Providing affordable, reliable and clean energy services is the goal of communities and utilities around the world. Achieving a balance between these three often conflicting targets is a challenging and complex task. To do this effectively requires the clear understanding that competitive energy services are the result of a highly interconnected system in which policy, business and technical choices interact all the way from fuel and supply options to the final decisions over energy-consuming equipment. To be frank, this is a statement of the obvious. But, if it’s so obvious, why do we so often fail to take a systemic approach and resort to one-dimensional sound bites and single-issue decision making around energy?
This interconnectedness was once more brought home to me in a recent analysis carried out for a community energy plan looking at the effect of electric vehicles (EVs). Using the assumption that about 7% of vehicles would be electric by about 2030, the easy question was to evaluate the effect on the overall carbon footprint of the city. The passionate EV enthusiast or business would probably compare a current gasoline vehicle with an EV and come to the obvious answer that the EV gave a net reduction in greenhouse gas emissions. When viewed systemically for this particular community, the emissions aspect was found to be neutral at best, even with major changes in the local electricity supply to much lower emissions levels.
The background details of this simple example aren’t important here. What’s important is that the apparently obvious answer failed to meet the larger energy goal. This is so often the case with energy. From a systemic point of view, putting an Energy Star refrigerator in the kitchen or efficient motors in a factory might not be the optimal approach if the power is coming from a 50-year-old inefficient plant.
The picture is further complicated by effects over time. Most energy-consuming and energy-supply infrastructures stay around for decades. Depending on which assumptions are used for energy legislation, costs and technology evolution, almost any investment can be justified when viewed alone. When viewed as part of a community-wide system aimed at cost, reliability and environmental breakthroughs simultaneously, the number of possible choices shrinks dramatically.
This might not always be the answer that market players want to hear. The windmill salesperson wants to sell windmills. The politician and community leaders want the green photo opportunity the windmill presents. All too often within a few hundred feet of the windmills are hundreds of inefficient buildings where relatively modest investments in controls, windows and insulation would reduce the need for electricity more cheaply than supplying energy with the windmills. This is another simple example of a systemic question: Would it be cheaper to supply clean electricity with windmills or windows? Nothing against windmills — as part of the energy system, they have a valuable role to play.
The basic approach to systemic energy thinking has been around for a long time. It’s encapsulated in the priorities of the loading order. The first and invariably cheapest priority is to increase efficiency — effectively increase energy supply by destroying the need for unnecessary energy. The second priority, consistently neglected, is to recover heat from inefficient processes in power generation, industrial plants and even within buildings. The third priority is to add renewable energy supplies where they clearly make sense, and only after the preceding priorities have been fully explored. Last, but not least, invest in the traditional network systems to serve the now restructured demand in an optimal way.
Despite overwhelming evidence that systematically implementing the loading order is effective, U.S. energy policy discussion is still predominantly built on sound bites and single topics. This applies equally to the protagonists and antagonists of topics such as domestic prospecting, renewable or fossil supplies, regulation or liberalization of environmental standards, free markets or regulated pricing, and technology and efficiency incentives. These are discussed narrowly without framing them in overall economic, security and environmental targets. This approach won’t get us where we need to be.
The energy challenges of the next decades are highly interconnected and far from simple. Worldwide, we have to supply the growing needs of billions of new consumers for high-quality energy services. We have to revamp existing systems in the industrialized world to bring them to acceptable efficiencies. We have to slow down and ultimately reverse the production of greenhouse gases. All this has to be done over time spans consistently well beyond the tenure of any CEO, electoral cycle or politician’s career.
This can happen only with policies and decision making processes that deliver the loading order priorities aimed at balanced energy targets that don’t change with the sound bite of the day.
Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at [email protected].