In Michael Porter’s book on Competitive Strategies, he talks about the competitive forces that shape an industry.   One of the main competiitve forces that impact almost every industry is the source of their energy.   The more options businesses create for their sources of power, the more competitive they will be long term - espcially with respect to other companies in their industry.  

This point was brought home recently by a business I have been working with on assessing, aligning, and expanding their energy options.  The company is a small speciality grocery who has seen his electrical bills go up from $700 to $7000 dollars over the past 20 years while his overall consumption has decreased due to efficiency improvements in his refrigeration.   When deregulation went into effect, he was able to get a lower electrical rate from an out of state provider, yet had to still pay the local carrier for delivering the electricty.   And then last year with the dramatic increase in heating oil prices,  it was the first year his company didn’t turn a profit.  

With electrical rates expected to experience a simiar increase over the next 20 years.  and the impact of volatile oil prices on his long term viability,  the business owner wants to develop his own power solutions.   The more options he can create to power his store, the less he will pay for his power, the more competitive he will be and the lower he can charge for his products or the more profit he can make on the products he charges that are in line with his local competitors.  

Through the Project  Energy Independence course, we are looking at two solutions - one for creating his own electricty with roof solar panels and another for heating his store with a removable wood furnace.  He doesn’t own the store so any solution he selects, he wants to do it with minimal infrastructure changes - these two solutions enable that.   There is a  whole foods store in a community 25 miles away that is using a fuel cell as a back up electrical generator - we are looking into some grant money to explore that option.

I’ve been extremely busy both implementing my own energy independence projects and creating a course to teach others how to do the same (the reason for the lack of blog posts over the past couple of months).   My Connecticut solar energy project is well under way with the site location marked out.   It is on delay for about a month for a VERY GOOD reason - the state of Connecticut has reinstituted it’s rebate program and we have to wait until July 1 to apply.   It reduces the cost of the install by almost $8000 - a SIGNIFICANT savings.   Our wind energy project in Alaska is right on track to install a 5kw Helix Wind Turbine.   We have done the site analysis, selected and prepared the location, ordered the windmill and scheduled training for the installation.   The Nevada sites are doing well  - one location is complete on the energy reduction implementation and the other one that is employs a passive solar design is still in the construction stage - a great place to be to input the systems right from the get go.

The Project Energy Indpendence course stemmed out of what I have learned on my journey to become Energy Independent.    I combined Cheetah’s award winning accelerated learning principles and project management methodology to get people successfully up and running with their  own energy independence projects in 35 hours.  The 35 hour online instructor led, Project Energy Independence course is based on four learning objectives:

1. Learn how to accurately assess current energy usage patterns.

2. Determine how to align energy use with actual needs.

3. Develop options for powering your life (includes a complete assessment of the wide assortment of energy alternatives).

4. Learn how to effectively and efficiently implement your energy independence projects.

The Project Energy Independence course is designed for both people who are new to the idea of becoming energy independent AND for people who have to help others become energy independent as it creates a very simple format to walk people through all the steps on becoming energy independent.

For people reviewing this course on the blog, use the promotion code IndependenceNOW - and get $100 off the price of the course.   The promotion code is good until July 31, 2009.

Less than a year ago, gasoline and home heating oil prices in Alaska were over $5 per gallon.   Now, because global demand for oil has decreased due to the recession,  oil prices have dropped over half price.   This has decreased interest and investment in renewable energy projects.   HOWEVER,   as soon as the economy gets a glimmer of recovering, OPEC will be raising prices again, spinning the economy BACK into recession.   At least this is the “hope” of the investment community according to this article in Trend Capital:

“Pioneer Astronautics president Robert Zubrin says the OPEC decision will not boost oil prices much right now.

“But as soon as the world economy starts to recover this decision, combined with OPEC’s other recent decisions to take crude out of production, will shoot oil prices up over $100 per barrel,” Zubrin told Trend Capital via e-mail.

He said all these decisions could send the world economy right back into recession, causing oil prices to collapse again.”

Obviously there is a tight coupling with energy costs and the economy.  By creating a more distributed energy model where we are all producing our own energy or at least we produce the energy we need much closer to where it’s actually needed, OPEC will continue to be able to exert far too much influence over the economic stability of our day to day lives.

This is why it’s imperative, EVEN with current day oil prices, that we use this time of lower prices to learn how to become energy independent.   By breaking the energy monopoly that oil has on our energy needs, THEN we will have more stable oil prices.   This is a matter of national security as well as a matter of our own economic security.

The US Environmental Protection Agency has a website where you can enter your zip code and it will show how your electricity is generated, and the byproducts of that electrical generation.   What amazes me is how the companies creating electricity that causes long term damage to the environment are not responsible for paying the costs of that long term damage.   We are in fact subsidizing our own demise here with the pollution output by the burning of fossil fuels (including coal) to generate electricity.

I entered my zip code for Nevada and found out that  almost half the power for Northern Nevada (for 2005) was generated by hydro power, about a third was generated by coal, a tenth by natural gas, and about 2 - 3 percent between nuclear and other renewable forms.  Electricity generated from oil was just a fraction of a percent.    And for this type of power, Northern Nevada creates about 2/3 the average of CO2 emissions as the rest of the country, and 1/5th the sulfer dioxide emissions of the rest of the country (the hydro power probably is bringing that number down).

how-clean-is-the-electricity

E-Fuel Corporation, a Silicon Valley startup, has created a backyard refueling station that looks about as difficult as making beer. Okay - maybe easier than making beer as it doesn’t require all the vessel transfers. It uses water, sugar, and yeast to create ethanol. It takes ten gallons of sugar (unusual measurement for a dry product) to create one gallon of ethanol. Over a week, the system can create 35 gallons of fuel. This means you’d have to have 350 gallons of sugar on hand on a weekly basis to create the ethanol. Where do you store all that sugar? What I do really like about this though is that this is set up for the individual to create their own fuel. They are selling these now, but delivery is not until fourth quarter this year. For just $9995 you can have your own ethanol back yard refueling station.

I love the name of this one - the Freedom Fueler. It’s the home biodiesel maker. You just need to collect waste oil from your local fry house. They have several different models - the entry level one is $3495 and can produce 40 gallons of fuel with just 30 minutes of effort. With 80 gallons of waste oil and 22 gallons of methanol, you produce 80 gallons of biodiesel with a by product of 22 gallons of glycerin. Glycerin is used in hand lotions, and in creating nitroglycerin (the explosive). Additionally, biodiesel has a high clouding temperature and is not suitable for use in cold climates without putting in a winterizing additive or blending it with diesel oil.

My ideal is to have an algae biofuel system that can create 35 gallons per day of algae biofuel from a small back yard system. In my ideal system, you grow your own algae and have the compressor set up to automatically create the fuel. Considering algae doubles in size every day, you’d have to get the right strain that would grow the best for your area. The ability to do this is much further away than fourth quarter this year so I might go with this micro fuel system first while the algae biofuel technology becomes more developed.   There are varying levels of success so far with algae biodiesel, yet tremendous research is happening on this front - Ames Laboratory is testing out an idea that would produce 10,000 gallons of algae biodiesel per year on just 1 acre of land.  If they are successful, a smaller scale back yard operation producing the amount of fuel a small family needs to heat their home and fuel their vehicles is possible.

There are a wide variety of financial incentives available to homeowners to aid in the conversion to a more self-sufficient lifestyle. Below are the top four states in terms of the amount of financial incentives offered to homeowners. The rest of the states’ incentives can be found on when clicking on the picture below.

Below describes each of the different homeowner financial incentives that are featured in the above chart.

Tax Incentives

• Corporate Tax Incentives: These include corporate tax credits, deductions, and exemptions. This can apply to residential sectors as well as commercial in a few special cases, such as in South Carolina where they have a Solar Energy Tax Credit that allows taxpayers to claim a credit of 25% of the cost of installing a solar-energy in any building owned by the taxpayer.
• Personal Tax Incentives: These include personal income tax credits and deductions, and are used as a tool to offset the cost of purchasing and installing energy efficient equipment in your home. This type of incentive usually has a maximum monetary amount of the deduction or credit.
• Property Tax Incentives: Include exemptions, exclusions, and credits. A vast majority of these types of incentives ensure that the added value obtained by implementing a renewable energy system is not included in the valuation of the property for taxation purposes.
• Sales Tax Incentives: This type of incentive provides an exemption from the state sales tax for buying energy-efficient appliances, a renewable energy system, and other items related to reducing use and increasing efficiency in the home. Some states have established a “sales tax holiday”, where a sales tax exemption for renewable energy items is available for a few days out of the year, giving consumers a push to purchase these items in a set time frame.

Loans

Loans provide financing needed to buy energy efficient or renewable energy systems and equipment. Loan terms are usually 10 years or less, and they are usually offered with very low-interest rates to cover a wide variety of energy efficient projects.

Rebates

Rebate Programs provide money after the fact to support and promote the installation of energy efficient projects. Rebate Programs are usually administered by utilities (municipal utilities and electric cooperatives, but can also be administered by the state.

Grants

Grant Programs: This type of incentive is offered by states to supports the development and use of energy efficient projects and renewable energy technologies. These incentives vary greatly from program to program. Some offer financial support for a wide range of areas related to alternative energy, while others or more specific and may offer funding for projects utilizing a specific type of technology. While grants are primarily available to commercial, industrial, utility, education, and government sectors, there are some available for the residential sector, which is illustrated in the table.

Other Incentives

• Green Building Incentives: These incentives are used to promote the creations of green building, which are building that are designed to minimize harmful impact on the environment. These incentives commonly come in the form of a reduction or waiver in building permit fees. The Leadership in Energy and Environmental Design (LEED) is a well-known program to certify energy efficient building.
• Leasing/Lease Purchase Programs: This incentive allows customers to lease an alternative energy generation device (i.e. photovoltaic system) from their local utility. This is done primarily for customers in remote areas, where the cost of extending traditional forms of electric distribution lines would be too expensive to be feasible. Some programs have the option for the customer to then purchase the system after a specified amount of time.
• Production Incentives: This incentive provides payments based on the amount of kilowatt-hours a renewable energy system generates. These are also known as performance based incentives.
• Utility Rate Discounts: This incentive can be offered by utility companies to encourage household energy efficiency. They are provided for households that meet a certain energy efficient rating (the Energy Star Program is well known for this), and in meeting those requirements the owner is awarded a discount on each month’s electricity bill.

I’ve been evaluating the various ways to power properties in three different locations over the past several months and have found a bewildering number of options to do just that.  Some are still in the twinkle in the eye phase of development, others are more proven, but my gosh the price tag makes you feel like you’re underwater gasping for air. Basically anywhere you live you need power for three functions:

1. Run Electrical appliances.
2. Heat and Cool Your Dwelling
3. Get you from point A to point B.

So here are the three locations I’ve been evaluating, the options, and the feasibility of those options.

Alaska - this property is on the Lynn Canal - a very deep fjord about 70 miles northwest of Juneau.    The local population is very pro-environmental so there is wide acceptance for doing alternative energy solutions.   The property actually just got on the grid less than ten years ago so it is already set up to be off the grid.  It has a large 20kw diesel generator that powers the main house and three outbuildings that includes an apartment.   It used to house a very large windmill in a field and the wiring still exists to the main generator shed. The home and hot water are currently heated with a diesel furnace.   Propane provides cooking fuel.   There are options to put in a geothermal heat pump system.  The piping can either be run underground or can be placed out in the water.    The approximate cost to do that is $20,000.  Current heating oil costs on that site are $5000 per year.   The site also has strong gusting winds sometimes over 70 MPH.   There is a 5kw windmill by Helix Wind that can handle wind from all directions and large gusts.    The cost is approximately $20,000.    Current electrical costs are $4000 per year.   Reducing the electrical usage is somewhat difficult as the custom home was built using approximately 14 different types of light fixtures.  It is not an easy matter of just replacing incandescent bulbs with florescent bulbs - most of the light fixtures need to be replaced.  There is also a green house that has high wattage metal halyide lights.   

To modify the home’s heat and electrical sources is possible, but may not be desirable.   The windmill would be the easiest to implement solution since the electrical system is already set up to be off the grid.   The Geothermal Heat Pump system would be considerably more difficult as there are no qualified installers in the area and doing the piping into the water, even though it is a closed loop system, would require special permitting and may not be allowed.   Doing a horizontal or vertical closed loop ground system would also add considerable cost to the installation and significantly alter the natural landscape on the property.   There is another alternative to use the existing infrastructure of both the diesel generator to create the electricity and the diesel furnace to heat the home - that would be to create algae oil.    But from what I’ve seen on the algae to oil tools - this is not an easy task and there are not currently off the shelf solutions to make oil from algae.   My initial step is going to be to install the windmill and keep experimenting with the algae biofuel alternatives.    The algae biofuel would also be used as fuel for the diesel truck and tractor.   I could put in a larger 100kw windmill and use the excess power to create hydrogen for a fuel cell car - however there are no technicians in the area with hydrogen or fuel cell experience so maintaining a fuel cell vehicle up there over the long term would be more difficult. The town has told me if I set up my own power company, they do have to purchase back my electricity at their wholesale rate. But they do not do net metering.

Nevada - there are two properties in Northern Nevada on the eastern side of the Sierra Nevada range.  The first property is a small home in a tract neighborhood.  The options for this house are limited to solar panels on the roof and possibly a very small windmill.   For this home, we have already replaced all the light bulbs with low wattage florescent, installed a tankless hot water heater and added an energy efficient natural gas fireplace.   The other property is on a south facing hill with ample space for solar panels.   It already employs a passive solar design, and was designed using low wattage light fixtures, and tankless water heaters.  We have designed solar awnings, a portable solar carport, are putting solar panels on the polar king freezer trailer and can ground mount at least 50kw of solar panels on the 2 acre hill behind the house.   The property also gets winds up to 30 MPH from the valley floor for half the day.    This property is also well suited for a geothermal heat pump system but because of the passive solar design and the airflow characteristics, the home has minimal heating and cooling needs as it is.   The excess electricity generated on this property could be used to create hydrogen for a fuel cell vehicle.  The area has numerous people who are technically qualified to help with a fuel cell vehicle.   The plan for this property is to first install the solar awnings as that will reduce the cooling needs of the house.  Then install the portable solar carport and put the solar panels on the polar king freezer.   The next step will be to install a 5 KW windmill and then work on the hydrogen creation system for the fuel cell.   Depending on the needs for the hydrogen fuel cell system, we may install more solar panels or windmills.

I’ve also been evaluating some other novel energy storage concepts for the Nevada property. Research Scientists at Worcester Polytechnic Institute have found a way to use asphalt to capture solar energy to heat a liquid. There are some other fascinating ways of very inexpensively using the sun’s energy on vacumn sealed tubes heating liquid mounted flat or in a trackable concave mirror. With both of these combined, they can circulate liquid through a tank that then uses that liquid in the tank to run a waste heat generator for electricity. After the water goes through the waste heat generator, it gets returned to the hot liquid sink to be heated up again from the asphalt and the concave mirror solar energy collectors. Electratherm, the manufacturer of the waste heat generator, said they were going to be rolling out a 5kw system by the end of 2009. The benefit of this system is it would also keep the driveway hot for snow melting in the winter. The key would be to use a non-toxic antifreeze in the system.

Connecticut - This property sits on a west facing hill.   There is ample space for ground mounted solarpanels facing south.   We priced a 6kw system which would cover the electrical needs of the home.   The installed costs would be 50K.   There is also ample space to install a horizontal piping geothermal heat pump system.    The house is a passive solar design as well so the geothermal heat pump would work well for the cooling needs in the summer but it may be inadequate to for the heating needs in the winter.   More evaluation is required - however there are other people in the area employing geothermal heat pump solutions and there are qualified installers in the area.    We may be selling this property within the next year or two so we have put the energy self-sufficiency projects on hold.   Homes in the area are not selling at even their market value so making improvements on this property doesn’t make sense at this time.

Now this is an incredibly innovative design - the Jelly Fish Windmill. Lets do a back of the envelope payback analysis. Being at this renewable energy conference this week in Las Vegas, I am more convinced than ever that we are going to see major electrical rate increases as the utility companies pass on their cost of upgrades onto the end consumer. So lets just say for ease of calculation that your electric bill in five years is $.20/kwh - that makes this new windmill cost savings of $8 per month. If it costs you $200 to acquire, and it really is as easy as plugging it into the wall so you have no installation costs, than the payback period is about two years. $8 per month doesn’t seem like much, but a payback period of a little over 2 years - WOW. You can place these about 15 feet apart so for a house 40 feet wide, you could put two on there. They are also working on a 1.2 kw design - and two of those could provide the typical house at the typical current usage profiles about half their electrical needs. This could very well be the most affordable solution to becoming energy self-sufficient coming down the pike.

The Keynote Roundtable of the Renewable Energy Conference was a who’s who of the trade associations in each of the renewable energy field domains.

Ms. Denise Bode
CEO
American Wind Energy Association

Mr. Douglas Durante
Executive Director
Clean Fuels Development Coalition

Mr. Karl Gawell
Executive Director
Geothermal Energy Association

Ms. Linda Church-Ciocci
Executive Director
National Hydropower Association

Ms. Julia Hamm
Executive Director
Solar Electric Power Association

Mr. Rhone Resch
President & CEO
Solar Energy Industries Association

Mr. Edwin F. Feo
Partner
Milbank Tweed Hadley & McCloy LLP

It also included the Keynote Speaker -
Mr. Roberto Denis
Senior VP Energy Supply
NV Energy

I captured the insights of the distinguished panel on twitter as it was occurring. They were asked questions by the moderator regarding the state of affairs in each of their respective industries and where they say the biggest challenges are. They opened the discussion up to the audience but didn’t allow for but several questions. The interchange between the panel on issues regarding government policies and the challenges with respect to distribution was interesting and deserved far more treatment than could be accorded in a short hour panel discussion.

What emerged for me was the realization that this field needs very strong coordinating leadership. It left me wondering why there was not representation by the leaders of the Department of Energy on the panel. Coordinating the development and distribution of the renewable energy nationwide is a matter of national security and needs to be guided and controlled by the federal government with innovative, visionary and stringent standards. It cannot and should not be left to each of the renewable energy specialties or the vendors. Yes these folks need a place at the table but they lack the vision of an integrated whole to address the challenges facing nation states for the national security issues with our long term energy policy.

You can see the stream of comments on each of the individuals at http://twitter.com/michellecheetah. Their perspectives are interesting. For example: Rhone Resch
President & CEO of Solar Energy Industries Association said that it all it took to become a solar installer was to hang out your shingle. I would recommend that Mr. Resch go try to do just that and see how far he gets with becoming a solar panel installer. It is a bit more complicated and regulated than that (and thank god). Another interesting comment by Mr. Edwin F. Feo, Partner, Milbank Tweed Hadley & McCloy LLP emphasized that the reason why utility companies wanted to adopt renewable energy projects was to justify rate increases so they could improve their profitability. (YES, I knew I was on track with my reasons for wanting to become energy self-sufficient as a way to hedge against utility rate increases). Ms. Linda Church-Ciocci, Executive Director of National Hydropower Association may have provided some of the most educational comments regarding how investment tax credits are more important than production tax credits as if you don’t have capital to even do these projects, you won’t get the benefits of the production tax credits because there won’t be any production. Ms. Denise Bode, the CEO of American Wind Energy Association, pointed out that in the next five years, there are wind power projects that will exceed our current wind energy production by five times. She also stated that America was now the number one producer of wind generated electricity. Mr. Douglas Durante, the Executive Director of the Clean Fuels Development Coalition said his industry was in the process of revising some mistakes they made in policy legislation that was ill conceived at the time. He didn’t further elaborate but counseled his peers on the panel to be more far sighted in their legislative policy making. Mr. Karl Gawell, the Executive Director of the Geothermal Energy Association, pointed out that over half the cost of using geothermal energy was in drilling yet most people focus the investment dollars on creating the production factory. Ms. Julia Hamm, the Executive Director of the Solar Electric Power Association pointed out that Utility companies have large percentage of their workforces near retirement. Her comment left me wondering if the new green jobs be able to meet work requirements of managing the energy needs of the country.

The idea of us being able to toss our household kitchen compost into an hydrolizer on the hood of our car like in the movie, Back to the Future, might someday be a reality. Microbial electrolysis cells (MECs) harness the electrons produced by bacteria as those bacteria feed on stuff like kitchen compost (referred to as “biodegradable material”). According to the MIT Technology Review, “The bacteria sit on an electrode–the anode–as they metabolize organic matter in an oxygen-devoid chamber. Not being able to react with oxygen, the electrons travel from the anode to the counter-electrode–the cathode–where they combine with protons to form hydrogen.” They report that researchers have made major strides in making this an affordable reality. The questions I have are:

A. How much hydrogen is produced per pound of kitchen compost?
B. Are some forms of kitchen compost better than others?
C. What about grass clippings - how does this perform?

I’m not sure if we’ll see flying cars in my lifetime, but this one concept might just get some wings.