Northwest plays it smart with energy
Regional firms that offer power alternatives could change the industry here and nationwide

By LISA COHN Issue date: Fri, May 7, 2004
The Tribune

For 100 years, the Northwest’s electric power system has been made up of “big iron, big concrete and big steel,” the power stations, poles and wires that generate electricity and distribute it to homes and businesses, says Rob Pratt, staff scientist at the Pacific Northwest National Laboratory, based in Richland, Wash.

Right now, that big steel-and-concrete infrastructure needs huge capital improvements — about $23 billion through 2020 — to avert troublesome transmission roadblocks and power blackouts, he says. In some areas during peak hours, when many customers are calling for power at once, the region’s “poles and wires” can barely manage all the electricity traffic required to meet customers’ demands, he says.

“ In the Northwest, we have some of the most constrained transmission corridors in the U.S. They go over the mountains from east to west, and are loaded to the max on cold winter mornings,” Pratt says.

For example, Portland-based PacifiCorp has experienced difficulties delivering electricity to customers in Castle Valley, Utah, who are located at the end of the company’s longest distribution line, says Margaret Kessler, a spokeswoman for PacifiCorp. Licensing of a power plant’s capital improvements — required by public utility commissions — to handle high-demand times of day would be time-consuming and expensive, she says.

To solve such problems, the “smart energy” industry has emerged in the Northwest in recent years. About 225 businesses offer software, meters and other technology as alternatives to traditional power system upgrades, says Rhys Roth, co-director of Climate Solutions, a nonprofit organization based in Olympia, Wash., that focuses on ways to create jobs by improving the environment. The group recently released a report about the smart power industry.

The Oregon and Washington firms — which bring in about $2 billion of the $15 billion in annual revenues generated globally by the smart energy industry — are expected to help revolutionize the electricity business here and nationwide, Roth says.

The Northwest plays an important role in smart energy because it’s rich in the resources needed for such companies to grow, says David Hoffman, president and chief executive officer of Portland-based smart power company, Celerity Energy Inc.

Hoffman says the industry capitalizes on the presence of the federal Bonneville Power Administration, the region’s long history of producing hydropower on the Columbia River, the plethora of public and private utilities, the existence of laboratories such as PNNL, and the proximity to high-tech companies.

PNNL, one of nine U.S. Department of Energy research facilities, is based near the Hanford Nuclear Reservation and has a Portland office.

“ This leads to collaboration that allows ideas to move from high-tech to energy,” Hoffman says.

And that collaboration is expected to solve critical problems.

“ As the recent worldwide blackouts have shown us, there are economic, safety and environmental reasons driving us to upgrade our electrical grid,” Roth says. “Smart energy technologies can help us do that much better and more effectively than the old poles-and-wires approach.”

Finding alternatives

To better manage existing resources, smart energy companies manufacture computerized meters that turn power-guzzling equipment off when there’s high demand for electricity; software that helps avoid blackouts by monitoring the operations of critical electrical equipment; and control systems that feed into the electrical system energy generated by alternative technologies.

“ By using information and advanced controls, we can save a ton of money. That’s the opportunity that presents itself. We need to use our newfound cleverness in the e-business to build technology into our everyday lives,” Pratt says.

That’s what PacifiCorp is doing to solve its problem in Castle Valley, Utah.

The utility purchased a unit that will allow it to store electrical energy in a battery system during off-peak times and distribute the stored energy during times of high electrical demand. The manufacturer is VRB Power Systems Inc. of Vancouver, British Columbia.
VRB Power Systems, which has sold its technology in Australia and South Africa, soon may join the ranks of Portland-area smart energy firms. The company is considering moving some of its operations to Portland, where its chief executive officer, Tim Hennessy, is based, says Vince Sorace, VRB’s president.

VRB focuses on delivering power to utilities during times of high demand. That’s also the focus of Celerity Energy, but the company employs a different approach. The firm uses software and hardware to create “virtual” power plants for utilities.
“Part of the problem with the electrical grid is it’s not uniformly used,” Hoffman says. “It’s mostly used during peak times, in the morning or when we go home and cook dinner. During the rest of the day, it has less than 50 percent utilization.”

Channeling the energy

Celerity Energy finds ways to gather up unused power from a number of locations and then feeds the electricity to utilities when it’s most needed.
For example, a hospital and airport in Albuquerque, N.M., have backup electrical generators required to protect patients and travelers.

“ Ninety-nine percent of the time, the generators sit there unutilized,” Hoffman says. “We add new controls and a software package that allows the resources to be there for their primary purpose and to be used by utilities simultaneously to provide power to the electrical grid.”

Portland General Electric employs a similar strategy for making use of idle backup generators, says spokesman Scott Simms. During periods of high demand, it uses the customer’s backup generators to feed power back into the PGE system for other customers.

Rather than focusing on adding electricity to the grid, Hillsboro-based Serveron Corp. concentrates on ensuring the existing system doesn’t fail. The company provides monitors that tell utilities whether critical assets — battery backup systems and transformers, for instance — are operating properly, says Bart Tichelman, chief executive.

“ We monitor systems so they don’t go down,” says Tichelman, whose company has been nurtured by Portland investor Ralph Shaw.

By helping avoid blackouts, maximizing the use of existing resources and storing electricity, these and other Northwest smart energy companies are expected to yield more than $4 billion in benefits to the region, Pratt says.

They will do this by cutting plant operation costs, reducing energy use, reducing power outage expenses and helping avoid the need to build new generating plants.

In addition, smart energy firms are providing work for area consultants, engineers and manufacturers — among them Portland-based Ch2M Hill Industrial Design and Construction, Bouillon Engineering, Black & Veatch LLP and Cutler-Hammer.