Open Letter to Rural Electric Cooperatives

As an energy industry professional I am becoming alarmed at the increasing cost of energy.  I look at my electric bill and think this is really convenient and reasonably priced energy, but I know if we don’t get proactive, the price is going to change significantly.

I’m going to ask you to join me and get proactive and solve this problem.  If you don’t provide leadership, we will all suffer.

The biggest bottleneck to maintaining low cost global electric prices is ENERGY STORAGE.  Unless we solve the storage problem, peak demand will continue to drive prices higher.  The mood of the country and the world has reached the tipping point.  Even if the environmental concerns with global warming are not manmade, the economic effects of supply and demand will continue to drive prices higher.  I think the majority of informed world residents feel it’s not worth the risks to continue down our current path.

The are several technologies on the horizon that have the potential to solve the energy storage problem, but only one of them is proven, cost effective technology.  I had to ask myself why this technology has not been deployed on a massive scale.  The answer to that question follows:

Electric energy prices have historically been averaged.  The low cost, low demand energy is averaged with the high cost high demand energy.  Because of this the end user does not benefit from buying low demand energy because it costs as much as high demand energy.

Some electric utilities have offered token incentives to use low demand (off-peak) electric energy, but those programs have been few and far between. The investor owned utilities owe it to their stockholders to keep the lion’s share of the profits and not pass them on to the consumer. 

I’ve been racking my brain trying to figure out how to get the lion’s share of the low cost, low demand energy to the end user so they would purchase and deploy demand limiting technology.

My first thought was that government would have to force the investor owned utilities to offer ten times their current token rebates to put the lion’s share of the savings in the consumer’s hand.  My conclusion was that the utility lobby would never let this happen.

The answer was to own the electric generating and distribution assets.  My initial thoughts were to buy or partner with renewable or carbon neutral energy generators such as wind turbines and bio wood fired power turbines.  It finally dawned on me that I am already a part owner of an electric company; I’m a member of a rural electric coop.

Environmental issues aside, economics prohibits building new power plants.
 

Demand and supply are the major components of the cost of electricity.  If we lower peak demand, supply will increase and the cost of power will fall significantly.

The primary method available to reduce demand is to make ice when electricity is cheap.  Melt the ice for air conditioning when electricity is expensive or in high demand.  This is a simple alternative to spending billions building new coal fired electric power plants. 

Thermal Energy Storage, TES systems have been in use since the early 1920’s when three Dallas area churches put in systems.  One of the original applications was to use a small inexpensive compressor to make ice all week long and then melt all that ice to cool the sanctuary for two hours on Sunday.  The church my parents were married in (Lovers Lane United Methodist) had a system installed prior to WWII.  I consulted with them to rebuild or replace the system in the early 1980’s.  A common TES system is using tank type water heaters (hot thermal storage) to avoid large instantaneous gas or electric water heaters. 

So why don’t we find a TES air conditioner in every house and small business?  The answer is also simple:

• Most electric rates are averaged so it is not less expensive to buy electricity when it should be cheap and it is not more expensive to buy electricity in high demand periods when the price should be exponentially higher.
• In very round numbers it costs thousands of dollars per kW (or ton of A/C) to fund the construction of electric generation plants, transmission and distribution (TD) infrastructure.  There are no mechanisms to divert funds from coal fired generators to funding TES systems in your home or business.  The current conservative estimate of avoided costs to build generation, transmission and distribution infrastructure is $1000. Per kW per year.  This adds up to more than $45,000. Over the 15 year life of a 3 ton TES system.  You can buy a 3 ton TES system for about $15,000.

Should we invest $45,000 in new coal generating plants or invest $15,000 in your home TES system?

If the above economic rationalization isn’t enough to convince you, consider the following additional benefits on TES.

• Running your air conditioner at night to make ice for daytime use is much more efficient because the ambient outside temperature is much lower and you’re a/c unit operates more efficiently.
• Running the generating turbine at night is much more efficient for the same reason, lower nighttime temperatures.
• All power plants run more efficiently when they are fully loaded and demand is predictable.
• Transmission and distribution is more efficient at night.
• Wind energy is 95% off peak and must have energy storage in the future to grow.

A massive deployment of TES will postpone the need to build additional power plants for many years and lower the cost of power for consumers.  We can land on the moon.  Why can’t we make ice to stay cool?

I’m asking all co-ops to fund TES demonstration projects for the 2007 season and provide ttheir members with incentives they can’t turn down.