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Do the Math: Efficiency Makes Economic Sense ; Volatility of the Natural Gas Market is a Threat to Electrical Power, Unless We Can Reduce Demand.

Posted on: Sunday, 30 October 2005, 15:00 CST

There has been a tremendous focus on the impending fuel-oil crisis in Maine and the Northeast, as high prices and cold weather grow more threatening.

There is, however, another serious energy situation looming - the reliability of the region's flow of electricity. The threat is serious enough, some say, that people in Maine and New England could see intentional shutdowns for several hours - called "rolling blackouts" - as grid operators try to prevent a catastrophic failure on the winter's coldest days.

There are two causes to consider: supply and demand.

A number of power plants that feed New England's grid use natural gas to produce that electricity - about 40 percent of the total. However, hurricane damages to natural gas facilities in the Gulf Coast two months ago may cause gas shortages this winter, and limit power capabilities.

As businesses and homes increase their use of electricity on very cold days, the power grid of which Maine is a part could be overloaded, and fail. Additionally, as demand increases over the years, so does volatility in the natural gas markets, setting up a long-term problem, if not a crisis.

A supply-side solution is to add more generating capacity. Some of those options include building new coal or nuclear power plants and promoting less conventional alternatives, like wind farms.

Nuclear power is a tremendously controversial source of energy. About 20 percent of all electricity in the United States is generated by nuclear power, but debate over the safety of the industry has limited new building of plants.

Adding coal plants, or increasing production at existing plants, might also be a tough sell, partly due to environmental concerns. Recent criticism has been aimed at the Environmental Protection Agency, which has proposed regulations that would allow older, more polluting plants to add hours of operation without adding new clean- air technology devices.

The addition of a liquefied natural gas (LNG) terminal in Maine would help, but several proposals to do so in recent years have been met with significant opposition. Such a venture would be good for Maine and the region, but it remains to be seen if public support can ever be won.

The big policy question, though, is asking whether we should only add new generating capacity. Is increased supply the only answer to impending energy crises that may continue for years?

The answer is no - if we find solutions on the demand side of the issue. Fortunately, there are workable, cost-effective avenues to be pursued. The thinking among some utilities experts is that conservation and increased efficiencies, by both businesses and residential customers, will provide significant reduction of demand. Some of the process is as simple as turning off a light, or better yet, installing 100 higher-efficiency lights. Other methods involve efficiency upgrades of electric motors and heating and ventilation systems for businesses. Overall, though, conservation and efficiency solutions aren't much more complicated than that.

Conservation and "green" thinking used to be the province of environmentalists. Many people on the business side tended to discount the environmental approach, believing those advocates did not fully recognize the importance of maintaining growth.

That's changed. Conservation and efficiency improvements are now seen as having real economic advantages. Kurt Adams, chairman of the Maine Public Utilities Commission, admits that he's come to the conservation side only recently, but has done so in a big way.

According to Adams, reducing demand through energy efficiency - particularly in lighting and heating and ventilation improvements - is about one-third the cost of building new power plants. The math is hard to ignore. Why look at new resources when you can achieve the same result - a stable, ample supply of electricity - through existing resources.

There's another benefit to conservation and efficiency that should also be considered - the environmental side. Any new generation source will increase pollution, while using less power lessens those concerns.

Electricity supply and demand are regional issues, and the New England states need to coordinate their approaches. The issue of reducing demand, however, poses benefits that can be specifically tied to Maine. If new generation facilities are built, there's no guarantee they'll be built in Maine. The state may get more access to power, but it doesn't gain any jobs or tax revenues.

Investments in efficiencies at the Maine sites where that power is used - factories, mills, office buildings - are investments that stay in the state.

It is not unreasonable to question if efficiency improvements can truly yield dramatic savings. A vivid case in point, however, comes from California. In 2001, higher demand and a financial disaster tied to deregulation led to emergency rolling blackouts. In response, residents businesses, nonprofit organizations, state government and utilities created a successful energy conservation campaign that leveled demand, and has kept it level.

In the end, New England has few power generation alternatives to natural gas in the short term. Energy efficiency is a new way of thinking that requires regional cooperation, but it can also bring real benefits to Maine.

Source: Portland Press Herald

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