Dialogue on energy details choices, opportunities

(Continued from front page)

Dr. Hockfield spoke about the potential to create an energy industry cluster, similar to the Life Sciences industry cluster in Kendall Square, in Massachusetts. In the same manner that the “race to the moon” galvanized her generation, Dr. Hockfield said the energy challenges facing our nation can provide the same inspiration for our young students.

“Our future energy challenges are a fantastic opportunity to invigorate the next cycle of the Commonwealth’s Innovation Economy,” she said.

Hockfield said there were new-generation nuclear power plants being designed that were safer and more efficient, responding to a question about the future of nuclear power from Lawrence J. Reilly, the Vice Chair of the MTC Board and Senior Vice President and General Counsel for National Grid USA. Hockfield said the work on those new designs was being conducted in large part at MIT’s excellent nuclear science and engineering program.

However, until there is a solution to the nuclear waste problem, Hockfield predicted that nuclear will only serve as a “transitional power source over the next 20 years.”

In response to a question from Michael Cronin, President and CEO of Cognition Corporation, and a member of both the MTC Board of Directors and the Innovation Institute Governing Board, regarding the future of coal, Hockfield said that in the future coal will certainly be a major fuel source. “The question is how to use coal cleanly,” she said.

The most promising future fuel source, Hockfield continued, may be bio-fuels. She spoke of the MIT-led team that had recently lost a competition to secure a $500 million bio-fuels center underwritten by BP. “It was a marvelous collaboration. We have the people in place, the ideas in place, the nucleus of a dynamic team,” Hockfield said. Our task, she continued, is to “find other sources of funding to implement the effort.”

Susan Tierney, managing principal of the Analysis Group in Boston, provided a detailed view of what she deems the “top ten” energy challenges for the region, and the need to not only recognize but reconcile “the multiple concerns of environmental quality, economic development and national security.” She added, "We need to create an environment in which we are willing to accept—if not encourage leaders to make—tough decisions."

Tierney compared energy prices nationally to those in New England and Massachusetts, showing that the electricity prices for the Commonwealth in 2006 were more than double the national average. A major reason for the spike in prices, she explained, was the decision “to bet on the market” and invest $6 billion in building 9,000 megawatts of new natural gas-fired electric plants in the aftermath of utility deregulation. These power plants now account for a significant share—more than 30 percent—of the region’s electric capacity.

However, natural gas prices are now close to historical high levels, and there are concerns about the adequacy and price of supplies, Tierney said. The anticipated supply from natural gas fields such as Sable Island in Nova Scotia has not materialized, she said.

“From a policy point of view, we seem to be betting that prices will come down because it’s too tough to make the investment choices we need to make if they don’t,” Tierney said. She warned that the era of cheap energy may be over.

One of the best potential reservoirs of energy for New England is energy efficiency, according to Tierney, and she said that energy efficiency must be considered an essential component of any resource mix.

Tierney also warned against the idea that there was a silver bullet to the region’s complex energy situation. “Each group,” she said, “has its own favorite silver bullet. We use them to shoot each other, and everyone is left dead in the corners.”

Gordon van Welie, the President of CEO of ISO New England, Inc., a not-for-profit organization that oversees the region’s bulk power grid and wholesale electricity markets, focused on the looming gap between peak demand for power in New England and new capacity to meet that demand. In the summer of 2006, the peak demand was more than 28,000 megawatts, and there is limited capability to meet increased peak demands with new capacity, he explained.

Van Welie offered a new equation to look at the dilemma, focused on the potential to reduce peak demand, agreeing with Tierney on the importance of investments in energy efficiency. According to van Welie, for every decrease of 1,000 megawatts in peak demand, there is a savings of $600 million a year in electricity costs.

Van Welie suggested that, in terms of payback, investments that reduced peak demand were much more lucrative than investments in new capacity.

Mary Smith , the manager of Harvard University’s energy supply and utility administration, offered the perspective of being both a provider and consumer of energy. “Energy is a big-ticket item,” she said, pointing out that the commercial rates in Massachusetts during 2005-2006 were among the highest in the nation.

Being part of a university community, she said, required developing an approach that was both cost-effective and socially responsible. “The customer, the end-user, needs to become part of any energy solution,” Smith said.

In the invigorating dialogue that followed, many attendees offered their perspective. David Cash, Assistant Secretary for Policy, representing Energy and Environmental Affairs Secretary Ian Bowles, said that the current energy situation was a great opportunity—“perfect weather” to address the problems caused by high energy prices, increasing threats from global warming, and limited resources and—to implement long-term solutions.

Robert Culver, President and CEO of Mass Development, and a member of the Innovation Institute’s Governing Board, urged that the Commonwealth use this energy opportunity to “attract and retain good businesses,” with an emphasis on creating new resources for jobs.

Warren Leon, the director the Massachusetts Renewable Energy Trust, seconded the idea of investing in ways to reduce peak demand in the summer, suggesting that a program of more efficient air conditioners might be beneficial.

Mitch Tyson, CEO of Advanced Electron Beams, an early stage company, and a member of the Innovation Institute Executive Committee of the Governing Board, suggested that the Commonwealth look to the manner in which the Innovation Economy has developed its infrastructure and create a similar vision for energy.

Tyson suggested some immediate steps: implement time-of-day pricing for commercial and residential accounts; and require utilities to purchase efficiency before they buy new power capacity.

Return to front page of Convergence.

Dr. Susan Hockfield, President of MIT

Susan Tierney, Managing Principal of the Analysis Group in Boston

Gordon van Welie, the President and CEO of ISO New England, Inc.

MARY SMITH, Manager of Harvard University’s Energy Supply and Utility Administration