California's Wise Use

California businesses and facility owners have responded to the energy crisis in productive ways: They are conserving energy and creating efficiencies that have greatly reduced power consumption in California during this last year. Rather than just calling for greater generating capacity—no matter how "dirty" the power—in many cases, they are figuring out ways to become efficient, and many of these businesses are implementing strategies to do more with less.

In the context of the California crisis, "dirty power" usually refers to the burning of fossil fuels or operation of nuclear power plants. According to a report from California's Independent System Operator, the entity that controls power transmission, six major power plants came online in the summer of 2000, along with a considerable number of backup generators. California utilities expect to bring more than 8,000 megawatts (MW) of power to California by the end of the year.

There have been government-initiated incentives for generating more power at a cost. For example, relaxation of environmental regulations has made technologies such as reciprocating engines more attractive. Utility rebate programs, launched on June 1, offer the biggest incentives for renewable technologies, but IC engines, with 42.5% efficiency and at least 5% waste heat, are eligible for up to 30% of project cost rebates.

The only obstacle is California environmental rules, which are among the toughest in the nation, even taking into consideration recent easing of regulations.

Additionally, Assemblywoman Elaine Alquist, Santa Clara democrat, introduced a bill into the state legislature to cut through the red tape in getting onsite gas-fired plants. And many Silicon Valley businesses, including Excel Communications, Sun Microsystems, Oracle Corp. and Cisco

Systems, have been looking into on-site power generation. Power quality was always a strong selling point for distributed generation, but this may be changing.

Power quantity, however, isn't the only issue for California businesses and institutions. Quality—especially for high-tech and mission-critical facilities—is just as important. In fact, it might be even more important. For manufacturing plants that make semiconductors or extruded plastics, even if the power stays on, events like voltage sags and swells and harmonics can cause millions of dollars in lost time and product.

But it's been energy efficiency, not power generation, that has averted a new power crisis. According to researchers at Cambridge Energy Research Associates, Cambridge, Mass., it was a drop in electricity demand that headed it off.

In fact, officials at the Energy Foundation, San Francisco, argue that the issue in California has all along been one of energy efficiency, which they define as being different from conservation. They argue that California's deregulation process abandoned investments in renewable energy technologies that would have provided efficient use of power resources. The state's 1992 resource planning process resulted in a plan to purchase 1,400 MW of new generation, much of it from renewable energy plants. In 1995, Southern California Edison convinced the Federal Energy Regulatory Commission to overturn the state plan, claiming Edison would need no new power before 2005.

But along with energy efficiency, maintaining good power quality strategies is also the name of the game. In the wake of the West Coast power crisis, building owners and managers need to make the decision: Do we go with good quality power, or any power that's available to us?

About two-thirds of California businesses polled say that they have a "generally negative" feeling about deregulation in the state and more than 80% cite the cost of energy as a top concern, according to a recent survey conducted by Detroit-based Market Strategies. Also, more than 75% of the firms surveyed are displeased with the suspension of direct access—allowing businesses to purchase electricity from alternative energy providers outside their local utility, typically at a lower price—on Sept. 20 by the California Public Utilities Commission.

But significantly, 77% of those polled say energy efficiency is "very important" to them, and many are actively seeking out companies to develop potential energy-saving opportunities in diverse building types and locations. In addition, they are seeking help from energy service providers to implement strategies that will allow them to capitalize on cost-control measures, energy-pricing opportunities and reduced market risk.

Market Strategies polled energy management professionals from the manufacturing, transportation, retail, public administration, educational and healthcare sectors. Commissioned by Sempra Energy Solutions, a retail energy services company that markets to commercial and industrial customers nationwide, the survey focused on businesses throughout the state with an annual electric bill of about $500,000.

"It's understandable that businesses are now struggling to cope with the re-regulation of the California electricity market and suspension of direct access," said Mark Camack of Market Strategies. "The survey shows that customers are exploring their options in energy-efficiency improvements as the principal way to control their energy costs."

In the immediate aftermath of the California power crisis—and the ensuing rush to identify the causes—it is often suggested that a key factor was increasing energy demands created by the high-tech industries.

However, a joint report issued last August by the Silicon Valley Manufacturing Group (SVMG) and the National Resources Defense Council (NRDC) challenges that notion, suggesting that high-tech industry's use of electrical power is highly exaggerated, and that the high-tech sector is doing its part to make more efficient use of energy.

Energy Efficiency Leadership in a Crisis: How California is Winning analyzes the role that high-tech industry has played in California's energy-efficiency efforts. There are a few key points where the report seems to contradict conventional wisdom.

First, while the California economy has witness rapid growth in recent years, the report quotes figures from energy guru Amory Lovins that "from 1997-2000, the electricity intensity of California's economy declined at a rate of about 4.4%, more than three times that for the rest of the nation." In fact, states the report, "[in] the San Francisco Bay Area, the year 2000 capped five years of economic growth averaging 9% annually, but the region's electricity consumption increased at only 2% per year."

A second, more interesting point that the report makes is that electrical consumption attributed to high-tech industries—and the products that they create—is highly exaggerated. The SVMG-NRDC report explains that Jonathan Koomey of the Lawrence Berkeley National Laboratory has shown that "direct electricity use for all office, network and telecommunications equipment, combined with manufacturing energy embodied in these products, totals only about 3% of all U.S. electricity consumption."

Furthermore, the report claims that another study from Lawrence Berkeley Labs found that "claims about the insatiable appetite of server farms (or "data centers") typically are overblown; these buildings, which house computer equipment to support information and communications systems, use less than one-eighth to 1% of the nation's electricity supply. Even in the San Francisco Bay area counties, which house fully 10% of the nation's server farm capacity, such applications account for only 1.2% of regional electrical consumption."

Engineered building systems, especially HVAC and lighting, can account for the lion's share of commercial building energy consumption. And this is why major California corporations have targeted these systems for increased efficiency.

Hewlett Packard, for example, has initiated steps to reduce electricity needs, while maintaining an optimal work environment. HP officials initiated a successful program to cut lighting intensity in most of its buildings—reducing power for lighting by as much as 70%. In addition, the firm is carefully monitoring controls temperatures. According to the SVMG report, in the first seven months of 2001, HP reduced its overall electrical consumption by 7%. Efficiency increases in the California facilities are even better. Other projects under consideration are high-efficiency water chillers, solar water heating and digital control systems.

Another major Silicon Valley giant, Compaq Computer, doubled manufacturing space and occupancy at its facility in Fremont, without an increase in electricity consumption—simply by making use of a variety of conservation methods and controls. These included a new control system for monitoring and adjusting electrical use for HVAC and lighting.

One final case study from the SVMG report describes the energy conservation efforts of Palo Alto-based Roche Bioscience, a pharmaceutical research company. The firm reduced electrical demand at its 17 buildings by 15% for the seven months ending July 2001, compared with the same period in the previous year. The reduction of 4.6-million kWh translated into a $320, 000 savings.

The future of energy management strategies are in careful metering and monitoring of both the quality and quantity of power that a facility uses.

From Pure Power, Summer 2002