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Sep|Oct|2013
volume 91|05
www.elp.com
Section 316(b) Rule and Public Utilities
DR in EPA MATS Era Bridges Coal-to-Gas Gap
Regulations Impact Fossil Plant Design, Water Management
Is Coal’s Death Looming?
1309elp_1 1 9/30/13 5:02 PM
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The business of power for utility executives
Sep|Oct|2013
volume 91|05
4 | ElEctriclight&PowEr Sep|Oct|2013
Events 6
Commentary 8
COLUMNS
Customer Service: Utility Style 10
Measuring the Customer Outage Experience
by Penni McLean-Conner, Northeast Utilities
Guest Column 12
Can Congress Get Its Act Together?
by Jim Manley, QGA Public Affairs
Economic Inquiry 14
Leveling the Power Sector Playing Field:
When New Entrants Can Compete
by Tanya Bodell, Energyzt
Guest Column 16
What Section 316(b)
Means for Public Utilities
by Nathan Henderson and Bill Mcelroy, Stantec
FEATURES
Industry Report Smart Cities’ Infrastructure:
Analytics, Interconnectivity and Integration 18
by Ted Fagenson, EcoFactor
SECTIONS
Finance
Attracting and Retaining Leaders to Overcome
Industry Challenges 20
by Ted Konnerth, Egret Consulting Group
Generation 22 The Tale of Cooling Towers: Regulations
Drive Fossil Plant Design, Water Management
System Innovations
by Steve Rosenberg, The Dow Chemical Co.
26 Demand Response in EPA MATS
Era Bridges the Coal-to-Gas Gap
by Judd Moritz, EnerNoc Inc.
Renewables 30 Solar Steam Augmentation:
A Sensible Alternative to PV
by John Robbins, AREVA Solar
Energy Efficiency & Demand Response 31 It’s Economic Efficiency, Stupid!
by Phil Davis, Schneider Electric
IT/CIS & CRM33 Learning. It’s Always in Style
by Rod Litke, CS Week
34 The Shifting Asset Management Paradigm
by Dr. Siri Varadan, UISOL
Smart Grid36 Smart Distribution: A Self-
healing and Optimized Grid
by Scott Zajkowski and Kevin Mays,
IUS Technologies
38 Bosses of the Electric Grid Should
Pay Attention to the Gridiron
by Michael McCullough, Edelman
16
20
26
38
1309elp_4 4 9/30/13 5:03 PM
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E V E N T S
ElEctriclight&PowEr is the official supporting publication of
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6 | ElEctriclight&PowEr Sep|Oct|2013
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The business of power for utility executives
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8 | ElEctriclight&PowEr Sep|Oct|2013
Commentary
Teresa Hansen, editor in chief
Is Coal’s Death Looming?
Some of you might think this issue’s cover depicting coal’s demise is too extreme. I was hesitant
to use it for that reason, but during the last couple of weeks, coal-fired power generation has been
targeted by the EPA, the United Nations and to some degree, the Clinton Global Initiative, mak-
ing its future more unpredictable and uncertain than before.
On Sept. 20, the EPA released its proposed pollution standards for new fossil-fired power plants.
Under the proposed rules, new coal-fired units would need to emit less than 1,100 pounds of carbon
dioxide (CO2) per megawatt hour (MWh); or, they would have the option to meet a tighter limit of between 1,000 and
1,050 pounds of CO2 per MWh on average over 84 months of operation. The EPA said this would provide new plants
flexibility and time to optimize technologies. Because the average U.S. coal plant emits 1,768 pounds of CO2 per MWhr,
new units would have to use carbon capture and storage (CCS) technology to meet the new plant requirement. Most
utility experts say CCS technology is still in research and development and is not ready to be implemented on a large
scale. In addition, it’s expensive.
The new rules also proposed a limit of 1,000 pounds of CO2 emissions for large natural gas-fired plants. Because
large combined-cycle gas turbine (CCGT) plants emit 800 to 850 pounds of CO2 per MWh, they already meet the stan-
dard, giving electricity generators one more reason to run toward natural gas and steer clear of coal.
The EPA is expected to propose carbon emission standards for existing coal-fired units in about 18 months. The
uncertainty about these standards adds more pressure to the industry.
The EPA announcement alone would have been bad enough for the coal industry, but to add insult to injury, the
Intergovernmental Panel on Climate Change, a U.N. sponsored group of the world’s top scientists, recently produced
a report on the physical science of climate change. The full 900 page report hasn’t yet been released, but a 36-page
summary was made available just days after EPA proposed the new plant standards. In it, the panel endorsed a “carbon
budget for humanity,” limiting the amount of CO2 that can be produced by industrial activities and deforestation. If
adopted in the U.S., the U.N.’s proposed carbon budget could set emission limits even lower than those set by the EPA.
The Clinton Global Initiative is a nonprofit organization founded by President Bill Clinton in 2005 to create and
implement innovative solutions to the world’s most pressing challenges, including climate change. The organization
held its annual meeting Sept. 23-26 in New York. One of the main discussion topics was building resilient cities and
coastlines. The destruction and devastation New York City suffered due to Hurricane Sandy was part of that discussion.
President Clinton, former Vice President Al Gore and New York City Mayor Michael Bloomberg spoke about global
warming and its contribution to extreme weather events and coastal flooding. I watched an interview with Clinton and
Gore on Bloomberg TV, in which they called for greater restrictions on coal-fired plants around the world and develop-
ment of more renewable energy, as well as natural gas-fired generation.
These recent rules and calls to action regarding coal-fired generation are the latest in a growing list of rules and
regulations that impact the industry. In the article “What Section 316(b) Means for Public Utilities” on page 16, the
authors write about how EPA’s Section 316(b) is impacting public utilities. Another article on page 22 titled “The Tale of
Cooling Towers: Regulations Drive Fossil Plant Design, Water Management System Innovation” explains how regula-
tions and water restrictions are affecting coal-fired plants. In addition, “Demand Response in EPA MATS Era Bridges
the Coal-to-Gas Gap” on page 26 discusses the EPA’s Mercury and Air Toxic Standards (MATS) rule. In it, the author
explains how utilities can use demand response as they transition from coal- to natural gas-fired generation.
These articles provide insight into how utilities have adjusted or plan to adjust to existing rules aimed at lowering
coal-fired generation’s environmental impact. I suspect that in a few months, Electric Light & Power will publish articles
that cover the rules and initiatives mentioned here.
I wonder, however, if and when the growing list of rules and restrictions will price coal-fired power out of the
generation mix. Will most of our coal-related articles be about the retirement and replacement of the nation’s coal-fired
power plants? Given the current trends, I think it’s OK to ask: Is coal’s death looming?
1309elp_8 8 9/30/13 5:03 PM
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Customer Service: Utility StyleC O L U M N
10 | ElEctriclight&PowEr Sep|Oct|2013
A u t h o r
Penni McLean-Conner
is the vice president of
customer care at NSTAR,
the largest investor-
owned electric and gas
utility in Massachusetts.
McLean-Conner, a
registered professional
engineer, serves on
several industry boards
of directors, including
the Massachusetts
Technology Collabora-
tive and CS Week. Her
latest book, “Energy
Effciency: Principles
and Practices,” is avail-
able at http://pen-
nwellbooks.com.
For 2013, this column has been dedi-
cated to the discussion on how utilities
can enhance outage communications.
Utilities are bullish about enhancing
the customer outage experience by op-
erationally improving performance and
communicating more frequently and ac-
curately with customers on outage resto-
ration status.
Utilities will know they have suc-
ceeded in improving their customers’
experience when customers tell them, as
part of customer satisfactions surveys.
The downside to customer satisfaction
survey measurement is that it is a lagging
measure. Metrics that a utility monitors
regularly and in real-time indicate what
is most valuable to customer satisfaction.
It is important for utilities to have these
leading indicators in place to monitor
and manage customer outage communi-
cations.
Some of the most valued outage
communications metrics are: estimated
time of restoration (ETR), which is the
communications attribute most valued
by customers; system reliability; how
utilities communicate; and, social media.
ETR Metrics
ETR is the most important piece of infor-
mation a utility can provide a customer.
Leading utilities regularly monitor met-
rics associated with ETR, including:
• Percentofcustomers’receivingan
ETR.
• Percent of customers receiving an
accurate ETR. A utility might call
an ETR accurate if the ETR is not
missed and is accurate within 90
minutes of the actual event.
• PercentofmissedETRs.This isa
quality measure identifying those
ETRs that were missed.
System Reliability
System reliability metrics are some of the
most mature and standardized metrics in
the utility industry. Because the definition
and measurement is standardized, these
metrics can be easily benchmarked with
other utilities. While there are many reli-
ability metrics that utilities will monitor
and measure, from a customer’s lens, the
most informative are:
• CustomerAverage InterruptionDu-
rationIndex(CAIDI).Thisprovides
the average outage duration that any
given customer would experience.
• SystemAverage Interruption Dura-
tionIndex(SAIDI).Thisistheaver-
age number of minutes a customer is
interrupted in a year.
• System Average Interruption Fre-
quency Index (SAIFI). This is the
average number of interruptions that
a customer would experience. It is
sometimes reported as months be-
tween interruptions (MBI), giving
insight into how often the average
customer is experiencing an outage.
• Total customers impacted by out-
ages. This metric reminds utility
leaders of the number of customers
inconvenienced by outages.
• Customers experiencing long inter-
ruptionduration(CELID).Thismet-
ric provides insights into the number
of customers who experience an out-
age greater than X hours, with X be-
ing set by the utility.
Communication Metrics
Utilities should maintain and monitor
metrics around outage communication
channels offered to customers to ensure
that each channel supports customers ap-
propriately and measures performance.
Outage communication metrics can
be benchmarked. The DataSource, ad-
ministered by the customer service com-
mittees of the American Gas Association
and the Edison Electric Institute, is a util-
ity customer service benchmarking tool
that supports analysis of inbound out-
age reports handled by customer service
rep resentatives (CSR), interactive voice
response (IVR) and websites. Recent
DataSourceresultsshowsthatmorethan
65 percent of customers prefer self-service
options. Other quality metrics reviewed
include percent of calls abandoned and
percent of outbound calls completed.
Social Media Metrics
Social media is the new utility metrics
area. Customers are increasingly using
social media to gain information on a
variety of subjects, including outage in-
formation. Twitter is an excellent com-
munication tool for utilities to leverage
during outage events. Some metrics util-
ities maintain with social media include,
number of downloads of mobile outage
applications,Facebookhits,Twitterfol-
lowers, retweets, Web visits and You-
Tube video views.
What gets measured, gets managed.
This is true with the customer outage
experience. Leading utility executives
are working hard to identify and monitor
metrics that give insight into customers’
outage experiences. With this
information, they can inform strategies
and initiatives that will enhance the
overall experience.
MeasuringtheCustomer Outage ExperiencePart 4 in a Series on Outage Communications
by Penni McLean-Conner, NSTAR
1309elp_10 10 9/30/13 5:03 PM
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GuestC O L U M N
A u t h o r
Jim Manley is a team
member at QGA Public
Affairs in Washington,
D.C. His political chops
include six years as a
senior communications
advisor and spokesman
for Senate Majority Leader
Harry Reid and nearly 12
years as press secretary
for Massachusetts Sen.
Edward M. Kennedy and
the U.S. Senate Committee
on Health, Education Labor
and Pensions. Prior to that,
Manley worked in the press
offce of then-Majority
Leader George Mitchell,
D-Maine. Reach him at
For anyone who’s had it with grid-
lock and partisanship in Washington, and
more importantly the impact the political
bickering has had on the fragile economic
recovery, have I got a deal for you. As we
look forward to the fall, the biggest threat
to the economy over the next few months
isn’t consumer confidence, the state of the
housing market or a lousy bond market, it’s
Congress. Simply put, there are two up-
coming fights over basic spending priori-
ties and raising the debt limit that could be
a make or break moment for this country.
The House and Senate reconvened on
Sept. 9 and were in session just eight days
before the fiscal year ended on Sept 30.
Given that the two parties are at least
$90 dollars a part, it is all but impossible to
see how an agreement to keep the govern-
ment open for the budget year that started
Oct. 1 can be reached in two weeks. After
some posturing, especially by presidential
hopefuls like Marco Rubio, Ted Cruz and
Rand Paul, I expect a modicum of com-
mon sense will prevail and Congress will
pass a so-called continuing resolution that
will put government spending on auto pilot
for a couple of months.
Unfortunately, however, the controls
on the autopilot have Congress in a down-
ward spiral headed directly toward the sec-
ond big threat to the economy: debt limit
brinkmanship like we saw in summer 2011.
(We all know how well that worked out.)
Stock markets and investors worldwide got
spooked, consumer confidence took a hit
and typical businesses had to think twice
about whether the time was right to invest
in new products and employees.
Lawmakers need to raise the debt
limit sometime in October or at the very
latest by mid-November.
No one knows how all of this will
play out, though both sides appear to be
getting ready for a major battle. The Presi-
dent has said repeatedly that unlike 2011,
he will not negotiate again over increasing
the debt limit. Yet, Republicans continue
to demand deep cuts in spending before
agreeing to raise the debt limit.
The good news is that so far neither
the stock market, consumers nor inves-
tors are paying much attention to this.
What happens in the fall, however, might
be different. Because Congress could not
get its act together the last time around,
the Congressional Budget Office said the
ham handed spending cuts contained in the
sequester cost the economy roughly 1.5
percent in economic growth and as many
as 750,000 jobs. If Congress keeps this up,
the economy could soon suffer real dam-
age.
Can Congress Get Its Act Together?by Jim Manley, QGA Public Affairs
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Economic InquiryC O L U M N
A u t h o r
14 | ElEctriclight&PowEr Sep|Oct|2013
Tanya Bodell is the
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Visit www.energyzt.com.
She can be reached at:
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“Whosoever desires
constant success must
change his conduct
with the times.”
-Niccolo Machiavelli
It usually is difficult to change the
rules in the middle of the game. The
team with the most to lose protests;
while those with the most to gain may
not be positioned to pressure the ad-
vantage. The same holds true in busi-
ness. A combination of technological
advantage, value proposition, and
well-backed challengers is required
for new entrants to be able to compete
against incumbents.
The power sector experienced
these conditions in the 1990s when
more efficient natural gas turbine
generator technology, high regulated
rates for power despite low natural gas
prices, and established independent
power producers motivated wholesale
electricity market restructuring. Pres-
sures from the combination of infor-
mation age technology, tariff changes
that can unlock values and investment
by established players are promising
to overhaul electricity markets once
again.
A Competitive Advantage
New technology can provide less sea-
soned players with an advantage simi-
lar to standing champions. Note the
introduction of Callaway’s ERC II (a
continuance of its Big Bertha drivers)
to the golfing world in the late 1990s
which, with its much larger sweet spot,
allowed amateur golfers to hit the ball
as far as professionals. In the energy in-
dustry, technology we take for granted
in our personal lives is preparing to
transform nearly every aspect of the
electricity supply chain.
Venture capital, having estab-
lished billions of dollars in green-tech
funds to invest in renewable generation
technologies, is shifting away from
these capital-intensive investments into
clean-tech consumer-focused start-
ups that use cloud, mobile and social
media. Wireless systems, the ability
to store and process big data, as well
as automation of physical processes,
improve traditional power sector func-
tions and can unlock value through new
applications. Although initial impacts
might seem incremental, the net effect
over the long run can be disruptive to
the old way of doing business.
Ability to Score
Legacy rate structures that preclude
energy providers and customers from
realizing new technologies’ value are
being challenged. Standard rate struc-
tures developed for kilowatt-hour me-
ters are converting into time-of-use
pricing, a necessary step to realize the
value of smart meters that measure,
communicate and store usage data on
an hourly or sub-hourly basis. Usage
and pricing on smaller time increments
incentivizes end-users to participate in
capacity markets and provide real-time
demand response. Wireless signals and
automated switches facilitate the pro-
cess.
Rate structures also have changed
for frequency and regulation control,
rewarding flywheel and battery tech-
nologies that can provide a quicker re-
sponse to signals communicated using
21st century technology. Streetlight
tariffs that traditionally levied munici-
palities a charge for energy according
to a set lighting schedule and estimated
energy usage per hour also are being
modified to reflect new technology. A
small subset of utilities now offer al-
ternative tariffs to reflect the lower us-
age of LED lights, so that a municipal
investment in the higher up-front costs
of LED technology can be recovered
through lower energy costs. Regulators
seem keen to revisit traditional tariff
structures when the value proposition
offered by new technology can be de-
fined and realized.
Stronger Competition
Technological advantage and the abil-
ity to obtain a return on their invest-
ment have enticed new players to enter
the market. These players often have
the financial wherewithal to challenge
the traditional regime and advance re-
search and development, creating posi-
tive feedback loops that level the play-
ing field.
The strongest set of new entrants
often consists of established players
from other industries. For example,
cable and telephone companies are of-
fering software applications for home
computers, smartphones and hand-held
devices to monitor and control light-
ing and thermostats within the home as
part of a home security offering. With
established wireless service providers
entering into the home management
business, wired home security compa-
nies and electric utilities that tradition-
ally serviced these end-users face for-
midable opponents.
The Final Score
Incumbents relying on their home team
advantage, ignore the competitive threat
of new challengers at their peril. They
can fight to maintain status quo, yield on
less important matters to protect the core
business of the company, capitalize on
new market opportunities or do all three.
The decision could be the difference
between victory and defeat.
Leveling the Power Sector Playing Field: When New
Entrants Can Compete
by Tanya Bodell, Energyzt
1309elp_14 14 9/30/13 5:03 PM
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16 | ElEctriclight&PowEr Sep|Oct|2013
A u t h o r s
Nathan Henderson
is a supervising
project manager
and 316(b) practice
lead for Stantec.
Bill Mcelroy is a senior
engineer Stantec’s
Plymouth Meeting
offce who has more
than 30 years of
experience working in
the power industry.
For the last decade or so, the U.S. En-
vironmental Protection Agency (EPA)
has worked on section 316(b) of the
Clean Water Act, which implements new
standards for cooling water intake at
industrial and manufacturing facilities.
The new standards are expected to af-
fect more than 1,260 facilities, including
power utilities.
The ruling, scheduled to be final-
ized during summer, was delayed until
Nov. 4. While still not official, most of
the proposed changes are expected to
move forward, so utilities can prepare
for what’s ahead.
316(b) Defined
Section 316(b) of the Clean Water Act
requires facilities that use more than
2 million gallons of water a day from
lakes, rivers, etc. for cooling processes
to ensure their systems have the most
up-to-date technologies for minimizing
environmental impacts. These impacts
typically include trapping fish and other
aquatic wildlife against the screens or
drawing them into the facility, referred
to in the new rule as “impingement” and
“entrainment.” Facilities were expected
to meet these requirements through a
three-phased roll-out: all new facilities
starting in 2001, existing large electric-
generating facilities in 2004, and existing
small electric and manufacturing facili-
ties in 2006.
Riverkeeper, a New York-based wa-
ter protection organization, challenged
the rule in 2007 however, proposing
closed-cycle cooling be the mandate for
all cooling water intake systems. Since
then representatives from the power in-
dustry and others have advocated for
more flexible, technology-based stan-
dards, and the rule has been suspended
and re-introduced several times, leading
to this summer’s latest delay, to give EPA
time to consult further with National
Marine Fisheries Service and the U.S.
Fish & Wildlife Service.
What It Means for the Electric Industry
The industries most affected by the new
rule are power generation and manufac-
turing. While most large power compa-
nies have already been through the sec-
tion 316(b) process in its previous rounds,
smaller public power and rural coopera-
tive facilities are now also within the pro-
posed rule’s parameters and must comply.
Following are changes that will trickle
down to public utilities:
1. Cost. Depending on the age and
equipment of the power plant, the
costs involved in making the chang-
es required to meet section 316(b)
might be high. Those costs will be
translated into higher generation
costs, which become higher retail
rates. These higher costs could af-
fect everything from large, stock-
owned power plants to small munic-
ipal plants and rural cooperatives.
2. Impetus for conversion or de-
commissioning. Some power com-
panies are considering converting
their coal plants to natural gas. The
changes required by 316(b)—on
top of recent effluent guidelines
that are more costly and difficult
to meet—might make the cost of
continuing to run coal plants too
much to bear, driving them to make
the conversion or decommission the
plant.
In addition, the desire to add renew-
able energy sources to the energy profile
is strong across the country. As more
coal plants close, states and power com-
panies might look to replace them with
other sources of energy than fossil fuel-
based plants.
What’s next?
The more than 1,260 facilities that must
meet the requirements of section 316(b),
should it be approved, will have eight
years to comply. For utilities, now is the
time to find out what power companies
and affected plants in their regions have
planned. Are they making any changes?
If so, what are they? How will they af-
fect distribution? Once these questions
are answered, utility management must
talk to their maintenance and operations
staffs to plan ahead for how the changes
might affect their facilities.
In the meantime, follow the devel-
opment of the rule as the Nov. 4 deadline
approaches. Staying informed about the
rule and its implications and require-
ments will leave power companies, elec-
tric utilities and their customers better
prepared to adjust their budgets, process-
es and systems accordingly as the rule’s
implementation progresses.
What Section 316(b) Means for Public Utilities
by Nathan Henderson and Bill Mcelroy, Stantec
1309elp_16 16 9/30/13 5:03 PM
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18 | ElEctriclight&PowEr Sep|Oct|2013
Smart Cities’ Infrastructure: Analytics, Interconnectivity and Integration
Ted Fagenson is EcoFactor’s
chief marketing offcer,
responsible for marketing
strategy and communica-
tions, channel marketing and
product management. He was
previously COO and vice presi-
dent of sales at CarCharging,
an electric vehicle charging
service that serves the SaaS
infrastructure marketplace.
Prior to joining ChargePoint,
Fagenson was vice president
of corporate marketing and
sales for Cellfre, a mobile
promotions service. He
received an MBA from the
University of Rochester Simon
School and a bachelor’s
degree in electrical engineer-
ing from Rutgers University.
by Ted Fagenson, EcoFactorUsing “smart” as an adjective is becoming a way to describe new categories of products and services. Smart phones
outsold feature phones, but only after years of iterations and integration. Mobile Internet access was akin to dial-up speeds,
and simple browser access was exceedingly frustrating. In the long run, it was the applications that drove the market forward,
not just basic access. Once the Blackberry (or even the Treo) integrated email, the smart phone market became part of people’s
daily business life. They became more productive. When the iPhone supported an expansive community of developers who
provided innovative applications, the market was poised to accelerate. Widespread smartphone market acceptance arrived once
Google’s Android platform unleashed a burgeoning original design manufacturer (ODM) market. “Smart” became useful,
productive, innovative and convenient. It’s not just the connectivity to the Internet that matters; it’s the applications that were
integrated into a single device. The same will be true of the smart home and smart city.
Smart home solutions today are essentially connected sensors such as door locks, lights, power plugs and video cameras
that enable consumers to manually setup and program these sensors. Smart thermostats differ from their aging cousin in that
they include connectivity to the Internet where one can control and maintain personal comfort levels. Similar to the feature
phone market segment, however, these products should not be categorized as smart, but connected and available. So, how does
the smart city market evolve from connected to smart?
Design and construction costs to engineer and build a city or a neighborhood that optimizes its homeowners to
waste less time in traffic, take less time finding a parking spot and many other efficient lifestyle chores is enormously
expensive. Inhabitants of existing cities must be able to cost effectively evolve into smart without the need to build out
entirely new developments.
Efficiency begins with data interconnectivity. Basic data collection with real-time access is the foundation of a
smart city. Sensor technology is becoming ubiquitous because of low manufacturing costs for products such as RFID
modules and digital cameras. The plethora of wireless communications, including 4G, WiFi, Bluetooth and others,
have allowed manufacturers to merge these technologies with most any sensor, spawning the phrase “the Internet of
things.” or IOT. From motion and light sensors to temperature and humidity sensors to oxygen and pressure sensors,
these components collect a lot of data that individually provides little value. Collectively, however, if organized and
correlated to optimize around efficiency, data scientists can use the data to devise innovative algorithms previously
unavailable. When supplemented with exogenous dynamic data such as weather, traffic patterns and work schedules,
a data model that forecasts and maximizes efficiency quickly becomes complex. Terabytes of data are collected every
few hours and real-time processing is required to provide valuable information to households and utilities alike.
Algorithms and models are great for optimizing and predicting around a set of variables, but value is derived from
making the data useful and productive to consumers. It’s not enough to inform consumers how best to maximize their
time or to minimize their energy usage or waste. The killer app in the smart city market segment is automation. It is the
essential ingredient that enables adoption.
For instance, a connected thermostat provides information to consumers about their high-voltage, alternating
current (HVAC) energy use and enables control from a remote location (consider the couch even though in many
instances it is steps away from the physical thermostat). Other than control, however, most consumers will not spend
the time or effort to minimize the time that the HVAC operates. SMART CITIES continued on 21
Industry Report
1309elp_18 18 9/30/13 5:04 PM
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20 | ElEctriclight&PowEr Sep|Oct|2013
Finance
A u t h o r
Ted Konnerth is the
founder, president and
CEO of Egret Consulting
Group — a retained
search frm special-
izing exclusively in the
electrical industry. Ted
formerly served as the
global vice president
for sales for Cooper
Lighting and holds a
Ph.D in psychology.
aAttracting and Retaining Leaders to Overcome Industry Challenges
by Ted Konnerth, Egret Consulting GroupAttracting, training and retaining the most talented
individuals for leadership positions in the electrical and
electricity industries is paramount to driving innovation and
profitability. Amid a sea of changing technologies, companies
aim to develop or insert the right leaders to help them adapt
and re-evaluate a new age of labor force demographics and
legislation, among other evolving industry elements. It may
be a challenge for utilities to attract and retain talented leaders.
The industry is in early stages of a sizable renaissance.
Utilities must identify leaders with the talent and insight to
address these changes.
How do utilities find and keep the best and brightest
people?
New Technology, Legislation and Competition
Complicates Recruiting
Utilites are witnessing early stages of a sizable renaissance
in the form of new technology, legislation and competition.
From a rapidly changing legislative agenda of subsidies for
alternative energies, to the push for smart metering technol-
ogy, to grid expansion complexities and the media hype paid
to net zero adopters and clean energy, it might be difficult to
identify the types of leaders necessary for the future electric-
ity industry.
Executive leadership teams need to accept that they are
now seeking different talent to address changes. Talented new
leaders must have a handle on how the industry is chang-
ing, as well as how those changes affect their organizations.
There is a talent pool from which to recruit that understands
the technology, legislation and channel changes within the
industry; however, the problem is that utilities are competing
with other high-tech industries such as telecom, electronics
and alternative energy. Companies within those industries
are far more adept at attracting technologically savvy talent
than traditional utilities. They are recruiting from top univer-
sities and programs and extracting talent from technological
hotbeds such as Silicon Valley and the Raleigh-Durham Re-
search Triangle.
Legislation Affects Training and Company Development
The elimination of the Edison bulb, which most consumers
have accepted, has impacted utilities. In addition, federal
energy codes and investments have impacted the growth of
alternative energies, battery development and energy codes.
New energy codes and investments will drive the market for
years.
State and local influences impact alternative energy ‘s
growth. In parts of the Midwest, a two-year waiting list ex-
ists for new solar or wind facilities to connect to the grid.
New, talented leaders in the industry must have a broad
understanding of the federal, state and local influence af-
fecting growth and development.
Changes Shaping Industry Training
Leaders in power distribution equipment manufacturing,
such as Schneider, ABB and Eaton, are focused on training
and developing multiple channel solutions. Schneider and
Eaton have their own internal energy service company that
can promote, install and sell equipment to end-users. Most
of their business bypasses legacy distribution partners. This
would have been unheard of a decade ago. Launching these
internal businesses had required much support; training pro-
grams changed significantly to meet this shift in promotion,
installation and selling strategies.
The growth of direct current (DC) power distribution
1309elp_20 20 9/30/13 5:04 PM
Finance
Sep|Oct|2013 ElEctriclight&PowEr | 21
has also been significant. DC power distribution enables the devel-
opment of localized power generation—often with alternative ener-
gies—that largely lives off-grid. This change has been rapid and
significantly impacts product development, building design and
downstream product changes. For example, computers can be pow-
ered directly via DC, saving the power loss from rectifying alternat-
ing current (AC) to DC. In addition, investor-owned utilities (IOUs),
some of which aren’t high on the growth of off-grid power genera-
tion and distribution, could develop innovative programs to sell and
install off-grid DC power generating solutions to datacenters and
other industries, establishing a software as a service (SaaS) revenue
model for ongoing maintenance and service contracts.
Growth Challenges
Utilities need to keep several obstacles in mind during the training
and recruiting process as they pursue growth strategies:
■ Regulation barriers impacting grid additions,
■ Environmental impacts,
■ Land access,
■ Rights-of-way issues,
■ Availability of capital to finance grid expansions, and
■ Utility commissions’ control on rates to support growth.
Challenges Attract the Most In-Demand Leaders
People change companies for growth opportunities and challenge;
they rarely change companies solely for money. Industry executives
tend to move to companies for growth reasons such as increased re-
sponsibilities, larger scope or an equity role in growing the company.
Many also have hopes of making a difference in an organization. Util-
ities must understand and acknowledge that the need for a challenge
is a key motivator for many recruits. They must encourage and hire
people with the right ideas and right mentality to move the company
ahead.
Offer a Variety of Compensation
Executives expect different forms of compensation. Companies work-
ing within the utility industry should take note and offer compensa-
tion incentives that match this desire. They should offer bonuses, stock
options, equity rights and deferred compensation plans, among other
variable forms of reimbursement. This is important when attracting
talent and when updating contracts or offering promotions to rising
leaders you want to retain for a long time.
Track Your Success: Use Retention Statistics
to Gauge Employee Satisfaction
It is important to use retention statistics to gauge your employees’
happiness and how engaged they are within the company. Before
rushing to human resources to inquire about organizing a survey,
however, realize that most employee satisfaction surveys tend to be
fraught with experimental flaws. If the annual turnover rate is near 10
percent, your business is considered a good place to work. In addition,
because turnover is healthy for a company, trying to drive turnover
below 10 percent isn’t necessarily good for business.
Talented Leaders Want to Grow with Talented Growth Companies
The recession had an interesting impact on talent mobility. Top talent
endured years of downsizing and seeing peers removed from the
company. They’re ready for a fresh challenge. They’re receptive to
growth, innovation, an opportunity to make a difference and adequate
compensation for their contributions to the company.
Be Smart About Forward Thinking
Offering challenges and variable compensation can help attract top
talent, but staying on top of what’s new in the industry will help
retain the best. Trying to keep talented executives on board only
through stock options and other golden handcuffs likely will keep
tactical people, but won’t entice the most creative or strategic people
in the industry. Golden handcuffs or non-compete agreements often
retain employees who have outlasted their productive years. Top
talent wants to be associated with companies that adapt to stay fresh
and ahead of the curve. Utilities need to create new markets, new
products and new ideas to keep the most innovative individuals on
board.
It’s too time consuming. Furthermore, as the cost of electricity shifts
from a flat rate pricing structure to a dynamic pricing policy that
better reflects generation cost, consumers will find it too complex and
taxing to optimize energy use. An intelligent algorithm instead will
incorporate these factors and provide a mechanism to automatically
adjust consumers’ settings based on comfort levels and electricity
costs.
Analytics resulting in automation extends beyond just the
thermostat. Imagine if electric grid operators could better forecast
electricity consumption. If they knew that the fleet of Teslas in a
particular neighborhood was automatically scheduled to charge
from 1:30 to 4:30 a.m., electricity providers would know the total
consumption per automobile, as well as the rate of charge.
With solar cells becoming more cost effective, distributed
generation’s effect on the grid contributes another data set to the
smart city predictive model. With natural gas prices forecasted to
remain low due to the large volume of reserves, it is believable that
local electricity generation from products such as Bloom Energy
may completely disrupt the flow of electrons throughout a smart city.
Electron flows are no longer as simple as one-way into a home or
business. Once local generation becomes more pervasive, electricity
pricing likely will become dynamic. For cities and consumers to adapt
to this new system, pricing must be a data element to incorporate into
the demand model. The killer app is the one that allows consumers to
never think about energy costs, but instead have energy consumption
optimized automatically. Integrating a wide array of sensors with
consumer habits and lifestyles will create a sophisticated real-time
model that enables smart city inhabitants to gain significant cost
efficiencies effortlessly.
SMART CITIES continued from 18
1309elp_21 21 9/30/13 5:04 PM
Generation
22 | ElEctriclight&PowEr Sep|Oct|2013
A u t h o r
Steven Rosenberg
is a Research Fellow
for Dow Water and
Process Solutions with
more than 28 years of
industrial experience
in the development of
advanced materials.
His main focus is on
developing break-
through innovations
for water treatment
technologies. He has a
doctorate in chemistry
from The Pennsylvania
State University.
wThe Tale of Cooling Towers: Regulations Drive Fossil Plant Design, Water Management System Innovation
by Steve Rosenberg, The Dow Chemical Co.While industrialization and population growth create a greater
need for electricity, power-generating technologies increase
fuel efficiency and flexibility and reduce air and water
emissions. Water must be optimized in power generation to
enhance operation efficiencies and minimize environmental
impact.
This water vs. energy nexus is a major driver of innova-
tion in the power industry. Recent advances include plant de-
sign improvements, upgrades to water management systems
and innovations to supporting purification technology.
Design Extremes
China and the U.S. represent the two extremes of power
plant designs. China is the largest producer and consumer of
coal in the world and accounts for nearly half of the world’s
coal consumption, according to the Energy Information
Administration (EIA). It is reasonable for China to invest
predominantly in coal-fired plants. Electricity demand growth
has caused China to also invest in nuclear power. The U.S.,
on the other hand, with more moderate electricity demand
growth is investing primarily in natural gas to reduce its coal
dependence while still reticent to adopt a notable nuclear
power plant investment strategy.
Coal has been the largest source of electricity generation
for more than 60 years, but its annual share of generation
declined from 49 percent in 2007 to 42 percent in 2011.
Some power producers switched to lower-priced and more
environmentally friendly natural gas that emits about half as
much carbon dioxide as coal, according to EIA data.
The Environmental Protection Agency (EPA) in 2012
proposed the first Carbon Pollution Standard for New Power
Plants. It released these proposed standards on Sept, 20, 2013,
setting national limits on the amount of carbon pollution
new fosil-fueled electricity generating plants can emit. The
proposed standard limits new coal-fired power plants’ CO2
emissions to 1,100 pounds for each megawatt hour of power
produced. This standard which can’t be met without carbon-
capture technology, is for only new plants. The EPA will
likely announce standards for existing coal plants in about 18
months. The standards are designed to create a cleaner, safer
and more modern power sector, according to the EPA.
There are four generally recognized ways to reduce
carbon emission via the choice of fuel source:
1) More efficient boiler designs that use less coal per unit
of electricity;
2) Use of natural gas, which has half the CO2 emissions of coal;
China’s Electricity Generation by Fuel
Type, 2000-2010
Conventional Thermal=Coal
Figure 1:
Sources: U.S. Energy Information Administration “International Energy Statistics.”
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Conventional Thermal
Hydroelectric
Nuclear
Other Renewables
Year
Tera
wat
t H
ours
1309elp_22 22 9/30/13 5:04 PM
Sep|Oct|2013 ElEctriclight&PowEr | 23
Generation
3) Use of biomass fuels, which are treated as having zero emissions
because they are renewable; and
4) Use of alternative technologies with low to zero emissions, such
as hydroelectric, geothermal, solar, wind and nuclear power.
Industry Design Trends
for Fossil Plants
With two-thirds of the planet’s
electricity coming from burning
fossil fuels, fossil power plants are
experiencing some of the greatest
design changes. Fossil plants typi-
cally have multiple water treatment
systems: a demineralization system
to provide water for steam genera-
tion; a condensate polishing system
to repurify condensed steam for re-
use in the steam system; a cooling
tower to cool steam and a flue gas
desulphurization system to prevent
toxic volatile emissions. The need
for higher operating efficiency and
lower environmental emissions has
led to design changes in each sub-
system. The greatest changes have
been in steam generation and cool-
ing methods.
During the past 40 years, im-
proved fuel efficiency has driven
fossil designs with ultrasuper-
critical steam and increased steam
pressures and temperatures. Fuel
flexibility has facilitated the devel-
opment of combined-cycle designs
that lower water usage. This new
development has been particularly
helpful in regions with water scar-
city. These regions were the first to
adopt recirculation water cooling
towers and use air for cooling in-
stead of water.
A major design trend that
affects steam generation for fos-
sil fuels is the use of supercritical
steam generators. By operating at
higher pressures and temperatures,
fossil plants become more efficient
and require less fuel consumption,
creating cost and environmental
emissions benefits. To achieve such
designs, the required water quality
has increased dramatically. In older
nonsupercritical designs, water is
boiled, the steam separates and is
then sent to spin steam turbines. Minerals dissolved in water will not
boil, and the water reservoir (drum system) can be bled periodically to
remove unwanted contaminants.
Supercritical designs send 100 percent of the feed water to the
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24 | ElEctriclight&PowEr Sep|Oct|2013
Generation
turbines without an intermediate water reservoir. As a result, all miner-
als dissolved in the water will end up in the steam and can form scale
on the turbines, hurt system operation and damage expensive equip-
ment. The result is a high dependency in supercritical designs on very
high-purity water. Ion exchange resins are the predominant conden-
sate polishing technology and there has been continuous innovation in
these systems to meet the higher water-quality demand.
A second design trend that affects steam generation is the adop-
tion of combined-cycle gas turbine (CCGT) plants where natural gas is
the fuel. The combustion products are gases that directly turn the gas-
powered turbines while they provide heat to create steam for a steam
turbine, hence the name combined cycle. CCGTs reduce water demand
for power generation because steam is not required for all the turbines.
CCGTs and renewable energy facilities are being built in the U.S. to
replace retired coal fired plants wherever possible.
Cooling system design has undergone
major changes in areas with severe water
shortages. Cooling the steam back to conden-
sate is essential to drive the pressure gradi-
ent that spins the turbine. Typically, water
is cooled to less than 55 C. Where practical,
such as near large rivers or the ocean, wa-
ter can be sent through a cooling tower in a
single pass. This consumes large quantities of
water and is practical only if the power plant
does not disturb the natural environment or
compete for water usage with the needs of
human consumption.
In many parts of China and other select
regions of the world with poor water avail-
ability, air cooling is being adopted in place
of water cooling. Condensate temperatures
often exceed 60 C on air-cooled systems. This places severe demands
on traditional ion exchange resins (which typically are unstable at
these elevated temperatures) used to purify the condensed steam be-
fore cycling back to the steam generation system. Manufacturers of
ion exchange resins continue to innovate to meet these challenges.
An alternative to air cooling for water-starved regions is the
recycling of cooling water. Recycling results in salinity increases in
the cooling tower owing to evaporation. It is possible to occasionally
blow down or bleed off mineral-enriched water, but that water must
be treated further. This has created the need for brine concentration
systems to reduce disposal and recover as much water as practical.
Reverse osmosis has been the technology of choice for the primary
concentration stage.
Ahead—Water Stress, CO2 Emissions Will Drive Plant Design
Because fossil power generates one-third of
the world’s CO2 emissions, more countries
are implementing strict environmental stan-
dards. Where coal will be used, supercriti-
cal designs are the standard; however, where
possible, natural gas and renewable energy
sources are being adopted.
Water shortages worldwide will con-
tinue to drive innovation in fossil plant de-
sign and accelerate the adoption of alterna-
tive power generation technologies. Using
the U.S. as an example, industrialization has
driven a change in water usage. During the
1950s, agricultural consumption used the
most water, but now electricity generation
uses the most water. As more countries in-
dustrialize, they will undergo similar trends
as industry competes with humans for water.
This already is occurring in China where the
trend is moving from water-cooled to air-
cooled towers.
Net Generation for All US Sectors, Monthly US Conventional
Thermal=Migration to Natural GasFigure 2:
Sources: U.S. Energy Information Administration.
Conventional Hydroelectric Nuclear Natural Gas Coal All Fuels
Thou
sand
MW
h
500,000
400,000
300,000
200,000
100,000
0
Year
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Trends in Total Water Withdrawals by Water-use Category, 1950-2000
(Total withdrawals for rural domestic and livestock and for “other
industrial use” are not available for 2000.)
300
250
200
150
100
50
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Figure 3:
Sources: U.S. Geological Survey Circular No. 1268, 2000.
Public Supply
Rural Domestic and Livestock
Irrigation
Thermoelectric Power
Other Industrial Use
Total Withdrawals
500
450
400
350
300
250
200
150
100
50
0
Tota
l With
draw
als,
in B
illio
n G
allo
ns p
er D
ay
With
draw
als,
in B
illio
n G
allo
ns p
er D
ay
Year
1309elp_24 24 9/30/13 5:04 PM
www.SkippingStone.com 866.891.2369
Energy Market ConsultantsEnergy Market Consultants
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1309elp_25 25 9/30/13 5:04 PM
Generation
26 | ElEctriclight&PowEr Sep|Oct|2013
A u t h o r
Judd Moritz is director
of Utility Solutions for
EnerNOC Inc. Prior to
joining EnerNOC Inc.
Moritz worked for
Ameren and APX, where
he was in charge of
the California Demand
Reserves Partnership
Program, which at the
time was the largest
capacity-based demand
response program in
the state. He has a
bachelor’s degree in
environmental studies
from The University of
Kansas and an MBA
from Webster University.
tDemand Response in EPA MATS Era Bridges the Coal-to-Gas Gap
by Judd Moritz, EnerNOC Inc.The Environmental Protection Agency (EPA) finalized stan-
dards in December 2011 that set higher limits on emissions
of hazardous air pollutants from existing and new coal- and
oil-fired electric generation resources.
The Mercury and Air Toxic Standards (MATS) create
capacity challenges for utilities that rely heavily on coal-fired
generation—utilities disproportionally located in the Mid-
west and South. As utilities evaluate alternative generation
options, demand response can offer a fast-to-market, flexible
way to bridge the gap between coal plant retirements and the
build out of new generation while supporting regional eco-
nomic development.
MATS and the Capacity Challenge
The Brattle Group projects 59 to 77 GW of coal plant ca-
pacity likely will retire by 2016, 30 GW of which already
have been announced. The announced retirements take a
significant bite out of the current total generation capacity
in the PJM and Midcontinent Independent System Opera-
tor Inc. (MISO) regions in particular, representing up to 13
percent of the total capacity (see Figure 1). At a MISO board
of directors meeting in August 2013, MISO stated that based
on a recent survey of its members, known generation retire-
ments could put 14.2 percent of the planning reserve margin
minimum in serious jeopardy by 2016. Depending on load
growth assumptions, MISO could be short anywhere from
3,000 to 7,000 MWs—a level at which the system has not
operated since the 1960s, said Clair Moeller, MISO’s execu-
tive vice president of transmission and technology.
These retirements have potential implications for the
utility integrated resource planning (IRP) process, particu-
larly in the Midwest. Traditionally, the IRP process is used
to provide a long-term plan for a utility to meet gradual, pro-
ISO/RTO Coal Retirements Percent of Percent of (GW) Coal Capacity Total Capacity
MISO 11-16 17-24% 9-13%
PJM 14-21 18-27% 8-11%
SPP 3-4 12-16% 4-6%
ISO-NE 0.8 33% 3%
NYISO 0.5-0.6 20-24% 1-2%
ERCOT 0.4 2% 0%
CAISO 0.1-0.2 5-10% 0%
Total 29-43
Data Source: Battle Group, 2012
Announced Coal Retirements by 2016 by ISO/RTOFigure 1:
© C
an S
tock
Pho
to In
c. /
jgro
up
Demand response can offer a fast-to-market, flexible way
to bridge the gap between coal plant retirements and the
build out of new generation
1309elp_26 26 9/30/13 5:04 PM
Sep|Oct|2013 ElEctriclight&PowEr | 27
Generation
gressive demand growth—historically at 0.5 to 2 percent—through
the lowest-cost, lowest-risk blend of supply and demand-side re-
sources. This process, with its long-term view of supply and demand,
has allowed utilities to make generation development decisions years
in advance based partly on projected retirements of older, inefficient
generation. This IRP process has worked for utilities, but it was not
designed to handle rapid generation retirements such as those antici-
pated after the MATS rule.
As the U.S. economy continues to come out of recession, the
U.S. Energy Information Agency (EIA) projects growth in demand
for electricity to return to normal levels during the next several years
with noticeable uptick through 2016 (see Figure 2).
On the supply side, rather than a five-to-10-year, long-term,
gradual view of generation retirements and new generation build out,
the MATS-based retirements might compress many utilities’ replace-
ment planning time within 24 to 36 months. The rapid retirement of
coal plants will cause a shift in the utility resource mix. Forecasts
of historically low market prices for natural gas into the foreseeable
future are driving rapid growth in natural gas plant development rela-
tive to renewables, clean coal and nuclear. A 2012 Bentek Energy
report projects natural gas will make up about one-third of the U.S.
baseload generation fuel source by 2017 up from a five-year average
of 23 percent.
Beyond influencing what types of new
generation are developed, historically low
natural gas prices migth affect which gener-
ation assets are dispatched; in the near-term
the generation bid stack could be turned on
its head. As coal-fired baseload units are re-
tired, intermediate and peaking natural gas-
fired units likely will be dispatched more
frequently as an immediate replacement for
the lost coal-fired capacity. The near-term
challenge will be to ensure adequate peak-
load resources are available as intermediate
and peaking generation assets are increas-
ingly dispatched to fill the gap between lost
coal-fired baseload capacity and new natural
gas baseload resource development. The question for a utility’s IRP
process is how to balance the time and cost associated with the build
out of new combined-cycle gas turbine (CCGT) resources with the
immediate- and near-term peak-demand needs.
New Gas-fired Generation Build Out Risks
As utilities seek to replace retiring coal generation with CCGT plants,
risks associated with project development and the supply portfolio
must be considered in the utility IRP process.
CCGT project development considerations. The availability
and accessibility of natural gas are key factors. If natural gas supply
and pipeline infrastructure are not near the generation development,
developing needed gas transmission infrastructure can add significant
time and cost to generation projects. The 2012 Bentek Energy report
notes that the growth in demand for natural gas as a generation source
fuel will test the existing gas pipeline infrastructure and add to gas
supply constraints in some regions. The MISO, for example, noted
in testimony filed with the Federal Energy Regulatory Commission
(FERC) in July 2013 that the system operator is concerned about the
increased dependence on natural gas-fired generation and the impact
gas availability can have on system reliability. Utility gas supply
contracts typically are for non-firm, interruptible service. On Jan.
22, 2013, a very cold peak day, many large generators were unable
to respond to MISO dispatch instructions because natural gas was
unavailable as a result of high heating demands. The MISO recognizes
this disconnect between the natural gas and electric industry. It has
initiated a task force of industry groups to coordinate communications
about infrastructure impacts because of increased natural gas demand
related to generation development. Once a new gas pipeline plan
exists, it will take three to five years to construct. Without an existing
pipeline development plan, there will be insufficient capacity to meet
utility demand as the impacts of the MATS regulations are felt in the
market.
Supply portfolio risk. Disproportional investment in gas
generation might create an unbalanced risk portfolio. Natural gas
prices are projected to remain low in the near term, which would
make CCGT the most cost-competitive supply-side resource option.
Basing the future on the past 15 years of gas prices, however, price
850,000 10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
–2.00%
–4.00%
–6.00%
Average Growth Rate:0.5% - 2%
800,000
750,000
700,000
650,000
600,000
550,000
500,000
Total Demand % Demand Growth U.S. Recession
1990 1995 2000 2005 2010 2015 2020E
Meg
awat
ts (
MW
)
% G
row
th
Summer Electricity Demand Growth
Projected Through 2020Figure 2:
$20
Independence HubGas Leak
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
Henry Hub Historic Spot Prices
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$/M
MBt
u
Hurricane KatrinaUnseasonably Cold
Winter Weather
Henry Hub Historic Spot PricesFigure 3:
1309elp_27 27 9/30/13 5:04 PM
28 | ElEctriclight&PowEr Sep|Oct|2013
Generation
volatility is inevitable, spurred by supply and demand dynamics and
extreme weather. Although natural gas is less than $5 per million
British thermal units (MMBtu) as it had been between 1997 and 2001,
from 2001 through 2011 gas prices were highly volatile, sometimes
spiking near $20/MMBtu (see Figure 3).
The shale gas drilling boom has supported a downward shift
in long-term natural gas prices during the past three to four years
(see Figure 4). Uncertainties around shale gas supply, however, are
emerging as states such as Maryland, New York and Pennsylvania,as
well as EPA consider the environmental implications of hydraulic
fracturing, or “fracking,” and potential bans or moratoriums on the
practice.
The Demand Response Bridge to the Capacity Future
In the era of MATS, as utilities, particularly in the Midwest and
South, enter into their next IRP cycles, they will evaluate the
implications of coal plant retirements and seek to balance the costs
and risks of the shifting resource mix. Although the prospect of
cheap natural gas appears to be strong in the near future, volatility
will exist. Demand response offers a fast-to-market, flexible way to
bridge the gap between old, retiring and new supply-
side resources to manage risks of natural gas price
volatility. Demand response resources can be put in
place and built incrementally, and they offer a solution
for the capacity constraints that will emerge in 2015.
Historically, some utilities have integrated de-
mand response programs in their IRP process and
pursued demand response based on a least-cost, least-
risk resource evaluation. All utilities have a latent,
untapped demand-side resource: an existing customer
base. Developing demand response is cost-effective
and time-efficient relative to generation options. De-
mand response is a scalable resource that is offered
at the point of use. Utilities can implement a demand
response program as needed to address generation
capacity needs. Unlike energy efficiency measures,
demand response is dispatchable, can be procured
through firm, long-term contracts, and its availability
has a high peak coincidence. When demand response
is included in an IRP, it typically replaces a supply-side peaking re-
source and, in the case of natural gas-fired resources, helps mitigate
fuel price-risk exposure.
Demand response has helped defer capacity investments.FERC
has reported more than 72,000 MW of potential demand response
reduction capability across the nation’s demand response programs
in 2012. This capability represents more than 9 percent of the coun-
try’s peak demand and helps to defer an equivalent amount of ca-
pacity investments throughout while maintaining system reliability.
There is significant room for greater capital deferral benefits from
demand response. In a 2009 report on demand response potential
in the U.S., FERC found demand response could reduce up to 20
percent of national peak demand by 2019. This opens up potential
for higher levels of utility capacity investment deferral, depending
on the type of demand response programs implemented and the level
of participation.
Beyond the cost and risk benefits to a utility, demand response
also benefits the community and regional economy within the
utility’s service territory. For demand-side management programs,
customers are the resource. Customers receive compensation for
participating in demand response programs, representing bottom-
line revenue, helping them become more competitive in the national
and global economy. Industry reports published by consulting firms,
universities, energy commissions and others have found that U.S.
utility customers can realize annual savings from $10 billion to $19
billion as utilities balance new capacity investments with demand
response programs—a large portion of these savings through
reduced capital expenditure in generation and transmission and
more competitively-priced electricity. These savings, combined with
increased competitiveness, can help local businesses keep the lights
on and focus on job creation. Expansion of demand response helps
spur new job creation in related technology and service industries
and supports wider-scale economic development. Demand response
offers a bridge to utility post-coal retirement generation capacity
future and to post-recession economic growth future.
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.002006 2011E 2016E 2021E 2026E 2031E
$/M
MBt
u
AEO 2011Projection
AEO 2012 Projection
AEO 2010 Projection
AEO 2009 Projection
Henry Hub Price ProjectionsFigure 4:
1309elp_28 28 9/30/13 5:04 PM
Go to http://uaelp.hotims.com for more information.
1309elp_29 29 9/30/13 5:04 PM
Renewables
30 | ElEctriclight&PowEr Sep|Oct|2013
aA u t h o r
John Robbins is
senior director of North
American Sales at
AREVA Solar. He has
more than 20 years in
the industry working
for Alstom Power
Inc., Solar Turbines
Inc. and General
Electric. He received his
Bachelors of Science in
Mechanical Engineering
at Oregon State
University and earned
a Juris Doctorate from
American University.
Solar Steam Augmentation: A Sensible Alternative to PV
by John Robbins, AREVA SolarAfter years of being poised for
rapid growth, the opportunities
for concentrated solar power
(CSP) are multiplying fast.
Analysts expect that over the
next decade there will be a 20-
fold increase in CSP generation,
with several factors driving the
increased interest.
Some solar power producers
are benefitting because solar’s
cost is better understood.
Traditionally measured cost
of solar power production has
decreased, but analysts are
increasingly factoring in volatile
fuel prices, impact to the grid and
the environmental costs of such things as land use, water use
and fossil fuel emissions.
CSP offers tremendous opportunities for local industrial
development in a fragile economy. Many solar steam generators
are made with standard materials and can be rapidly deployed
using low-cost, locally-sourced manufacturing processes and
materials.
Increased investment from global energy leaders,
including Alstom, AREVA, Bechtel and General Electric
(GE), removes barriers and builds trust. CSP companies can
now reliably offer the full package of necessary services
and guarantees, from technology leadership to engineering,
procurement and construction services to operation and
management expertise.
CSP technologies are mature, with more than 1 gigawatt
(GW) of installed capacity, and many having undergone
rigorous proof-of-concept testing in real-life situations.
Perhaps most importantly, demand continues to grow
as utilities are pressured to reduce emissions in the near term
without significant capital investment. CSP technologies
effectively addresses these concerns, offering cost-effective
and quick-to-market opportunities for utilities to increase the
fossil-fuel plant output without added emissions, or reduce
emissions while keeping plant output the same. Since CSP
provides solar electricity to the grid that is far more stable than
photo-volatic (PV), it enhances grid reliability and can be an
important, cost-effective solution for the industry in bridging
the carbon gap.
The Advantages of Solar Steam Augmentation
Power augmentation is when utilities integrate CSP boosters
into the steam cycle of existing fossil fuel, geothermal and
biomass-powered plants. Utilities choose CSP because they
need to either cleanly boost power plant output to meet
increased demand or offset fossil fuel consumption and
reduce emissions. Either way, power augmentation with CSP
delivers a number of additional benefits.
1. Electrical output from a solar steam augmentation project
is more stable than electricity from a PV plant because
thermal inertia of the steam enhances grid reliability.
2. Boosters can often be built on land that power companies
already own and control. For those companies that face
land constraints, compact linear fresnel reflector (CLFR)
technology is the most land-efficient solar solution.
3. Existing infrastructure can be leveraged to levelize elec-
tricity costs, allowing CSP technology to compete with
similar sized PV plants, depending upon the CSP technol-
ogy used.
4. Incremental investment allows power plant operators to
maximize the value of existing plant assets without major
capital expenses or long lead-times, such as those typically
associated with building a new power plant.
5. Incremental solar power from solar steam augmentation
qualifies for environmental credits, meets renewable
portfolio standards (RPS) or both, thus increasing the
value of this investment.
Rendering of Sundt Solar Power Booster Project
SOLAR continued on 32
1309elp_30 30 9/30/13 5:04 PM
Energy Efficiency & Demand Response
Sep|Oct|2013 ElEctriclight&PowEr | 31
tA u t h o r
Phil Davis serves as
senior manager for
the Demand Resource
Center for Schneider
Electric, and develops
grid connected energy
effciency and demand
resource strategies
large energy users. Prior
to joining Schneider
Electric, he was chief
operating offcer for
RETX Energy Services.
“The economy, stupid” was a theme used in the 1992
presidential election, after a year of recession in 1991. Now
it is the centerpiece of too many speeches. The popularity
arises from simple behavior. We worry about many things
when we are financially confident. When we are not, we
worry about one thing, the economy. In mature societies,
most things fall into the economic realm; how much money
do you have? With enough, one can reach for the stars.
Why does this matter to designers of energy efficiency
programs? The answer has two elements. One addresses the
difference between conservation and efficiency while the
other is a matter of motives and behavior.
Conservation assumes resources are limited and
using less saves resources. A simple example is changing
thermostat settings while a more complex reaction
would be that of the “Setsuden” movement in Japan after
Fukushima. In this more extreme example, homeowners
downgrade residential service panels to ensure they won’t
use as much energy as before. This requires significant
sacrifice. Conservation is behavioral.
Efficiency doesn’t consider resource amount, but instead
means using fewer resources to create the same result. LED
lighting is an example. It’s just as bright as incandescent but
uses much less energy. Efficiency is an investment.
The key for program planners is that conservation is
(largely) free. Behavior changes are not popular or easy,
but they are low-cost solutions with immediate paybacks.
Efficiency is not free. Generally, increased efficiency
requires some investment, often significant, and payback
becomes a significant factor.
Economics has two broad areas of study:
Microeconomics covers what “we” do and macroeconomics
covers what “they” do. A number of grander definitions exist,
but these are useful here. We—individuals, corporations
and organizations—do what benefits us most. Results often
are measured in savings, return-on-investment, cash-on-
hand or other important elements.
“They” have a presumed greater understanding of the
big picture coupled with the ability to see when individual
actions are counterproductive to the long-term health and
welfare of societies and the world. The theoretical result is
policy that allows individual activity within constraints that
keep our world intact.
Governments have developed or are developing
policies to deal with major threats like global warming
and environmental degradation. Back at the micro level,
we (citizens), would be unable to recognize such threats.
Without government research and data, we would perceive
unpredictable and random storms or droughts. The
larger view, however, helps individuals understand the
connection between these occurrences and their actions.
This understanding leads to actions, many involving energy
efficiency.
Programs directed at energy efficiency can make
a difference, but rarely do they achieve lasting impact.
Sometimes the result is the opposite. Several years ago,
Time Magazine recounted the “SnackWell Effect.” Dieters
consuming low calorie food would consume more. The
low-calorie label absolved them of the responsibility to
keep track of their consumption. This happens with energy
efficiency, too.
Better insulation, more efficient lighting and high
voltage alternating current (HVAC) can make consumers
believe their conservations efforts aren’t needed. Comfort
settings on thermostats coupled with the growing number of
objects that can be plugged in can result in greater energy
use than before. As early as 2008, the Energy Efficiency
and Renewable Energy agency of the Department of Energy
noticed and documented the trend of energy use rising
faster than population growth. The culprit was recidivist
behavior coupled with new types of plug loads.
Another contribution of macroeconomics is the
concept of inputs per units of what we do. In this industry,
we speak of energy use per capita, per ton of steel, per car
and so on. The U.S. is criticized for excessive use of energy
per unit of output compared to, for example, Germany; a
country with similarly formidable economic output.
This explanation requires an understanding of output
per unit of input, and the U.S. is a benchmark. An efficient
economy takes abundant and low cost resources and uses
them in a manner that makes it as competitive as possible.
While the U.S. might use 10 times the energy of a competing
nation per person, its economic output might be 12 times as
much per capita.
Part of the reason is that energy costs are cheaper in
the U.S., so Americans use energy to automate production.
Other countries with large populations but high cost energy
might use low cost labor and less automation. The result
is subject to the same measure: How much did it cost to
make that widget? For many years, U.S. companies moved
production to emerging economies because the overall
labor costs more than compensated for shipping and lower
It’s Economic Efficiency, Stupid!Economic efficiency, the electron value chain and delivering value on the journey
from control center to customer.
by Phil Davis, Schneider Electric
1309elp_31 31 9/30/13 5:04 PM
32 | ElEctriclight&PowEr Sep|Oct|2013
Energy Efficiency & Demand Response
per capita productivity. Recently, many of those jobs have returned
because shipping costs and local productivity gains have risen
enough to overcome the offshore labor advantage.
More locally, there is evidence that the cost of high efficiency
lighting raises payback periods beyond the requirements of many
purchasers. As a society, we understand energy efficiency, but
we really want economic efficiency. How do we achieve energy
efficiency goals with economic design?
Some suggest the easy answer is to expose consumers to the
costs of energy, but this already occurs. If not, bankrupt utilities
would litter the landscape. Customers are utilities’ only source of
revenue, so by definition, a healthy company’s customers must
cover its costs at minimum.
In realistic terms, customers pay for the cost of energy plus a
risk premium associated with low to no volatility, plus various costs
of doing business. Those costs are derived from an infrastructure
designed to deliver that energy, regardless of time or demand. To the
extent that customers achieve significant new levels of efficiency,
no longer would those costs be covered, and rates would have to
rise to maintain providers’ fiscal health.
If energy efficiency is not the answer, how does economic
efficiency change the landscape?
Remember that efficiency is maintaining or improving output
with decreased input. A corollary of this is matching demand
and supply so there is no waste. The retail world does this with
sophisticated supply chain management.
Our energy programs lean toward prescribed activity and
technology; such as insulation rebates, specific solar goals and
upgraded transmission. This leads to functional silos and project
based management with specific time periods. Supply chain
management is never ending and coordinated. Much like the
International Organization for Standardization (ISO) 50001 energy
management standard, supply chains are a constant exercise in
plan-do-learn, repeat.
Economic efficiency reduces disparate activities to the
dollars they create. More efficient enterprises keep more of those
for research and development, investor and employee rewards
and operational improvements. In regulated monopolies, this
natural evolution becomes artificial. Justified project assets earn a
regulated rate of return but the long term impact may be harmful to
the activities of other projects.
One example is the California “Duck Curve,” named because
the lines representing interaction between electrical demands, fossil
and renewable generation resembles the shape of a duck. It shows
that peak grid demand will shift from afternoon to evening as local
solar energy handles an increasing percent of daily demand. The
real news is that overall demand does not increase, but generation
does. With existing renewable standards, this results in inefficient
ramping of fossil plants to compensate, creating a greater potential
for carbon emissions.
Economic efficiency would have rewarded a result rather
than prescribed a technology. That might have been a reduction in
emissions through significant reductions in demand as a result of
an integrated and efficient supply chain.
This supply chain starts at the generator but does not stop at the
utility. It extends from the control room to the customer; including
control room software that can dispatch millions of smart toasters
to level demand. That means automated substations sophisticated
enough to recognize assets and manage intermittent renewables
with circuit level rapid demand response events independent of the
operations staff.
These concepts arise often in describing the “utility of the
future.” Google returned 138 million results on that phrase,
rendering it meaningless. The implication is clear, however, the
utility of the future will be what “we” and “they” decide it will
be. If economic efficiency is our guide, and if we include the true
costs of production, then we can look forward to a green, efficient,
reliable, safe and productive energy future, a ration capacity future
and a post-recession economic growth future.
Real World Proof
Florida Power and Light brought a 75 MW trough CSP booster
online in 2010 to work with a 1,200 MW combined cycle power
plant near Indiantown, Fla. Abengoa brought two 20 MW trough
CSP boosters online in 2011 at new gas-fired, combined-cycle power
plants in Morocco and Algeria. Together, they generate more than 240
GW hours per year of solar energy, while reducing greenhouse gas
emissions by more than 121,000 tons per year.
Success builds on success. Tucson Electric Power, in partnership
with AREVA Solar, is installing a booster project slated to go online
in early 2014. The project will provide a 5 MW solar addition to
TEP’s 400 MW gas and coal-fired Wilson Sundt Generating Station
in Tucson. It will allow Sundt’s dual-fueled Unit 4 to reliably produce
an additional 5 MW or the same amount of electricity during peak
daylight periods, while reducing the use of up to 3,600 tons of coal
per year or up to 46 million cubic feet of natural gas.
AREVA Solar also is constructing a 44 MW solar thermal
addition to CS Energy’s existing 750 MW coal-fired Kogan Creek
Power Station in South West Queensland, Australia. When it
becomes operational in 2014, that booster will avert 35,600 tons of
CO2 emissions each year and will be the world’s largest coal and
solar augmentation project. This, and others like it, will create local
construction, operations and maintenance jobs while sourcing local
materials and manufacturing.
The Time to Leap Forward is Now
These projects are evidence that solar augmentation using CSP
technology offers utilities a cost-effective, reliable strategy to
quickly boost capacity, meet sustainability goals and renewable
portfolio standards while reducing fuel, emissions and operations and
maintenance costs.
As CSP providers deliver those benefits, they will make a
dramatic and long overdue stride forward for the CSP industry.
SOLAR continued from 30
1309elp_32 32 9/30/13 5:04 PM
Complete information at your fingertips. www.csweek.org
CS Week
Learning: It’s Always in Style A utility compilation website ran a thought-provoking article recently, reporting on extensive orders for smart
meters in several South American countries. The nations involved and meters being purchased were interesting,
but the word ‘consumer’ was never mentioned.
Northern hemisphere utilities are doing everything possible to educate and involve customers on the benefits
of smart meters—greater efficiency and reliability—but at best as a two-way conversation. CS Week has supported
active communications with customers and promoted steps to successful smart infrastructure implementations.
The 2014 CS Week Planning Committee meeting embodied the passion for increasingly meaningful
exchanges and communications with consumers, as well as the role of education by utility professionals for utility
professionals in ensuring success. CS Week Colleges and Conference 38 workshops will disseminate more specific
topic and content information this month. CS Week 2014 registration opens Nov. 4, 2013, at www.csweek.org.
Also open for submissions are the 2014 Expanding Excellence Awards, presented annually with Electric
Light & Power magazine. The awards will be presented May 7, 2014, in
the opening session of Conference 38 in San Antonio (www.csweek.org/
ExpandingExcellenceAwards/)
Key Account Forum, CS Week’s newest invitation-only session, struck a
chord with the initial participants, providing top-level professional education and
active interchanges. Watch for this vibrant group to expand high-level topics and
participation. Executive Summit already has the elements of a vibrant meeting.
From supervisors to the C-suite, the amazing individuals who share their
utility know-how and connections to develop rich, meaningful venues for CS
Week are already at work. I look forward to seeing you at the Henry B. Gonzales
Convention Center in San Antonio, May 5-9, 2014. And, as if you need a nudge,
the entire city will be celebrating Cinco de Mayo the previous weekend. Rod Litke, CEO, CS WeekFor more information, please visit www.csweek.org
H e n r y B . G o n z a l e z C o n v e n t i o n C e n t e r | S a n A n t o n i o , Te x a s | M a y 5 - 9 2 0 1 4
Achieving IT/OT Convergence using Advanced Communication NetworksOriginally broadcast: May 21, 2013, 2:00pm EST, sponsor: ABB Tropos
Data to Serve the Utilities BusinessOriginally broadcast: August 28, 2013, 3:00pm EST, sponsor: Teradata
Satellite - A Cost Effective Solution for Complete Network CoverageOriginally Broadcast: October 16, 2013, 11:00am EST, sponsor: iDirect
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IT/CIS & CRM
A u t h o r
34 | ElEctriclight&PowEr Sep|Oct|2013
Dr. Siri Varadan, PE, is vice
president at UISOL, an
Alstom company, where he
leads the asset manage-
ment practice. Dr. Varadan
holds bachelor’s, master’s
and doctorate degrees in
electrical power engineer-
ing. He specializes
in asset management
for electric utilities
with a focus on T&D
systems. He is a senior
member of the IEEE and
a member of the Institute
of Asset Management.
eEnsuring that an asset performs to its full potential throughout
its life is fundamental to effective asset management. Various
factors make this objective difficult to accomplish, however.
Tight budgets, vying priorities and a strict regulatory regime
pose constraints that force utilities to do-more-with-less. Utili-
ties are, as a result, shifting their thinking and moving to a para-
digm where:
■ Risk is no longer avoided, but managed;
■ Costs are no longer minimized, but optimized; and
■ Performance is no longer maximized, but adjusted to
achieve thresholds.
In the context of electric utilities and ongoing smart grid
efforts, this shifting paradigm means that asset management
needs to be understood in terms of the following simple high-
level questions: What work should be done? When and how do
you do it correctly? While these questions are simple, they pro-
voke thought on a variety of subjects throughout the asset man-
agement process shown in Figure 1. Going through the asset
management process and focusing on the correct work answers
the question: “Where should a utility invest its money to obtain
the best return?”
Asset management, at a high level, addresses the following
questions:
1. What assets does the utility own?
2. Where are these assets?
3. How important are these assets?
4. What is the condition of these assets?
5. What is the performance level of these assets?
6. Are these assets’ conditions and performances satisfactory?
7. If not, should action be taken to restore the asset to its origi-
nal performance or health?
8. If yes, what are the proper actions and how do you choose
from a diverse set of actions so that corporate objectives, in-
cluding customer satisfaction and regulatory approval, are
satisfied?
While the first two questions almost sound trivial, they are
fundamental to asset management and may be addressed by the
implementation of a geographic information system (GIS) or an
asset registry. A common thread in all of this is the availability
and use of quality asset data.
Asset Criticality
Common sense dictates that the “squeaky wheel gets the
grease.” An asset that is of consequence should get more at-
tention. In a recent asset management survey conducted by
UISOL, released in May, utilities equated the word conse-
quence to loss of revenue, system reliability and performance.
Consequence may also be understood as the impact caused
by the absence of an asset on the system, the customer, other
assets and socio-economic factors. Risk is one of the better
measures of asset criticality because it describes the impact
of the failure of the asset by combining probability of asset
failure and impact. Depending on the factors considered in its
calculation, risk may take various forms—operational risk,
environmental risk, public safety risk and so on.
Asset criticality in the electric utility industry is typi-
cally calculated per asset or by asset type and prioritized
based on the asset’s geographical and topological location.
Figure 2 shows an example of asset prioritization for a utility
with transmission assets. Value refers to the total sustainment
expenditures and risk is a measure of the asset’s loss conse-
quence. To clarify, the loss of an asset in the category P1 has
the greatest business impact.
Asset Health
Asset health is often considered subjective. All factors that
determine asset health are not quantifiable and, hence, asset
health is different from asset performance. Despite this,
several efforts are used in the industry to quantify asset
health. A score from 0 to 100 is sometimes used with the
understanding that 0 means the asset is at end of life and
requires immediate attention, repair or replacement. A score
of 100 means the asset does not need attention for the next
several years.
As a starting point, asset health can be conceived as a
weighted average of several components, which is a measure
of an attribute of the asset that could potentially lead to failure
or result in a situation that could cause a failure condition.
The Shifting Asset Management Paradigm
by Dr. Siri Varadan, UISOL
Asset Base Condition
Metrics Analysis Selection
What to do? Prioritized List
Figure 1: Asset Management Process
Figure 1. 1309elp_34 34 9/30/13 5:04 PM
IT/CIS & CRM
Sep|Oct|2013 ElEctriclight&PowEr | 35
The asset health indicator should allow peer comparison, provide a
sense of remaining life and indicate how soon intervention is required
to avoid failure.
Identification of failure modes and the effects of these failure
modes is important to health determination in reliability centered
maintenance (RCM) analysis. Failure modes effects and criticality
assessment (FMECA) focuses on evaluating a failure’s impact. In
doing so, a reliability engineer might focus on addressing failure
modes that bear higher consequence. To eliminate human experts’
subjective variations in asset health when selecting the weighting
factors used to compute asset health indices, it is best to rely on
statistical data and RCM studies that establish failure rates for each
failure mode.
Asset Performance
Asset performance is a quantitative concept and correlated to asset
health. The nature of the correlation, however, is a topic of further
study. At a simple level, one might ask: How well is an asset perform-
ing with respect to its peers? The same question might be asked when
comparing performance with other assets at other locations, perhaps
owned and operated by neighboring utilities. As a result, it is important
to understand benchmarking and utility best practices. It is also impor-
tant to understand the role and nature of standards in evaluating asset
performance.
Several measures for asset performance exist. These measures
are mostly based on failure frequency and duration. Other metrics
commonly used include restoration time, maintenance costs and time
between failures. Financial metrics such as replacement costs, O&M
costs and return on investment may also be included. Selecting and de-
fining the metrics to use, and the logistics of data collection for calcu-
lating metrics are important when implementing an asset management
project. It is difficult to
calculate an individual
asset’s performance due
to the lack of monitoring.
It is possible, however,
to make valid inferences
about asset performance
by considering data from
a variety of sources. This
is typically an area where
data integration helps the
most.
Data collected
through online moni-
toring of electrical and
non-electrical devices is
common with smart grid.
This new data can be used
to assess asset health and
performance when the
systems are integrated ef-
fectively.
Asset Investment
Actions that restore problem assets to their original performance and
health are necessary. These actions or projects could include asset
maintenance, repairs, refurbishments or replacements. Each action
has its pros and cons. Understanding the cost of these actions and
their benefits over time is important when deciding which projects
to implement. This science of decision making is at the core of asset
investment planning (AIP).
Integrated AIP tools can assist in decisions making using a
combination of objective functions, as well as constraints. AIP takes a
list of projects and prioritizes them according to an established set of
objectives. The rankings indicate projects’ importance, their expected
return and the time frame in which each project must be executed.
AIP also provides information about risk associated with each project.
Asset management is a cradle-to-grave concept that requires careful
asset planning, operations, maintenance, performance measurement
and corrective actions to improve and maintain performance. Asking
the right questions along each step of the asset management process
is the best way to ensure goals are met. Internalizing the responses to
each of these questions will enable a utility to transform to the new
paradigm. A question can have more than one correct response. It is
important to ensure that the answers work in concert to achieve asset
management’s overarching goal of identifying the correct work.
Present efforts at asset criticality, health and performance
assessments combine data from various sources to provide quantifiable
metrics that provide a sense of remaining life, when to take action
and which action yields the most benefit. Correctly performing the
work requires incorporation of best utility practices, tight integration
of online monitoring, implementation of an asset management culture
and personnel training. Leveraging smart grid efforts will be a key
factor in the future of asset management.
P1: High Value, High Risk P2: Moderate Value, High Risk P3: Low Value, Low RiskSource: Hydro One
Priority 1 (P1)
Asset Class
Transformers
Gas Insulated Switchgear (GIS)
Oil Circuit Breakers
HV/LV Switches
Strategic Spares
Protection and Control System
Phase Conductor
Wood Pole Structures
Underground Cables
Right of Way
Total: 11
Priority 2 (P2)
Asset Class
High Pressure Air Systems
SF6 Circuit Breakers
Metalclad Switchgear
Power Line Carrier
High Voltage Instrument Transformers
Revenue Metering
Station Insulators
Station Cables and Potheads
Batteries and Chargers
Station Grounding Systems
Capacitor Banks
Station Buildings
Fences
Drainage and Geotechnical
Fire and Security Systems
Total: 15
Priority 3 (P3)
Asset Class
Protection System Monitoring
Station Buses
Station Surge Protection
AC/DC Service Equipment
HV/LV Station Structures
Heating, Ventilation and Air Conditioning
Boilers and Pressure Vessels
Oil Containment Systems
Oil and Fuel Handling Systems
Microwave Radio Systems
Fibre Optics
Metallic Cable
Site Entrance Protection Systems
Teleprotection Tone Equipment
Line Steel Structures
Line Shieldwire and Hardwire
Line Insulators and Hardware
Total: 17
Figure 2. Asset Prioritization at the Transmission Level
1309elp_35 35 9/30/13 5:04 PM
Smart Grid
36 | ElEctriclight&PowEr Sep|Oct|2013
A u t h o r s
Kevin Mays is an engineer
at IUS Technologies. He
has more than 20 years of
engineering design, product
development and technical
sales experience. He began
his career as an RF engineer
at Motorola and later worked
as a sales and applications
engineer for Maxim Inte-
grated Products. He has a
bachelor’s of science degree
in electrical engineering from
Northeastern University.
Scott Zajkowski works in
marketing and business
strategy in IUS Technologies’
North American Business
Development group. He
develops end of line devices
for the smart grid. He has a
bachelor’s degree in packag-
ing engineering from Michi-
gan State University and an
MBA from Indiana University
Kelley School of Business.
sSmart Distribution: A Self-healing and Optimized Grid
By Scott Zajkowski and Kevin Mays, IUS TechnologiesSmart distribution is a fully controllable and flexible
distribution system with embedded intelligence from
substation to meter. It enables the distribution system to be a
self-healing and optimized grid. To reach smart distribution,
a utility must remotely monitor, manage and control the
distribution circuits in real time from the substation to the end
of line. In addition, smart distribution requires intelligence
throughout the distribution system. Smart sensors and
monitors are key and must be deployed throughout each
feeder line and work in conjunction with reclosers, automated
switches, capacitor banks and voltage regulators.
Volt/VAR Optimization
Grid optimization allows utilities to leverage more value from
their current distribution infrastructure, preventing additional
investment and need for new generation, transmission and dis-
tribution assets. Implementing volt/VAR optimization (VVO)
throughout the distribution system is paramount to optimiz-
ing the grid. To do this, remote monitoring via sensors must
provide the distribution management system with real-time
data from many points throughout the distribution line to the
grid’s edge. These smart sensors throughout the distribution
system allow utilities to control voltage and VAR for intelli-
gent decision-making. The smart sensors record and provide
real time and accurate data about distribution feeder line and
equipment condition. More devices in the field reporting data
make it critical for utilities to mitigate data overload at the
control center by using unsolicited messaging. This data and
information provide utilities with a comprehensive view of
the distribution load and voltage conditions from the substa-
tion to the end of the line. Controlling VAR levels minimizes
losses by working in conjunction with capacitors banks.
VVO benefits are significant. They provide enhanced
reliability, efficiency and more. By optimizing the grid, utili-
ties can minimize system losses and demand through a lower
voltage profile and in turn reduce end users’ energy consump-
tion, lowering their costs. This form of distribution automa-
tion allows electric utilities to control demand and increase
distribution system efficiency. Peak demand also is alleviated
through VVO, which extends the life of the infrastructure, op-
timizes asset utilization and reduces the need for additional
investment in infrastructure. Electronic sensors play a major
role in grid optimization by pinpointing trouble spots, voltage
and VAR conditions, power quality issues, outages and more.
Utilities no longer have to depend on customers’ calls to noti-
fy them of an outage or power quality issue, such as low volt-
age. Smart sensors enable utility workers to be immediately
dispatched to troubled areas, significantly reducing customer
outage minutes each year and increasing utilities’ revenue.
Residential, commercial and industrial end users are de-
manding higher reliability and power quality, and grid opti-
mization through VVO can improve system performance and
increase service quality. Smart demand management lever-
ages current electric utility infrastructure and increases its
capacity.
Volt/VAR Control
New or pending regulations for energy conservation meth-
ods are some of the main drivers of grid optimization imple-
mentation. Optimizing the grid or operating the distribution
system at a lower voltage level has a significant impact on
total energy reduction. Volt/VAR control (VVC) allows utili-
ties to meet these regulations. VVC results in environmental
benefits by reducing waste from early product failures and
reducing greenhouse gas emissions through decreased energy
losses and improved energy efficiency.
Equipment and sensors are key assets to grid optimiza-
tion; however, deeper software integration is also required for
utilities to more effectively and efficiently coordinate power
distribution. VVO requires real-time voltage information
from sensors located throughout the distribution line to allow
grid operators to better anticipate problems and make fast lo-
calized decisions at the edge of the distribution system.
As smart grid technologies are added into the distribu-
tion system, utilities eventually will transition to adaptive
VVC (AVVC). This next phase in VVC enables the distribu-
tion system to learn from previous conditions and anticipate
system needs. AVVC will allow utilities to optimize the grid
and more efficiently provide power without operator inter-
vention.
Smart Transformers and Secondary Transformer Monitoring
Smart secondary distribution transformers and secondary
distribution transformer monitoring or both also are vital
to smart distribution. Secondary distribution transformer
monitoring typically monitors voltage, loading and sometimes
More devices in the field reporting data make it critical for
utilities to mitigate data overload at the control center by
using unsolicited messaging.
1309elp_36 36 9/30/13 5:04 PM
Sep|Oct|2013 ElEctriclight&PowEr | 37
Smart Grid
temperature. These monitors provide utilities a comprehensive view
of their assets in the field. Some monitors like IUS Technologies’
TM1000 and TM2000 monitor total combustible gas along with
temperature and load, enabling utilities to better maintain and utilize
their transformer assets. Grid operators will increase their use of
transformer monitoring because it provides many additional benefits
to grid optimization. It can integrate with Volt/VAR optimization to
provide additional value and justify implementation.
Secondary transformer monitoring provides utilities with outage
notification, revenue protection from theft, asset management and
improved power quality, providing even more value and justification
for the utility.
Self-Healing Grid
With federal government support via the American Recovery and
Reinvestment Act (ARRA) of 2009, many utilities invested in self-
healing grid programs by purchasing new equipment such as reclosers,
switch gear, automated controllers and sensors. They created a more
reliable grid that is less dependent on traditional, unintelligent
distribution equipment. Most, if not all of the switching and controller
devices in these grids include communication technologies (integrated
or modular) for notification and timely control. Remote smart sensors
with integrated communications provide intelligent visibility of
distribution feeders. Subsequently, the self-healing grid requires a
robust IT and communications infrastructure to monitor, report and
control the reconfiguration process of the distribution network.
Many of today’s electric grids are designed with multiple sources
of power generation located throughout them, allowing the DA system
to reconfigure and reroute power to minimize service disruptions and
outages. When a fault occurs, reclosers automatically locate the fault,
disconnect power at that point to isolate it and then report it. The
smart distribution system uses algorithm based control commands to
source electricity from an alternative power generation source and
adjust loads at substations and capacitor banks, while the switchgear
reroutes the power to areas around the fault location. The software
intensive control centers can make decisions, precisely dispatch
maintenance crews and restore power to many periphery customers
in minutes, depending on the severity and size of the service area.
Smart distribution systems not only allow end-users to maintain
their productivity but they also allow utilities to save millions of lost
revenue dollars.
Utilities will progress toward smart distribution by implementing
sensors, monitoring devices and other automation equipment
throughout the distribution system. Merging software and hardware
will provide the benefits utilities must have to move the electric
distribution grid into the future. All utilities whether cooperative,
municipalities or investor-owned will face challenges in creating an
optimized and self-healing grid as energy consumption increases.
Additional challenges from distributed generation and electric vehicles
will complicate the distribution system, requiring the implementation
of intelligence to make the right decisions in real time.
Ad Index
Ad index name PG#
ACLARA 5
BECHTEL 17
CS WEEK 19
CS WEEK 29
ELECTRIC LIGHT & POWER WEBCASTS 33
ELSTER 40
ENERSYS 9
FLIR 23
PANASONIC CORPORATION OF NORTH AMERICA 11
QUANTA SERVICES 2
REEL-O-MATIC 12
REID LAW 12
S&C ELECTRIC COMPANY 7
SABRE INDUSTRIES 39
SCHWEITZER ENGINEERING LABORATORIES 3
SIEMENS ENERGY INC 13
SKIPPING STONE 25
TAIT COMMUNICATIONS 15
Ad Index
1309elp_37 37 9/30/13 5:04 PM
BackpageS P E C I A L
38 | ElEctriclight&PowEr Sep|Oct|2013
A u t h o r
Michael McCullough is
a vice president in the
corporate practice at
Edelman, the world’s
largest independent
public relations firm.
His clients are leading
the global smart
grid discussion and
educating consumers
and customers about
how these technologies
will convert energy
challenges into lasting
solutions. Reach him at
michael.mccullough@
edelman.com or on
Twitter @mikeymc50.
cBosses of the Electric Grid Should
Pay Attention to the Gridironby Michael McCullough, Edelman
College football’s big-time programs have as much at
stake as any other billion-dollar enterprise; and the associated
scandals demonstrate a culture of playing fast and loose with
rules and regulations.
Compliance doesn’t equal security, in football or with
utilities. On the gridiron, the University of Oregon demon-
strated recently that minimum compliance to keep the school
and athletic department out of trouble, with the NCAA was not
enough, especially when it found it had committed numerous
violations. To address this, the university is proactively think-
ing ahead and setting the bar higher, announcing it would hold
its program accountable to the most stringent standards in the
sport, well above what the NCAA mandates. The contract be-
tween the university and its new head football coach contains
an unusual set of specific provisions related to NCAA rules
compliance, including a requirement that he “actively look for
red flags of potential violations.” Such an exhibit did not ex-
ist in any of the three iterations of the previous coach’s agree-
ments.
The utility business could learn a lot from the University
of Oregon.
In May, I attended the Department of Energy’s Consumer
Engagement Working Group planning session in Denver. This
group continues to refine a template that utilities can use to en-
gage consumers. One of the primary rec-
ommendations to come will be education
covering customer and citizen benefits,
and concerns from A-Z. When it comes to
smart grid, there’s no shortage of security,
privacy and health concerns.
If you’re from a utility, ask your-
self: How prepared are you for consumer
questions about security, privacy and oth-
er concerns? Are external consumer ad-
vocates ready to be mobilized and speak
on your behalf?
Grid modernization technologies
are shifting the utility-customer relation-
ship. With a primary focus on regulators,
utilities can’t afford to overlook consumer
opinion and expectations about how their
information is used, stored and secured.
Reputational damage already has been
done for some utilities in news coverage
about smart meter health concerns and
fires.
Any consumer backlash will invite
more regulatory scrutiny. Understanding key stakeholders and
increasing trust will proactively ease the regulatory burden.
When consumers read headlines claiming 40 percent of cyber-
attacks target the energy sector, the next logical step is to begin
asking for information on how they are protected. How data is
managed, kept private and secure will change in the wake of
these technological advances.
The biggest utilities, and those looking to demonstrate
innovation, need to evolve beyond a culture of compliance.
Utilities should embrace enhancing relationships with
customers. According to Edelman’s “Privacy & Security: The
New Drivers of Brand, Reputation and Action Global Insights
2012,” security and privacy are important to people and busi-
nesses must be more accountable for managing the informa-
tion they collect. Some 85 percent of customers say that busi-
nesses need to take data security and privacy more seriously.
Engagement activities with local, regional and national
organizations that acknowledge and consider consumer pri-
vacy and data protection might seem daunting. Utilities would
be wise to seek advice on how to break this down into some-
thing manageable so that that they are prepared to activate in
situations that pose a risk to their reputation.
In addition, the messenger is just as important as the
message in utilities’ engagements with customers. Customer
service and stakeholder education often
reside within different utility depart-
ments, which can create a delimma.
Utilities should consider adjusting this
model. The new energy dynamic likely
will mandate these two functions work
closer together. Add that to the privacy
and security advocates now informed
and speaking on your behalf, and you
get the positive halo deserved. When
you inform the right audiences, you’ll
be rewarded when they speak positively
and with correct information.
A modernized electrical grid will
benefit the end customer, but the story of
how that will happen is as uncertain as
the outcome of a third-and-long play call.
Relying on compliance alone is conserva-
tive and risky. But if you engage the right
stakeholders now and tell them what they
need to know, you can play offense and
call the plays rather than sit back and rely
on defense to save the day.
1309elp_38 38 9/30/13 5:05 PM
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1309elp_39 39 9/30/13 5:02 PM
In today’s world, what’s more important than being connected?
Your business today is about much more than
delivering reliable electricity. It’s about forging strong
connections with your customers, your community
and your government leaders. It’s about connecting
your smart grid data with the people and business
processes that need it. And it’s about linking today’s
business and technology needs with those of tomorrow.
Elster provides the vital connections you need to achieve
these objectives. With essential solutions like smart
meters, advanced metering infrastructure, meter data
management, network communications, data analytics
and pre-integrated grid management applications
that adapt to your business processes, Elster is helping
utilities everywhere unlock the value of their meter data.
How can we help you?
Elster – vital connections for a brighter energy future.
©Elster 2013Elster Solutions | elster.com/en/elster-solutions | 800-786-2215 | 208 S. Rogers Lane | Raleigh, NC 27603
Go to http://uaelp.hotims.com for more information.
1309elp_40 40 9/30/13 5:02 PM
Fo r t he i ndu s t r y ’ s c a r e e r - m ind e d p r o f e s s i ona l s SUMMER 2013
A sup p l emen t t o P ennWe l l pub l i c a t i on s | w w w. P ennEne r g yJ O B S . c om
New Horizons:
The Growth of
Offshore Wind
Around the World
FROZEN ASSETS:
The Artic Push
in Offshore
Oil & Gas
INDUSTRY INSIGHTS
Offshore Energy: Mitigating Risk
TRAINING INSIGHTS
Empowering our Troops: AEP Career Initiatives for Veterans
ENERGY 101
Wave & Tidal Power
1308pejew_C1 1 8/20/13 2:58 PM
1308pejew_C2 2 8/20/13 2:58 PM
2 EDITOR’S LETTER
Offshore Energy: Towards the Great Horizon
Dorothy Davis Ballard, PennWell
3 NEW HORIZONS
The Growth of Offshore Wind Around the World
Dorothy Davis Ballard, PennWell
5 FROZEN ASSETS
The Artic Push in Offshore Oil & Gas
Hilton Price, PennWell
6 INDUSTRY INSIGHTS
Offshore Energy: Mitigating Risk
Matthew Gordon, Viking SeaTech
8 CAREER INSIGHTS
Regulatory Experts: Career Opportunities Galore
Volker Rathman, Collarini Energy Staffng
10 TRAINING INSIGHTS
Empowering our Troops: AEP Career
Initiatives for Veterans
Dorothy Davis Ballard, PennWell and Scott
Smith, American Electric Power
12 ENERGY 101
Wave & Tidal Power
PennEnergy.com
w w w . P e n n E n e r g y J O B S . c o m
SUMMER 2013
A PENNWELL PUBL ICAT ION
Stacey Schmidt, Publisher
Dorothy Davis Ballard, Content Director
Hilton Price, Editor
Cindy Chamberlin, Art Director
Daniel Greene, Production Manager
Tommie Grigg,
Audience Development Manager
PennWell Corporation
1421 South Sheridan Road
Tulsa, Oklahoma 74112
918 835 3161
PennWell.com
Recruitment Advertising Sales:
Courtney Noonkester
Sales Manager
918 831 9558
Ad ve r t i s e r s ’
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rce:
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ergy
A/S
1308pejew_1 1 8/20/13 2:57 PM
2 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
Ed i to r ’ s
Le t t e r
THE world’s oceans and vast waterways have always evoked feelings of wonder
and piqued the adventurous spirit. Teeming with life and uncharted depths,
these fuid bodies are awe inspiring in the way they are so vast and yet joining together
everything.
In the ancient world the challenge was to transverse these great expanses, to fare
into the horizon of the unknown for sustenance and wealth. Today, the world beyond
our shores holds the promise of new bounties. We turn again towards the great horizon,
abundant with the promise of resources to fuel all we have developed.
In this issue of Energy Workforce we delve into offshore energy as it is moving
ahead in great leaps and
bounds. We begin with an
overview of offshore wind
power on page 3, highlighting
the incredible global growth
of this industry as it moves
towards becoming a truly
competitive resource.
Next, we look to the
offshore oil & gas industry
and its renewed push into artic territories on page 5, followed by a timely editorial on
mitigating risk on page 6 as offshore exploration & production moves to tap these once
unreachable resources.
With a focus on career development, we hear from an industry expert on expanding
opportunities for regulatory experts on page 8 and speak with an executive of U.S.
energy major AEP about initiatives for veterans in energy on page 10.
We close this issue with another round from our Energy 101 series, this time a brief
introduction to the evolving wave and tidal power industry on page 12.
We hope you enjoy these insights and encourage you to keep us on your summer
reading list to stay ahead with the latest energy news, research, and jobs at PennEnergy.
com and PennEnergyJobs.com.
Carpe diem!
—Dorothy Davis Ballard
Towards the Great Horizon
“Today, the world beyond our shores holds
the promise of new bounties. We turn again
towards the great horizon, abundant with
resources to fuel all we have developed.”
1308pejew_2 2 8/20/13 2:57 PM
Cover STORY
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 3
The Growth of Offshore
Wind Around the WorldBy Dorothy Davis Ballard
AS more countries around the
globe realize the potential of
offshore wind, new turbines
are being installed off of our coasts.
In 2012, 1,296 megawatts of new off-
shore capacity were installed — a 33
percent increase from 2011, according
to the Global Wind Energy Council
(GWEC). The world now has at least
5,415 MW of offshore wind energy gen-
erating around the globe.
Offshore wind represents about 2 per-
cent of global installed energy capacity,
but that number could, and is expect-
ed to, increase rapidly. This renewable
resource, which is able to generate far
more power than onshore wind tur-
bines, could meet Europe’s energy de-
mand seven times over, highlights the
GWEC. While in the United States, off-
shore wind has the potential to provide
four times the energy capacity needed.
Europe’s lead in offshore wind
Currently, more than 90 percent of the
globe’s offshore wind power is installed
off the coast of northern Europe in the
North, Baltic and Irish seas. There is
now also a solid presence in the English
Channel. Last year, the United King-
dom took the lead in new wind capacity,
adding 854.20 MW of offshore wind
power assets. Denmark added 46.8 MW
in 2012 and Belgium 184.5 MW.
As of this article, Europe has a total
of 4,336 MW generating from 1,503 off-
shore wind turbines at wind farms locat-
ed across 10 countries. The European
Union has set a goal to generate 20 per-
cent of its electricity from renewable
sources by 2020, and offshore wind is
slated to play a major role in making
that a reality.
In early July, the offshore wind in-
dustry celebrated a milestone: Dong
Sou
rce:
DO
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En
ergy
A/S
1308pejew_REV_3 3 8/28/13 1:13 PM
4 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
Energy inaugurated the world’s largest
offshore wind power facility. The proj-
ect, which includes 175 Siemens wind
turbines, is called London Array and lo-
cated 12.4 miles off the Kent and Essex
coast in the Thames estuary. It has a to-
tal capacity of 630 MW, enough to pow-
er 500,000 households.
The UK’s Department of Energy &
Climate Change recently approved an-
other major offshore wind project, which
will add to Europe’s expanding wind en-
ergy output. The 1.2 GW Triton Knoll
project will be led by RWE and located
off the Lincolnshire and Norfolk coast.
Along with supplying clean, alternative
energy, the project is expected to gener-
ate more than $5.5 billion of investment
in the region and create about 1,130 jobs.
Germany, too, has had its sights set
on the development of alternative ener-
gies like wind and solar as part of a na-
tional commitment towards the phase
out of nuclear power. The country add-
ed 80 MW of offshore wind energy to the
electric grid in 2012, and another six util-
ity scale offshore wind projects are under
construction. Petrofac, and Siemens En-
ergy also recently entered into a $53 mil-
lion contract to build two major offshore
wind projects in the North Sea off the
coast of Germany - one totaling 576 MW
and another set for 800 MW.
US makes commitment to offshore wind
North America is aiming to add some
6.5 GW of wind power this year, and the
United States is looking to be a major con-
tributor. While there are no offshore wind
farms in the U.S. at the moment, the fed-
eral government has recently completed
its frst-ever round of auctions for offshore
wind leases. Deepwater Wind,
a company based in Rhode Is-
land, came in with the highest
bid of $3.8 million for two ar-
eas totaling more than 164,000
acres off the coasts of Massa-
chusetts and Rhode Island. The
auction was viewed as a histor-
ic moment for the U.S.’s future
commitment to clean energy.
The federal government is
expected to hold another auc-
tion in September for a possi-
ble wind project off the coast of
Virginia. Areas offshore Mary-
land, New Jersey and Massa-
chusetts have also been sited
as possible locations for future
wind developments.
PensionDanmark announced in June
it will be funding $200 million in capi-
tal for the planned Cape Wind project
expected to include up to 130 Siemens
turbines of 3.6 MW each. If completed,
the project off the coast of Massachu-
setts’ Cape Cod would become one of
the world’s largest offshore wind farms.
Asia will boost wind output
According to the GWEC, Asia will con-
tinue to boost its wind energy output an-
nually, reaching 25.5 GW by 2017. When
it comes to offshore wind energy, Japan
reached 25.3 MW last year. Meanwhile,
South Korea reached 5 MW of offshore
wind generation.
China holds the third spot for most
offshore wind capacity, with 258.4 MW
installed. China is also home to the frst
commercial offshore wind project outside
Europe. The Shanghai Donghai Bridge
project was installed in 2010 and totals
102 MW. China hopes to have 5 GW
of offshore wind by 2015 and 30 GW by
2030, according to the GWEC.
Cheaper costs will drive demand
A major challenge for expanding off-
shore wind development is the current
high costs of the technology. Deep wa-
ters far offshore, higher waves and steeper
construction costs can make these proj-
ects somewhat cost prohibitive. Howev-
er, like other renewable energy sources
being developed around the globe, off-
shore wind technology is steadily improv-
ing to boost its overall return on invest-
ment. Investment remains strong across
the broader wind power industry with
2012 marking several milestones. It ap-
pears with continued cost reductions and
the growing push towards renewable re-
sources, offshore wind is positioned to be
a key player in meeting global energy de-
mand through the next decade. ⊗
Sou
rce:
DO
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En
ergy
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EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 5
Frozen Assets
Despite immense challenges, the Arctic can’t
keep away exploration and drilling.
By Hilton Price
WHEN U.S. arctic waters saw
a drillship for the frst time
in 2 decades, it seemed the
return to a bygone era of exploration
had begun. Although Shell was ready
to usher in a new age for exploration
in those icy waters, process hurdles,
equipment issues, and natural obstacles
left the company’s dream unrealized.
Immediately after, as word of techni-
cal violations added insult to injury, it
seemed potential reservoirs in U.S. arc-
tic waters would remain unexplored for
at least a little while longer.
The frigid waters of the arctic present
one of the greatest challenges for any ex-
ploration company. These natural hin-
drances, combined with ongoing legis-
lation from the countries that lay claim
to those waters, make it a massive un-
dertaking. Shell lost billions in its failed
2012 campaign, and as the season end-
ed the company announced it would not
attempt a return in 2013.
However public Shell’s struggle in
the region may be, it is only a set-back.
2014 looms, and there is still no word
whether Shell will attempt a return to
the Arctic, but it is looking likely.
Shell is planning specialized surveys
of the area, using ships deployed to ar-
eas in the Chukchi and Beaufort seas.
This kind of data collection will be in-
valuable to potential future exploration
campaigns, and could save Shell in both
cost and risk if it chooses to return.
The same success Shell is hoping for
in U.S. arctic waters is being realized by
other companies in other areas of the
tumultuous region.Offshore Norway is
proving successful for numerous compa-
nies exploring the area. In the UK, three
of the country’s “Big 6” energy compa-
nies are planning Arctic drilling. E.On,
Centrica, and RWE Npower are all ex-
pressing interest in the region.
Likewise, there is a growing interest
offshore Russia, where legislation is loos-
er than the U.S. and reservoir potential
just as high. Shell has turned its atten-
tion to this area. If the company is suc-
cessful there, it could affect U.S. arctic
drilling policy, and possibly open the re-
gion further in the future.
In the U.S., however, there is an-
other element that could swing the
pendulum the other way, and close
off the country to further arctic ex-
ploration. The U.S. shale exploration
boom is changing the global energy
landscape. The country is expected to
become a major exporter in the com-
ing decades, and successful produc-
tion of these unconventional resources
could affect the interest in traditional
exploration. It could end the return to
the U.S. arctic before it truly begins.
There is a growing call for environ-
mental stewardship, the same kind that
brought an end to U.S. arctic drilling
decades ago. That concern for our natu-
ral environments isn’t likely to fade. Any
company heading to the area must show
respect for the land, and for those who
fght for it, or risk an evaporation of sup-
port for its work in the region.
Arctic drilling is hardly over. In ar-
eas offshore Norway, it thrives as much
as ever. In U.S. arctic waters, the pro-
cess may be stalled, but across the
sea in Russia’s arctic waters, oppor-
tunities are increasing. Success there
could further push exploration inter-
est here, and possibly overcome the
fnancial and legal hurdles that stand
in the way.
Meanwhile, success with shale oil
and gas could turn U.S. interests away
from the arctic, and back on land. But
that isn’t stopping companies from re-
viewing the region, and critically an-
alyzing collected data. For an area of
the Earth where even basic exploration
means a multi-billion dollar campaign,
every move matters and every decision
is crucial. ⊗
1308pejew_5 5 8/20/13 2:57 PM
6 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
INDUSTRY Insights
Offshore Energy: Mitigating Risk
By offering an integrated offshore support package, variant
forms of risk can be avoided, according to Viking SeaTech
Survey’s General Manager Matthew Gordon.
By Matthew Gordon
POST-MACONDO, there has been
an increased focus on the miti-
gation of risk. The industry has
reviewed operational practices from top
to bottom. Everyone from the
operators to offshore specialists
has been affected by the major
incident.
As a result, there has been an
increase in the contractual tug
of war between operators and
contractors in relation to the ac-
ceptance of risk and liabilities.
This has led to lengthy nego-
tiations as legal teams look to
reach middle ground, resulting
in increased administration,
time and cost.
It could be said that offering
an integrated and streamlined service re-
duces administration, costly contract ne-
gotiation and indemnities. Expanding in-
house services could not only hold the
key to unlocking cost savings, but also
to reducing risk in a risk wary industry.
Bringing new thinking to an old problem
Offshore service businesses are reinforc-
ing their position in the marketplace
by providing a fully integrated package.
Previously, smaller companies offered
a niche service that was considered sat-
isfactory twenty years ago. But as the
large corporations’ priorities adapt in
line with supply and demand, support
companies have risen to the task.
Viking SeaTech has looked at how
a new business stream can be injected
into a maturing and heavily saturated in-
dustry, in order to meet the changing re-
quirements of their clients.
By offering more services under a sin-
gle contract, including survey services,
we can provide a convenient package that
offers all the benefts, minus the opera-
tional burden. Our integrated approach
supports our efforts to make rig-moving
safer, faster, cheaper and eas-
ier to execute.
Reducing the
operational burden
Contract negotiations can
be time consuming; la-
bor intensive, costly and
can often impact project
scheduling. This is multi-
plied by having several con-
tracts to set up and manage
simultaneously.
An integrated approach
works towards removing
these barriers. It is highly advantageous
to the client to have a single contract in
place for service provision. This equates
to a single point of contact, invoice and
company-specifc set of terms and condi-
tions to manage.
The benefts of such a contracting ap-
proach are realized when an issue arises.
Instead of managing multiple contactors,
it takes one call to a single organization to
1308pejew_6 6 8/20/13 2:57 PM
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 7
Matthew Gordon joined Viking SeaTech in November 2012 as General Manager, Viking SeaTech Survey. His role is to oversee the development of the newly created Survey division. He is responsible for initial recruitment, project management and contracting, proft and loss. Matthew joined the company from Subsea 7, where he was a Client Account Manager overseeing sales for the UK, Ireland and the Netherlands. Previously, he was in a general management position with VERIPOS and a project engineer with Fugro. He specializes in hydrographic survey positioning, project management, ROV and TDU operations, business development and personnel development. Matthew has an MSc in Management Studies from The Robert Gordon University and a BSc in Electronic Engineering from Glasgow Caledonian University.
remove the issue. If a single contractor is
working towards a shared goal, the time
taken to resolve the issues is also reduced.
The rig moving food chain
Operational effciency is improved when
operators use the integrated approach,
and also removes the need for multiple
contractors. By having numerous disci-
plines working together in-house, com-
munication is strengthened and it is en-
tirely realistic to suggest that the risk to
client operations is reduced.
From a quality assurance perspective,
Viking SeaTech Survey is involved at ev-
ery stage of the life cycle, from design
to evaluation and through working with
other disciplines. This process identifes
errors that may not be uncovered until
much later in the job, resulting in proj-
ect delays and increased cost.
Eradicating the blame culture
Contractor confict can trouble clients.
We have found that the greatest issue for
our clients is managing multiple contrac-
tors, especially when they are in confict,
as this can often lead to spending vast
amounts of time acting as arbitrator.
This is understandably irksome and
often it is the client who pays for this in
the form of lost time and additional costs.
An Integrated service approach can re-
move much of the operational burden
and the single contractor can resolve
problems on the client’s behalf. This
approach allows the client to spend their
valuable time working on other things,
while we deal with the issue at hand. This
is becoming even more important as or-
ganizations become fatter and individ-
uals within those companies have more
responsibility, meaning that time is a pre-
cious commodity.
Bespoke options
Large frms have the option of using
the offshore support specialist for their
rig moving operations expertise. It may
seem obvious, but advising clients at the
earliest point in the process is fundamen-
tal to the success of the job at hand. Step-
ping in at the initial engineering and de-
sign stages makes things easier later in
the job. Once these specifcations have
been approved by the client, a list of ma-
rine procedures can be made. This step-
by-step guide advises as to how the boats
and personnel will move the rig from
start to fnish.
Our potential clients may have fve
or six different options from multi-
ple contractors. To make the decision
easier, we tailor the options to ft the
client exactly. By offering multiple ser-
vices, operational burden is lifted and
risk is less likely. The more links in the
operational chain, the more things that
can go wrong. We are trying to bring it
down to just two links, us and the client.
Furthermore, uniform policies and pro-
cedures lead to a safer operation. A unit-
ed quality system that clearly informs all
personnel of operational methods will
drive a safer practice.
Looking to the future
The integrated service model brings end-
less possibilities. Removing the burden
for the operator is not only advantageous
in terms of costs, time and schedule, but
it can remove the incidence of risk within
an operation. Risk comes in many forms,
but can be reduced by using a stream-
lined business with one goal, the swift,
safe, coordinated and accurate comple-
tion of a contract.
I foresee integrated services becom-
ing more common place as the indus-
try continues to adapt. The often long
and drawn out processes attached to
drawing up contracts between opera-
tors and contractors, and subsequent
legal associations, has proved costly in
the past. Integration will become the
norm once the industry realizes this
effcient business prototype is one to
be utilized. ⊗
Risk comes in many forms, but can be reduced by using
a streamlined business with one goal, the swift, safe,
coordinated and accurate completion of a contract.
1308pejew_7 7 8/20/13 2:57 PM
CAREER Insights
8 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
Regulatory Experts Career Opportunities Galore
Evolving regulatory systems in the petroleum industry
provides an emerging career path
By Volker Rathman, Collarini Energy Staffng
WITH the drilling moratorium
lifted, the oil and gas indus-
try is trying to fgure out how
to deal with the onslaught of new regu-
lations. The effects on the job markets
have already been felt: Thousands of
jobs in the offshore industry were tem-
porarily lost after the moratorium was
put in place in the wake of the Macondo
incident.
We say “temporarily,” since over time
many of these jobs will come back. This
is in no way belittling the effect the loss of
jobs has had on those involved and their
families. It is stating a belief that our in-
dustry is resilient and will come back –
stronger and better.
Well over 80 percent of this country’s
energy comes from hydrocarbons. No
number of alternative or renewable energy
sources will change that percentage quick-
ly. Oil and gas are here to stay; and, frank-
ly, the country needs us to produce hydro-
carbons for them, even if the importance
is not always realized by many Americans
outside of our industry.
So our take on the future job market
is positive. Regulations about to be dealt
with by the industry will have an increas-
ing effect on job creation, since many
1308pejew_8 8 8/20/13 2:57 PM
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 9
more people will be needed to under-
stand what the new rules mean and to
develop the best practices to implement
them. Regulatory experts and analysts
may apply here!
The role of the regulatory analyst has
expanded in all sectors of the oil and gas
industry as a result of proposed, new and
revised legislation.
• A regulatory analyst’s position may in-
clude such responsibilities as:
• Preparing and submitting permitting
requests for all new operations activi-
ty and any revisions to prior approvals
• Monitoring and reporting gas and oil
production and inventory for compa-
ny-operated wells
• Managing and updating regulatory in-
formation and forms
• Interfacing with local, state and feder-
al regulatory agencies
An experienced analyst will have pri-
or regulatory permitting and reporting
experience for full cycle development
planning, drilling completion, workover
operations, and feld abandonment. The
role also requires knowledge of permitting
specifc to the governing agency and geo-
graphic area.
Additionally with conventional on-
shore drilling, the process of shale ex-
traction is regulated under a number of
laws, most notably at the federal level,
the Environmental Protection Agen-
cy, The Clean Water Act, The Safe
Drinking Water Act, and The Nation-
al Environmental Policy Act. While
the federal agencies administer a gen-
eral “one-size-fts-all” set of guidelines,
the regulatory bodies at the state and
local levels may be distinctly different
due to geographic location, hydrology,
population density, wildlife, climate
and local economics.
This stew of agencies and rules cre-
ates career opportunities for experts in
each area and for generalists keeping an
eye on the big picture and the interface
among all parties.
Experts in this feld will be needed in
the permitting processes. This will create
employment opportunities particularly in
the context of:
• Greenhouse gas and air emissions
• Noise pollution
• Erosion and sediment control and
• Environmental threats to endangered
and threatened species
We do not know how the regulatory
scene will play out. We are certain, how-
ever, that regulatory compliance needs
will not decrease; this could create a boon
for those professionals seeking a switch
in their careers.
Tis fast-growing sector of the indus-
try holds promise to any regulatory pro-
fessional due to the diversity of agency
interface, geographic variety and environ-
mental concerns. As industry technolog-
ical developments and practices improve
and legislative requirements continue to
evolve, so will the unique opportunities
in these regulatory roles. ⊗
Volker Rathmann is the President of Collarini Energy Staffng Inc. Prior to joining the frm
in 2001, he held the position of Chief Financial Offcer for INTEC Engineering, a provider
of specialized engineering services in global frontier and deepwater projects. Before INTEC
Engineering, Volker held a number of leading positions in operations, marketing and fnance
within the Daimler AG. Volker earned a Bachelor’s degree in business administration in
Berlin, Germany.
The role of the regulator y analyst has expanded
in all sectors of the oil and gas industr y as a
result of proposed, new and revised legislation.
1308pejew_9 9 8/20/13 2:57 PM
10 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
Empowering our Troops: AEP Career Initiatives for Veterans
HEADQUARTERED in Colum-
bus, Ohio, American Electric
Power (AEP) is one of the
largest electric utilities in the United
States, delivering electricity to more
than 5.3 million customers in 11 states.
AEP has a long history of community
engagement and has established itself
as one of the top employers for military
men and women.
As a leading utility, AEP partners
with veterans’ organizations and job pro-
grams, provides special benefts to vet-
eran employees, and supports veteran
employees and their families through
mentoring and recognition programs.
Recently, PennEnergy was invited to
learn more about AEP’s veterans’ ini-
tiatives and given the opportunity to
engage Scott Smith, AEP Senior Vice
President for Transmission Strategy and
Business Operations.
A former U.S. Army captain and com-
bat engineer, Smith serves as an execu-
tive sponsor for AEP’s Military Veteran
employee resource group. Smith collab-
orated with PennEnergy content direc-
tor, Dorothy Davis, to offer greater in-
sight into AEP’s veterans’ initiatives and
how they beneft our military heroes,
the energy industry, and the communi-
ties they serve.
PennEnergy (PE): What percentage of
AEP’s current workforce is represented
by veterans?
Scott Smith (Smith): Veterans com-
pose 10 percent of AEP’s workforce, with
1,770 military veterans working through-
out our 11-state service territory.
PE: When did AEP’s veteran outreach
initiatives begin and what prompted
them?
Smith: Though AEP has a long his-
tory of supporting military veterans, it
became even more pertinent in recent
years as we increasingly realized that the
skills military veterans could bring to the
workplace closely match the skills we are
seeking for new employees. Many vet-
erans have the job-related training we
need to operate equipment and to per-
form other technical functions, along
with the personal attributes we value,
including leadership skills, f lexibili-
ty, adaptability, dedication and team-
work. We also have recognized the
signifcance of building a skilled work-
force pipeline that will help us meet the
future needs of our ever-evolving indus-
try. With this in mind, we have placed
increasing attention on our military re-
cruiting efforts as well as on our compa-
ny pay and benefts policies that support
Reservists and National Guard members
who are called into active duty.
PE: What programs does AEP have
in place for helping to recruit and
transition veterans into civilian ener-
gy careers?
Smith: At AEP, we have taken a
number of approaches to target the vet-
eran community and transition them
to successful careers at AEP. For exam-
ple, instead of fltering through thou-
sands of resumes, which can be time
consuming, we work with veterans’ or-
ganizations and national and state jobs
programs to locate veterans who have
the skill sets that match utility jobs.
This spring, AEP hosted an open
house at the AEP Transmission train-
ing facility near Columbus, Ohio, for
an up-close and personal view of the
daily activities of linemen, station tech-
nicians, protection and control elec-
tricians and other jobs. The event,
co-sponsored with veterans groups,
TRAINING Insights
1308pejew_REV_10 10 8/28/13 1:14 PM
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 11
provided an orientation about the types
of careers available at AEP. Several AEP
military veterans served as mentors dur-
ing the event. AEP seeks out veterans at
traditional recruiting events, too. For ex-
ample, we participate in Hire Our He-
roes, a U.S. Chamber of Commerce-
sponsored job fair.
In addition, AEP is one of a handful of
utilities that directs ex-military job appli-
cants to an online “military occupational
specialty” decoder that translates military
skills, capabilities and training into civil-
ian terms. The decoder helps veterans
recognize the meaning and value that
their military skills and training have in
the civilian workforce.
PE: What impact has AEP’s veteran
program had on the company and its
service communities?
Smith: For 10 consecutive years, AEP
has been ranked among the top “mili-
tary friendly” employers in the country
by GI Jobs Magazine. Our program has
not only increased the number of veter-
ans in our ranks, but it has helped veter-
ans transition successfully through men-
toring and company support.
I serve as an executive sponsor for
our Military Veteran employee resource
group, which was launched on Veterans’
Day in 2012. The group not only men-
tors newcomers, but it also supports em-
ployees by assisting their families while
the employees are away on active duty.
The resource group partners with veter-
ans groups and sponsors events to honor
veterans throughout AEP’s 11-state ser-
vice territory. Ultimately, we want to show
our employees and our service commu-
nities that we value the service of veter-
ans who have fought to protect our free-
doms and want to help them secure the
economic prosperity, ongoing support,
and respect they deserve.
PE: How does AEP envision the role
of veterans in evolving energy industry?
Smith: When we look at the veter-
an community, we see a skilled, disci-
plined workforce that can help our in-
dustry succeed as we begin a period of
rapid infrastructure modernization and
expansion. Nationwide, utilities will
need to replace an estimated 200,000
skilled Baby Boomers expected to retire
in the next fve years – a third of the ener-
gy workforce. At the same time, utilities
across the U.S. are expected to invest $50
billion to modernize electric transmis-
sion infrastructure through 2020. This
estimate could surpass $100 billion if
additional investments are made to en-
hance communications and cyber secu-
rity capabilities.
Through 2020, AEP alone plans to
spend billions to build around 480 new or
enhanced transmission substations and
roughly 1,800 miles of new transmission
lines. We plan to rebuild another 3,900
miles of transmission lines between 2013
and 2015. We also are focused on prepar-
ing ourselves for success in a competi-
tive transmission business environment,
which will require us to move quickly and
fnish projects on time and on budget.
As a result, targeting military veter-
ans who are transitioning to civilian ca-
reers makes sense since their capabilities
match the qualities necessary for us to
succeed in a rapidly growing, competi-
tive transmission landscape.
PE: What is ahead for AEP’s veteran
initiatives?
Smith: As we seek to recruit more
veterans into our ranks, we have looked
at how we can best support this popu-
lation of employees, particularly those
who continue to serve. AEP recently an-
nounced it will make up the difference
between an employee’s military pay and
his or her AEP base wage when the em-
ployee is off work for required training.
Additionally, we are supporting indus-
try-wide efforts to leverage the talents of
the veteran community. AEP helped es-
tablish the Troops to Energy Jobs pro-
gram, a product of the Center for En-
ergy Workforce Development. The
Center recently published a 54-page na-
tional model to help energy companies
develop a comprehensive program for
military outreach, education, recruit-
ing and retention. Through such col-
laborative efforts, we are determined to
help more veterans by providing a road-
map to civilian employment in the en-
ergy industry. In turn, we are ensuring
that we have the skilled workforce need-
ed to continue generating and deliver-
ing the reliable electricity that is essen-
tial to American homes, businesses and
national security. ⊗
“When we look at the veteran communit y,
we see a skilled, disciplined workforce...”
To learn more visit: AEP – A Military Friendly Employer
For career resources in the power and petroleum sectors visit: PennEnergyJobs.com
1308pejew_11 11 8/20/13 2:57 PM
12 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
Energy 101: Wave & Tidal EnergyPennEnergy.com
WAVE and tidal energy is
a predictable form of re-
newable energy that uses
the power and movement of wave
and tidal fows to generate electric-
ity. With the use of underwater tidal
turbines, energy from the sea is cap-
tured to create a non-polluting form
of electricity.
A dam approach with hydraulic
turbines is the most modern tech-
nology being used across the world
to harness tidal power. Tidal dams
are most effective in bays with nar-
row openings. Gates and turbines are
installed at certain points along the
dam, and when an adequate differ-
ence in water elevation on the dif-
ferent sides of the barrage occurs,
the gates open, creating a “hydrostatic
head,” the Ocean Energy Council re-
ported. During this process, water fows
through the turbines to create electric-
ity. The technology used at tidal ener-
gy facilities is similar to that used at
traditional hydroelectric p ower plants.
Wave and tidal power is one of the
oldest forms of energy used by humans,
with tide mills used by the Spanish,
French and British as early as 787 A.D.
It’s estimated the world’s potential for
ocean tidal power is 64,000 megawatts
electric, the OEC reported. However,
tidal power has a low capacity, usually in
the range of 20 to 30 percent. The tech-
nology for tidal energy is also expensive,
though powerful. It is estimated that if
a barrage was placed across a high-tid-
al area of the Severn River in western
England, it could provide 10 percent of
the country’s electricity needs, accord-
ing to the OEC.
Growing popularity
Tidal and wave energy technology is ad-
vancing rapidly as more countries are
beginning to realize the renewable en-
ergy’s benefts.
In the United States alone, there are
about 2,110 terrawatt-hours of wave en-
ergy being generated each year. Yet, ac-
cording to the Renewable Northwest
Project, this is just 25 percent of how
much the U.S. could be generating on
its coasts from tidal power.
Using special buoys, turbines or
other means, the country is captur-
ing the power in waves and tides from
the ocean - power that can be more
predictable than wind. Because tidal
energy reacts to the gravitational pull
of the moon and sun, experts can pre-
dict their arrival centuries in advance.
Oregon and Washington experience
the strongest waves in the lower 48
states. In Washington’s Puget Sound,
the U.S. could develop wave and tidal
technology that could capture sever-
al hundred megawatts of tidal power.
The U.S. Department of Energy
also recently unveiled a foating off-
shore wind platform that uses under-
water turbines to capture tidal energy
and create electricity, Forbes report-
ed. Another wave project that includes
10 buoys is being tested off the coast of
Oregon. It is expected to generate 1.5
MW. U.S. regulators see projects like
this as a smart and valuable solution to
diversify the country’s energy mix with
greener technologies. These regulators
also see wave and tidal power as more
predictable than wind and solar.
The United Kingdom also sees tidal
power as a viable alternative to fossil fuel
power. The U.K. is seen as a world lead-
er in wave and tidal stream technologies
due to its abundance of marine energy
resource. It is estimated that tidal tech-
nologies could generate up to 300 MW
of power by 2020. However, overall po-
tential is between 25 and 30 gigawatts. ⊗
1308pejew_12 12 8/20/13 2:58 PM
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