Roger Duncan's Night Visions
Austin Energy's GM invites us to wrestle with the conundrum of clean energy
Roger Duncan often finds himself awake at 3am worrying about work. As general manager of Austin Energy, with ultimate responsibility for keeping the city's lights on, Duncan has good reason to wander his house in an insomniac funk. "Roger's 3am List" has become shorthand around AE for the most mind-bending challenges faced by the city-owned utility as it strives, in a rapidly shifting global landscape, to set a clean-energy example for the country. "The things I worry about," says Duncan, "are the things where there are not obvious solutions."
Ratcheting up his wee-hours fretting is the Austin Climate Protection Plan, adopted by City Council last March. That plan raised the bar on an already challenging 2003 council mandate to make Austin the “clean energy capital of the world.” Among other ambitious goals, the Climate Protection Plan pledges that by 2020, Austin Energy will get 30% of its power from renewable sources, while reducing energy consumption enough to eliminate the need for a 700-megawatt power plant. All of this while the city’s population and its energy needs grow at a steady clip.
Now, Duncan and AE are asking for the community's input, help, and attention in deciding on the mix of energy sources that Austin will use between now and 2020. How much solar, wind, and biomass; how much gas and coal and nuclear? While most people like the idea of renewable energy, they're unaware of the near-term rate increases that could entail. To help citizens truly understand the trade-offs, the city and AE have kicked off an eight-month Austin Smart Energy public participation process.
"We need a large community discussion about our future generation plan," says Duncan. On Oct. 22, Austin Energy hosted the first in a series of town hall meetings (see "Your Two Watts: AE's Public Participation Process," below). Duncan also has begun meeting personally with key local stakeholders; he and the AE staff plan to meet with a diverse array of customer groups in the first three months of 2009. Austinites can educate themselves further and join the fuel-mix dialogue on a content-dense new website, www.austinsmartenergy.com (see "Getting Smart Energy"). It's a good place to gain a working grasp of key concepts like "load forecast," "capacity factor," "intermittency," "load growth," "carbon offsets," "energy charges," "net metering," and "transmission bottlenecks." For extra credit, citizens can master the fine points of solar nanotechnology, smart grid distributive generation, and emerging federal carbon legislation that would effectively tax nonrenewable energy, while wrestling with a global future in which civilization must carry on with or without petroleum. (And then pass the Tylenol PM.)
Why are the city and AE so interested in community involvement and input? One reason: An educated electorate will become increasingly valuable in the event of a clean-energy bond election. Bond monies could become necessary for the city to invest in municipal-scale solar technology, new infrastructure, or a wind farm. "There's some correlation between the people that will show up at one of these meetings and the people that will show up to vote at a bond election," said Duncan. "I don't want to wait until a bond election to start explaining all of this."
Bucky to Buddha
Encompassed in "all of this" is what Duncan calls "my dream and my nightmare." The dream: A city 100%-powered by wind and solar, with most Austinites generating energy on-site to help meet their needs. The nightmare: Austin Energy, the 10th largest public power utility in the country, goes bankrupt as its business model breaks down.
The utility's profitability currently requires generating and selling energy to some 380,000 customers. Moreover, the city's general budget depends on hefty annual transfers from Austin Energy profits, which for 2008-2009 amounted to $95 million. Yet AE currently is losing money selling fixed-price wind power to customers through its GreenChoice program; it can't afford to be providing 30% renewable energy at a loss by 2020. In fact, no public utility in the world has yet figured out the business model for channeling breeze and sunshine. "I've had council members say to me: 'Now, how are we going to put ourselves out of business again? Tell me that,'" says Duncan. "They understand there's a fundamental problem that's got to be solved."
If it's going to be solved, Duncan is a good man to have on the case. His personal passion is a key reason Austin enjoys energy efficiency, conservation, wind power, and green building programs that rank among the most advanced and comprehensive in the nation. He started at AE in 1998 as vice president in charge of conservation, renewables, and environmental policy. In 2005, he was recognized by BusinessWeek magazine as one of the Top 20 leaders of the decade in the fight against global warming; the "individual achiever" honor put Duncan in the company of former British Prime Minister Tony Blair, California Gov. Arnold Schwarzenegger, and former New York Gov. George Pataki. He speaks frequently around the country and has served on numerous national committees that advise the federal government on environmental efforts, including an appointment by the secretary of energy to the Federal Energy Management Advisory Committee. As AE deputy general manager from 2004 to 2008, Duncan led AE's award-winning Green Building program and the Plug-In Partners program to help bring plug-in hybrid cars to market; he also oversaw distributed energy services (which include conservation programs and chilled-water cooling), strategic planning, governmental relations, energy conservation, and air quality.
The former Austin City Council member (1981-1985) also has been savvy about the policy implications of his efforts. (He is married to Jo Clifton, the editor and publisher of In Fact Daily, an online newsletter covering City Hall and local politics.) He's also an inclusive, wide-ranging thinker; in conversing about the utility's challenges, he draws on the ideas of Buckminster Fuller (how the law of accelerating demands led to nanotechnology), Alvin Toffler (his futurist notion of "proconsumerism," in which consumers are also producers), Wikinomics (for the game he's putting on the new website), and Chicago's Samuel Insull (who created public utilities as we know them in the early 1900s), not to mention recent chats with top energy policy minds in Washington, D.C.
Duncan is by inclination a meditative man; when we spoke on the eve of Hurricane Ike, he was regretfully canceling a Buddhist retreat to the mountains of New Mexico, due to the storm heading our way. So, what imponderables does he mull over after midnight? Duncan ticks off the Top 3 "no obvious solution" challenges on his 3am list: 1) how to transition to 30% renewable energy in 11 years when the technologies and infrastructure are not yet sufficiently mature and – during this transition – 2) how to keep the utility solvent yet rates affordable and 3) how to overcome work force issues that pose huge obstacles.
Just Do This
One day in his office, Duncan gives a chalk talk using a series of intricate diagrams he'd drawn out previously on an enormous white board. The mysterious notations covering the wall are reminiscent of the equation-covered blackboard in the opening scene of A Beautiful Mind, the film about mathematical genius John F. Nash Jr. and his radical studies of game theory. The "X" for which Duncan is solving: closing the gap between Austin's load forecast – the energy we'll need – and the power that existing, still-evolving renewable technologies can reliably deliver.
"There's the intermittency issue. You've got to change the capacity factor. You've got to change the dispatch." Right, of course, but ... huh? "Say council voted tomorrow to cover all the rooftops in the city with solar. We can't get the modules. There's not the manufacturing supply. Every renewable energy source I know of has supply problems and bottlenecks right now."
Although he doesn't quite say it, it's clear Duncan has grown weary of hearing other local environmentalists declare that Austin should simply slash its carbon footprint tomorrow through aggressive conservation measures and a quick conversion to solar. "There are just a number of complexities involved in this huge of a transition to how we are sourcing our energy," he sighs. He ticks through a number of them: supply, cost, transmission, distribution, water consumption. The devilish details include a national lack of welders and nuclear scientists and wind turbines that are too long to transport on highways. "All of those real-world complexities are lost," Duncan notes, "when people just pick a fuel or pick a technology and say, 'We should do this and not that.'"
He explains that one triangular diagram relates to the city's Pecan Street Project (see "The Pecan Street Project," Oct. 3). That new clean-energy initiative has a lofty mission: "to make the city of Austin into America's clean energy laboratory – a place for researchers and entrepreneurs to develop, test, and implement the urban power system of the future." The Environmental Defense Fund, a nonprofit advocate for solutions to global warming, has made the Pecan Street Project a national initiative.
A pressing technical question is how to store and distribute alternative energy on a municipal scale. As part of the Pecan Street Project, Austin Energy is providing the city's energy grid as a real-world lab for the development and testing of prototypes. Participating in the reinvention of how energy will be distributed and stored also offers AE an opportunity to develop a new business model – probably charging separately for distribution and generation – that the Environmental Defense Fund hopes to share with utilities nationwide and even globally.
"That whole new system has a lot of technologies that have to be developed. And the business model changes – the old model just breaks down; it doesn't work. But I think, within a year, we can get there. We're already ahead of the curve."
The New Proconsumer
Duncan's diagrams illustrate how, historically, energy flowed one way, from a central power plant to consumers. Under the new model of distributed generation, energy flows in multiple directions, along a triangle of proconsumers – homes and buildings, plugged-in electric cars serving as auxiliary generators, and central sources like power plants and wind farms. "The arrows going both ways? That's the smart grid technology. That starts to control not only the flow of energy but also appliances in the house and so forth. Now you have three kinds of sources for sustainable energy inputs, which you could shift back and forth as you need it. Ethanol coming in here, solar coming in here. It may be a coal plant coming in here, or it might be a wind farm, a solar farm, et cetera. When the sun doesn't shine or the wind isn't blowing, that's okay, because I can use something else."
Duncan notes that no utility in the country will shift to renewable energy if it means financial failure. Again, he points out that renewable energy currently costs more per megawatt and will require massive new investments in technology and infrastructure. In addition, energy consumers will become part-time producers. "The environmentalists will say, 'If I put solar panels on my roof, then I shouldn't have to pay you anything, because I'm not using your generator,'" Duncan says. "Under the current net metering system, a person putting solar on their roof doesn't pay a penny for debt, operations, or maintenance of the poles and wires system. But I'd argue that they use it more than other customers do – they're running energy both ways over it! And I assure you that if a thunderstorm blows through and a transformer blows out, they'll expect us to put in a new transformer."
While the municipal economic impact won't be directly discussed during the public participation process – "I can't take on everything at once here!" says Duncan – it's important to understand how closely AE's finances are tied to the city's General Fund budget. "Is our priority the lowest bill for the customers?" he asks rhetorically. "Our customers own the utility. If that's our priority, then we ... ratchet down the General Fund transfer and hit the parks and library and such that are getting the benefit of that transfer."
For those who followed the city's recent decision to spend $2.3 billion for 20 years' worth (100 MW) of biomass power, it may seem suspicious that AE's public participation process begins only after council voted to sign that purchase power agreement. (See "Biomass: A Question of Wood, Not Could," Aug. 22, and "AE Defends Biomass Plant," Aug. 29.) AE has been preparing since last December to involve the community in selecting a more carbon-neutral mix of fuel sources; why was the decision to add biomass rushed through in isolation, with only minimal community input?
Duncan concedes that the timing was off. Unfortunately, he says, putting together a public process, hiring consultants to run it, building a new website, and developing an accurate load forecast has taken many long months – during which a short-term opportunity arose. "In the electric utility industry, things move fast sometimes," he says. "We had to move fast to get that opportunity."
"I have thought time and time again, 'How could I have done the biomass differently?' and I don't know. I would love to have had a bigger, longer process to discuss the pros and cons of biomass, in general, and compare it to the other utilities and educate people about the capacity factor and why it was so marvelous to have a 90 percent capacity factor on that plant and stuff like that."
Duncan foresees a similarly fast-tracked decision on the horizon, should an opportunity develop for the city to buy a wind farm at fire-sale prices (due to the current transmission bottleneck from West Texas). "If some of those wind farms can't make it financially, it's possible that you could have a distress sale on a wind farm. Whoever is able to move in there, and has patient money, will need to sit and wait it out two or three years for the transmission. But then I own a great resource for 20 to 30 years.
"That kind of deal is going to go down fast, and it's not going to go through a bid process. Do I say: 'I'm not going to bring this to my City Council; I'm not going to tell them about it?' No! I'm going to say, 'This is the deal; this is why I think we should do it – but it's your choice.' If I don't do that, then I've made the policy decision by not bringing it forward to them." An early warning, then, for the environmental community: Bone up now on wind farm purchases.
Most of us will do well simply to help tweak AE's Draft Resource and Carbon Reduction Plan. Input can be as simple as filling out a survey on the website to "vote" for more wind or nuclear power. After the participation window closes next March, the public's input will shape AE staff recommendations. Those will go for review to the city's Electric Utility Commission and Resource Management Commission, then to council for a final policy decision next summer or early fall.
"We'll try to accommodate what the public wants as much as possible," Duncan emphasizes. "We really don't have a vested interest here. If everybody came back and said, 'We want everything solar,' we'd say: 'Fine. That's going to raise your bills X amount per month.' And if everybody came back and said, 'Fine, that's what we want; I'm willing to pay four or five or six times what I'm paying now' – because that's around what it would take – 'just give me 100 percent solar,' we're okay with that! If that's what the people want; it's the people's utility."
Then he chuckles: "The problem is, you're going to get recommendations like, 'I want everything solar and wind, and I want it in three years, but I don't want you to raise my rates.'"
Getting Smart Energy
To dig into the real issues to be vetted during the Austin Smart Energy public participation process, it's helpful to spend a little time on Austin Energy's new website, www.austinsmartenergy.com.
An introductory fact sheet lays out Austin Energy's 2020 load forecast – which anticipates a need for an additional 330 megawatts – and highlights of relevant City Council resolutions. It also presents the AE Draft Resource and Carbon Reduction Plan. This is what Roger Duncan calls his "straw man" plan – one reasonable proposal, to which the community can respond, for how to meet Austin's needs for affordable, reliable power for the next decade. (The plan also must meet council mandates for renewable energy and carbon-emissions reduction.) The mix of fuel sources is what citizens are invited to help shape.
Through 2020, the draft plan shows Austin increasing energy conservation significantly. The bad news: Those usage reductions will be canceled out by increased needs, due to Austin's growth. Conservation can keep us running in place – but would do nothing to reduce our carbon footprint. (Austinites could also advocate for more aggressive energy-use reductions: Anyone ready to give up air conditioning?) To cut emissions of the greenhouse gases that cause global warming (and also reduce air pollution), Austin will need to trade "dirty" sources – especially coal – for clean sources, such as renewables (wind, solar, biomass) and possibly nuclear.
To truly understand all of the proposed and alternative generation options and their inherent trade-offs, read the meaty "Resource Guide," available on the Austin Smart Energy website. This delivers a reality check on the costs of shifting to renewables and explains the current limitations of wind and solar technology. It also discusses how nuclear energy – clean, but expensive and potentially dangerous – stacks up. By January, an interactive game will be posted to the site, which will let people immediately see the consequences of making various fuel mix choices.
On the Get Involved page, take a short online survey to share your preferences, see the town hall meetings schedule, or learn about AE outreach meetings with customer groups. The utility's plan is to bring information to community service organizations, major companies, neighborhood associations, chambers of commerce, real estate and facilities groups, environmental groups, large industrial customers, surrounding small cities, seniors, minority-focused groups and more. Want a presentation for your club of wiener-dog lovers? Call 322-6514.
Roger Duncan's diagram illustrates the flow of energy among power plants, homes, and vehicles. In the past century, power moved in just one direction – from power plants to consumers. But under the evolving model of distributed generation, "smart grid" technology allows energy to flow both ways. Homes and buildings capture solar energy, while plug-in electric cars generate excess energy stored to their batteries; both can supply power back to the central grid. As electricity consumers become part-time producers, public utilities will need a whole new business model.
Your Two Watts: AE's Public Participation Process
Austin Energy has invited the community to town hall meetings to help determine its future mix of traditional and renewable fuel sources. The first session occurred Oct. 22; upcoming facilitated meetings around town are listed below. In addition, community groups can request a presentation by AE staff next January through March. For more info, see www.austinsmartenergy.com.
• Tuesday, Oct. 28, 6:30pm: Sunset Valley City Hall, 3205 Jones Rd.
• Thursday, Nov. 6, 6:30pm: University Hills Branch Library, 4721 Loyola
• Wednesday, Nov. 12, 6:30pm: Travis County West Service Center, 4501 FM 620 N.
• Wednesday, Nov. 19, 6:30pm: Metz Recreation Center, 2407 Canterbury