NWI’s healthy future relies on economic development November 24, 2010Posted by Laura Arnold in Feed-in Tariffs (FiT).
Tags: NIPSCO feed-in tariffs, Northern Indiana Public Service Company, NW Indiana economic development
By Jeremy Gantz BusINess Contributor | Posted: Monday, November 22, 2010 12:00 am
“In this world nothing can be said to be certain, except death and taxes,” Benjamin Franklin quipped at the end of the 18th century. But indefinite population growth and finite fossil fuel supplies point to a 21st-century certainty that business owners are especially aware of: rising energy prices.
Today, as gas prices creep back up after their rapid fall from historic highs in 2008, all kinds of Northwest Indiana enterprises are paying closer attention to their electricity, gas and oil bills, hunting for ways to cut fixed costs by using energy more efficiently. Increasingly, conserving energy is an economic (rather than just an environmental) decision.
“The reality is our demand for energy is going up continually,” says Robert Kramer, director of Purdue University Calumet’s Energy Efficiency and Reliability Center. That means it’s crucial that businesses use all types of energy as efficiently as possible. “We’ll have to optimize all the energy resources we have in the future. It’s a problem the whole world is having right now, not just the United States.”
Figuring out how to get to that more efficient future can be difficult for many small businesses in Northwest Indiana, Kramer notes, because they’re struggling with more immediate problems. “A lot of businesses are focusing on their major activity, producing their product or whatever it is they do,” he explains. “Sometime it’s difficult to focus on optimizing energy.”
But such focus usually yields significant payoffs. Most businesses can cut their energy costs by 15 to 20 percent without having to make major capital expenditures, Kramer says. He speaks from experience: Every year a handful of NWI businesses hire Kramer and a team of his students at the Energy Efficiency and Reliability Center to conduct “commercial energy audits.” Each audit, which takes about a month, examines a business’ consumption habits and how efficiently company machinery is operating. Even basic things like what time of day energy is used can directly impact cost, he says.
Asked whether most businesses in the region are aware of how cheap and achievable energy cost savings are, Kramer is blunt: “Probably not.” But he has seen an uptick in businesses interested in energy audits. “It’s not huge, but we’re seeing an increase. I think it will tie directly into energy pricing and what’s going to happen to manufacturing,” he says. As factories ramp up production after the long recession, there’ll be more pressure to re-examine energy utilization.
How to generate and sell your own power
In recent years the Northern Indiana Public Service Company (NIPSCO), which distributes electricity and natural gas throughout the region, has re-examined and diversified its energy supply sources. At the start of 2007, nearly 100 percent of the utility’s power came from coal-fired plants. Three years later, after NIPSCO purchased a natural gas-fired plant and invested in 100 megawatts of South Dakota wind power, coal accounts for about 75 percent. (But it’s not NIPSCO’s first foray into renewable energy; it has drawn hydroelectric power from two plants it owns in northern Indiana since 1944.) “We’ll continue to review proposals and ideas for existing and future renewable projects,” says Nick Meyer, NIPSCO communications manager.
It’s not surprising that an energy utility would be ready to embrace the alternative energy future; by diversifying its energy sources, NIPSCO protects itself (and its customers) from price spikes and outages. But what is surprising are the company’s moves to allow its customers—including commercial and industrial businesses—to generate their own power.
Early next year, the company plans to launch a “feed-in tariff” pilot program, which would encourage development of new alternative power generation by allowing customers generating power from hydro, wind or solar sources to sell it to NIPSCO at above-market prices. Since 2005, NIPSCO’s “net metering” program has allowed customers to receive credits for generating their own power.
“We went from about five customers in 2008 to well over 30 customers in 2009,” Meyer says. “The net metering program really allows customers to generate power for their own needs, to offset their own energy bills. What we wanted to do was make that more widely available and expand the limit of facility sizes that people could install.”
Under the feed-in tariff program (which is pending Indiana Utility Regulatory Commission approval), all classes of NIPSCO customers will have a new incentive to begin harvesting the sun and wind. “There’s a growing interest among our customers and key stakeholders to offer these types of programs,” Meyer says. “Energy wasn’t necessarily top-of-mind like it is today for many companies.” If they’re able to invest in new equipment, they’ll be able to assert some control over their operation’s energy costs in the long run.
Renewable economic development
But alternative energy production in Northwest Indiana is about much more than helping existing businesses. The expansion of NIPSCO’s customer energy generation programs could also spur new development. In the town of Schneider, a large-scale solar project is interested in the feed-in tariff program, Meyer says. “They’re able to connect to our grid to put [the energy] on the open market. In a sense, they’re an independent generator… These programs help provide a foundation for creating local jobs and investing in the local economy.”
The manufacturing of renewable energy technologies could be big business for Northwest Indiana. An analysis from the Washington D.C.-based Renewable Energy Policy Project placed Indiana among the top 10 states for renewable energy investment and job-creation potential. The state ranks sixth in terms of the number of people working at companies that have the technical potential to manufacture wind turbine components, The Times reported in July.
“If wind turbine production were something that the region decided to move in, then you would have growth in that sector,” says Dr. Ellen Szarleta-Yancy, an assistant professor at Indiana University Northwest’s School of Public and Environmental Affairs who teaches courses on sustainable development and environmental law. Noting Lt. Gov. Becky Skillman’s interest in building turbines on Lake Michigan’s Indiana shoreline, Szarleta-Yancy says: “If that were the case, then you’d actually have jobs associated with the operation of wind turbines.”
But there’s another option beyond wind and solar power that both she and Kramer point to as holding out great potential: biomass fuel systems, which convert food, animal and human waste material into hydrogen, among other things. This is an attractive possibility for Indiana because biomass energy systems could utilize the state’s agricultural waste. But there are drawbacks, Szarleta-Yancy says: the technology is not fully developed for all industries and where it is, “it can be quite expensive” to take advantage of. And some biomass facilities in the country have had to shut down for lack of demand.
This points to another obstacle to the adoption of renewable energy generation: “There’s front-end investment that needs to be made in terms of educating the public,” Szarleta-Yancy says. Public officials and educators need to do a better job of making renewable energy possibilities—or even smaller-scale efficiencies through existing equipment and facilities—visible and better understood.
Like Kramer, she doesn’t think small business owners and operators are very aware of how they could be making smarter energy decisions. “They haven’t been given the information to make the best decisions,” Szarleta-Yancy says. But she praised NIPSCO for expanding its programs helping customers save, or even generate, energy, calling it “socially responsible for saying this is something that you can do.”
The innovation middle ground
While Indiana may have installed the second-highest number of turbines among all states last year (Texas was number one, according to Renewable Energy World), alternative-sourced electricity is clearly not dominating Hoosier state power lines. Coal remains the cheapest way to generate electricity here, as elsewhere in the country. But there’s a middle ground—between the status quo and widespread wind turbines, solar panels and biomass facilities—that some of Northwest Indiana’s largest companies have been pursuing for years, says Kay Nelson, director of environmental affairs at the Northwest Indiana Forum.
“Many of our companies are looking at alternative fuels within their internal fleets,” Nelson says. In 2007, U.S. Steel’s Gary Works switched much of its fleet—including loaders, dump trucks, flatbeds and Bobcats—to biodiesel, significantly cutting emissions at the large site. “This has a direct benefit with regard to air quality. It’s an energy conservation method,” she says.
Other steel industry improvements include purchasing locomotives outfitted with highly efficient engines (which avoid wasteful idling by entering “shut-down” mode) and ArcelorMittal’s $63 million blast furnace gas flare capture project at Indiana Harbor in East Chicago, which began in late October. By installing an efficient recovery boiler at the site, the project will save energy equivalent to that needed to power 30,000 households for a year. (Half of the project’s price tag was paid for by federal stimulus dollars.)
“Most of these projects have been driven not by the [recession], but by existing environmental stewardship guidelines,” says Nelson, calling them “exciting” energy improvements that deserve more recognition.
It’s true: When most people think of energy innovation, they think of turbines and photovoltaic cells, not steel yard trucks running on biodiesel and successfully “audited” commercial business buildings. But as demand keeps rising, incremental improvements will likely be just as important for saving and producing energy as any paradigm shifts.
“The entire picture in the future will be a blend of all the energy options we have available,” says Kramer of Purdue University Calumet.
In other words, the energy sources that power our future—and perhaps Northwest Indiana’s economy—will be more familiar, but also more varied, than most people expect.