utility trying to reduce emissions and maintain "fair" rates.

So, our situation is much tougher now, yet we can’t just throw up our hands and say, "There's nothing we can do about it." Instead, we acknowledge that we're going to have to do something differently, and figure out wot that something might be.

Accelerated Efficiency Initiatives

If we focus much more of our short-term efforts on energy efficiency, we can reduce our demand and future growth…and that makes it much easier to go ‘green’.

Now, under an energy efficiency regime, the “load forecast” becomes a moving target, which makes this a much more interesting strategic planning situation.

Sure, there’ll be growth pressure as our island economy expands in the years ahead, yet we’re also gonna be getting smarter about how we use energy.

Here’s a quick example of how this nets out. Say the expected growth rate for energy demand is 3% a year, and we set an annual “efficiency savings” target of 3%. Net-net, he load should remain the same, not grow.

BTW, KIUC’s load forecast calls for energy demand to increase by 2.7% annually through 2020. (Oh, and, don’t forget to factor in the fuel cost increases also forecasted in KIUC’s IRP documents…climbing from 32 cents per kWh in 2006 to 55 cents in 2020.)

Now, if this load forecast is right, and energy demand jumps to 110 MW from its current 76 MW, we’ll need 55 MW of ‘green’ energy to get to 50%. Yet, if we get more energy-wise and the load doesn't grow at all, we’ll only need 38 MW of ‘green’ to get to 50%.

BTW, choosing a 3% annual efficiency savings target would conform with the "Oil Depletion Protocol" promulgated by Richard Heinberg, and I notice that the "Oil Independent Oakland" task force is recommending that the city adopt this protocol and take immediate steps to implement it.

Oh, and, BTW, greater efficiency is one strategy that KIUC cannot achieve by itself. All us coop members will need to get much more into the efficiency thang to make this work. That means changing our energy-use behaviors and tapping into KIUC’s various incentives (where our track record, so far, has been underwhelming).

The good news is, we see evidence that our members' own energy usage patterns are changing in response to these circumstances. (BTW, I'll be writing about this in my "Kaua`i People" column next week.) There are much stronger reasons now for every member to participate in energy efficiency programs; it's the only way to cut our costs.

More Aggressive Partnering

True, we’re already headed toward 1/3 ‘green’ supply because of “Purchase Power Agreements” (PPA) that came out of an RFP floated by KIUC over 2 years ago. Yet, we’re prolly gonna need to put out many more RFPs, starting, like, yesterday.

There’s ample evidence that lots of new ‘green’ energy technologies are heading our way, and the economics of renewables is changing fast. ‘Greener’ now looks cheaper, yet we’re gonna need fairly savvy deal-making to ensure coop members actually see falling rates as tech price points fall..

Oh, and, methinks it’s not enough to promise energy entrepreneurs you’ll buy their electricity…if they manage to get all the required permits and start operating. IMHO, KIUC must become much more of an advocate in ensuring these projects are assessed much more robustly and expedited wherever possible.

More Direct Investment

We can also start investing directly in ‘green’ generating sources and storage tech, and need not wait for others to act.

Turns out, there are strong financial reasons for KIUC to make these investments upfront, especially as we learn how to integrate renewable sources that are intermittent. Especially in energy storage, KIUC gets more of the benefits if it owns the storage assets.

Integrating 3 Spheres

Got it? In the community sphere, we’re changing how we use energy. In the economic sphere, we’re changing how we distribute energy. And in the ecology sphere, we’re changing how we make energy. All 3 spheres gotta work together if we’re gonna get’r done.

‘K den. If this isn't a reason to forge a strategy that rallies members and energy entrepreneurs around a dramatically accelerated push toward renewables in a distributed system…starting, like, yesterday…I don't know wot is.

It seems clear we gotta get greener, sooner, cheaper. IMHO, we need to tweak KIUC's strategy to make it so.

Published by Ken on February 25th, 2008 tagged Energy, Systems Thinking

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