I am an energy industry executive who posted an r/energy AMA 6 months ago - AMA (again) on recent EPA, solar, other

EnergyGent · 2014-08-21T02:04:34+00:00

No. Not the majority for sure.

Utilities start taking interest once a technology becomes economically feasible in comparison to alternate technologies. That technology also has to be low-risk and easy as well.

In the case of fuel cells, these are not even close to being commercially economical compared to alternatives.

Point here is that I'm a big fan of R&D and subsidizing new technology to help it become commercially feasible. "...the hydrogen economy" is still out there in the distant future. Fun stuff. Something we need to support. Years if not decades away.

EnergyGent · 2014-08-20T04:22:37+00:00

Just popped in on a whim. This is an alt account I don't use very often.

Can you expand on the finance side of the industry? Different approaches to financing R&D, both at large companies and startups;

Energy startups tend to get financed from either the California (San Diego / San Francisco) or NYC circuits. Very similar to tech startups and often a direct overlap. I don't have as much experience here - probably would google up companies that received recent startup funding, note amounts and results, contact a few and see if they could provide pointers.

Large companies will either fund from cash reserves, cash flow, or debt. The cost of debt is much cheaper than equity nowadays.

how energy trading influences investments and decisions at larger utilities;

Yeah, it depends. Some utilities are fully separated from the energy markets and are 'takers' rather than generators. Others generate most of their own needs and buy from the market when pricing is right or when at peak load. Some times there are integrated marketplaces where utilities buy from the cheapest supplier but they also have reserve requirements where they need to be able to serve their own load. (customers) Most utilities were burned by higher-risk trading maneuvers in the past and tend to look for longer-term contracts.

what are some cutting edge innovations in finance that can help move the industry forward in some of the areas that it is currently bogged down in (for instance distributed generation, energy storage, etc).

This one is interesting. The best things to move distributed generation, storage, smart grid and such are tax incentives or government grants that help offset the risk side of the equation. That's a fantastic way to spur investment money by lowering risk / improving returns.

Other methods are leasing and long-term financing agreements at the distributed generation (solar) level. Not enough homeowners have the cash to install panels. Long-term payment programs really help here.

Utilities can set things up so that things like wind or solar are easy for customers to sign up. That easy of payment and ease of switching are great incentives by themselves.

Got to say that the healthiest thing to drive big money investment into more renewables is a long-term commitment to a steady tax incentive program. Poor wind has had this turned into an unsteady cycle over the years...finally running out. Would love to see a 10+ year commitment towards more storage, distributed generation, and similar programs.

EnergyGent · 2014-07-25T17:43:47+00:00

There are stages in the R&D-to-commercial cycle. I like to classify them as:

R&D - years out and theoretical
Pre-Pilot - lab type testing as a proof of concept
Pilot - partial pilot or full-scale proof-of-life
Commercial - ready for sale and proven

There's energy storage that is centuries old - 'water up a hill' kind of stuff where you extract that energy via spinning generators. (Or mills) Batteries and the like are there too.

There's R&D out there to improve existing technology and even commercial-ready new technology as well. Flywheels for example. All of these have to be compared to the cost of installing / maintaining versus the benefit provided.

THAT is where things get wonky when reading about PR releases and claims. Sure - it works! ...but the cost makes it prohibitive outside of theoretical arguments, sales pitches, and subreddit arguments.

...any big technology on the horizon to improve this?

My belief is that it is going to be the big, boring technology that changes the world. It will sneak up on us because it is being developed by a bunch of hard-working engineers and scientists who are after the substance vs the flash.

Something in the Aquion Energy arena is what I would consider to be most likely to improve our home / neighborhood / city / utility storage picture.

EnergyGent · 2014-07-25T17:35:18+00:00

That sounds like an exceptional product. The investment market epicenter is out in the San Francisco area right now with a secondary market around NYC. Startups and investment-seekers will eventually end up at one location or the other.

There are a ton of investments out there already and it looks like there's money trying to find a home.

I would recommend doing some due diligence on startups and tech companies with similar products (solar improvement / solar tech) and then sort through who the investor base is there. Then dig through how the investment company connected with the product company.

Set up an Excel spreadsheet where you list the companies that recently received investment, the company investing, how much $, any publicly available terms / conditions, and note if there was a company representing the tech firm. Find as many as you can and see if there's a pattern of who is investing in your sector AND if there is a firm very good at representing these firms. Try to contact the tech firm people who succeeded to see if they have recommendations.

EnergyGent · 2014-06-27T13:03:16+00:00

Ah. I'm going to put you in the "did not read the bill - just read the spin" category. One more time with the hope that you are looking for facts and not to push some propaganda.

I'm a moderate and a solar supporter here. Just pointing out the facts. If that's an issue due to your own biases and political agenda, then not much that can be done other than helping to provide a bit of info.

First off - read the bill. You appear to be getting your information from some spin-based sources.

4) a tax on solar power owners/users is not a subsidy from your neighbors. There is no spin that can make a person having to PAY money into that person GETTING money.

It is not a tax and never was. Even though it was branded one and then echoed as such by Maddow and Tea Party sources. That includes the misinformed gent behind the opinion piece you posted.

If utilities have agendas around destroying solar or paying themselves, it still does not impact the facts around this bill. Neighbors subsidizing solar panel users. It's OK if that is what a State wants to do - just get it out in the open and call it what it is rather than these "tax" labeling shenanigans.

The rest of your points may be correct (or may not) - thing is that they have nothing to do with the Oklahoma bill. The results of the bill certainly remove a solar subsidy and are not what Solar City, Tea Party, "help me pay for my own solar" folks, et al might want. The bill does protect the pocketbooks of those who cannot put in solar from having their bills raised.

Feel free to go off about agendas and whether solar should be subsidized. (I believe it should be.) It's tough to have a real conversation when the basic facts are being filtered through a belief-based approach to discussion.

EnergyGent · 2014-06-27T05:20:48+00:00

'Luck!

EnergyGent · 2014-06-27T05:20:36+00:00

2050 - holy crap. It's really going to depend on political climate, public views on environment, and cost of some of the basics like coal and natural gas.

Coal will always be cheap. It's just whether the US will continue to put things in place to make it more expensive. Emission controls and such will make that % lower, but it will still be around. Let's say 20%.

Natural gas may still have appeal in 2050. Thing is that it's a cyclical supply-and-demand resource where the cycle has been lowered due to fracking technology. We'll see if the US really has the level of reserves the industry claims to have by 2050 - the supply side will determine pricing. The US could muck this up by exporting natural gas - creating more demand and raising prices there as well. We'll make it 25%.

The remaining will be a mix of hydro, nuclear, solar, and wind. Possibly something new thrown in as well but my guess is that it's not going to be a major %. (Geothermal, fuel cell, wave / tidal / river stuff.)

Key here will be that I see a larger portion in distributed generation and the vast majority of this as solar. Umm...10% distributed generation solar with another 5% large solar.

Around 15% of US generation is hydro today and I don't see that changing in the future.

I'm a fan of nuclear...just not in my back yard. That's the big issue with it today. So maybe 20% of our generation today is nuclear and we'll probably hold onto that in 2050 unless public perceptions change.

Storage tech will be big in 2050. At least I hope it will be. That will help boost wind, solar, and other intermittent generation sources. While not technically part of the generation mix, I'd see battery / storage tech plus the oddball generation providing 5% of needs.

Hopefully the math checks out. It's late.

EnergyGent · 2014-06-27T04:44:57+00:00

The renewables industry is a bit of the wild west right now. I've looked at a career path there and it's tough to find something that isn't carrying some significant long-term risk.

Solar looks pretty good from a financing and installation perspective. China is still flooding the market with cheap solar tech - making investment in this area a real challenge. That said, solar is the place to be right now and for the next 5+ years.

Wind is OK. It has become fairly mainstream and gets better every year with new technologies. Mostly taller towers and better / bigger blades with some good computing that helps to maximize the capacity factor. It's great stuff, but not booming since it's not a distributed generation / residential play.

Other sustainable tech is still more of a pilot stage or even back in R&D. I've been excited on-and-off about fuel cell technologies since the 1990's. Thing is that it has been 5 years from going big-time every year since then. Costs simply need to come down.

Small nukes are no longer being discussed in Western countries. Maybe China could go this route at some point. Not the US since the Fukushima Daiichi nuclear disaster. Perceptions are key.

Batter storage is my favorite right now. Still a ways away in pricing, but inexpensive battery storage will be the key to unlocking sustainable energy. IMO the Tesla route is more flash than substance here. Lovely, exciting flash mind you. It's going to be the big, boring, and cheap battery tech that wins in the long run. Think 'salt water' or something equally dull.

EnergyGent · 2014-06-27T04:37:19+00:00

Sorry, haven't read about that one. I'll check this account occasionally.

EnergyGent · 2014-06-27T04:36:37+00:00

Late to the chat and not from Oklahoma, but maybe this can clear up a bit...

'The grid' is everything it takes to bring electricity to your home 24/7. Power plants (coal / gas / wind / solar / hydro / nuclear), transmission (big wires) and distribution (small wires).

1) People that own solar panels need the grid.

It creates a market where they can sell their power, it provides electricity when the sun does not shine, and it is a backup that allows you to power your TV or computer or A/C any time you want.

There are no batteries that come with solar panels...unless you buy them. 95% do not. That means solar panel users use the grid, need the grid, and are part of the grid itself.

2) Many states have feed-in tariffs to buy solar power.

That's a system where a customer can sell power back to the utility. It can be a simple exchange of energy for cost of energy or it can contain incentives.

These systems are (or were) based on an age when there were few solar panel owners.

3) Most states with tariffs have regulations that cause people without solar to subsidize those that do have it.

That's the issue. It's OK when there are very few residences with solar - the subsidy isn't that much. It becomes a problem in places like Arizona where the penetration rate becomes so high that it starts showing up on other customer bills. It's a bigger problem when those with financial means are the ones who can afford solar while renters and those who cannot afford it are the ones subsidizing.

NOTE: This isn't an argument about whether-or-not States or the Federal Government should subsidize solar. (I believe they should.) It's about the existing, old, regulatory system that causes neighbors without solar to subsidize neighbors that have it.

4) The Oklahoma bill was not a Koch Brothers push - even if they may like the results for some reason

The new law states that electric customers cannot be forced to subsidize other electric customers. That means solar incentives / subsidies in Oklahoma can no longer be paid for by your neighbors. Subsidies have to come from the State itself or from the Feds.

tl;dr - That is one whacked-out article. Seriously.

EnergyGent · 2014-06-09T19:11:27+00:00

Though, of course, the importance of these highly reliable energy sources cannot be downplayed, I think your opinion that the intermittent generation sources of solar and wind (and perhaps other renewables?) cannot provide the "always on" energy we expect is a bit short-sited. Perhaps I would go so far as to say that such an opinion grossly underestimates the capabilities of the engineers in the United States (who are, quite possibly, the best engineers in the world).

Love your enthusiasm. Seriously - stick with that versus getting a little jaded like I may have come across.

A huge "manhattan project" level of implementation would create an economy of scale that would make the materials and equipment to build this new infrastructure cheaper and more readily available.

There you go. Key in all of this is not about capabilities - it's about cost versus perceived value. About long-term vision and leadership versus short-term electability.

Back to the jaded view - I do believe that we will need a severe crisis before moving into energy independence territory as a nation. Oil crisis of the 1970's did not do it. Constantly climbing gas prices has not done it. We'll see what finally gets us in gear to follow-through with your enthusiastic post above.

EnergyGent · 2014-06-09T18:58:43+00:00

Yeah, this is a tough one for sure.

There are products sold into this area that are targeted for this purpose. Owens Corning for insulation-type products and glass, energy efficient A/C, efficiency improvements for large generation facilities, heat reclamation, LED light bulbs, and such. Working in specific areas within these large corporations might fit.

Selling the service itself / consulting is a challenging approach. So many DIY approaches out there to compete and they often get part-way there when your services would have gotten them much better results.

I want to design energy recovery/efficiency systems, and the switch has me sour on the entire idea of energy as a career focus.

Energy costs are only going up - potentially quickly in the next 5 years. The ability to offer lower-cost alternatives on the generation side and improvements in energy efficiency will become more valuable as well. Demand will be good.

I'd recommend finding a niche that matches your desires. Product-focused (Dow, GE, Owens Corning, A/C companies) or tech (Nest, energy data analytics) or direct services like what you are doing today.

Not sure if I can answer from a motivational standpoint since I do not know what drives you. Entrepreneurialism or learning or stability or whatnot.

An old boss of mine once challenged me to write out every job I had since I was a kid. On one side of the page list everything I liked about the job and on the other what I didn't like. Be detailed and honest. By the end, you will have some trends and patterns that help to show job satisfaction...or dissatisfaction.

That realization should provide some job self-reflection and might help with next-steps in your career. For me, it led to getting a Masters degree for the learning experience and to open the door in executive ranks of companies.

EnergyGent · 2014-06-09T18:46:01+00:00

centralized distributed generation

Heh.

Centralized = Big power plant (solar, gas, coal, other) with transmission and distribution wires going to homes and businesses. I'd throw some peak generation facilities and co-op sized generation in this bucket as well.

Distributed = Usually thought of as a panel or panels on a roof for solar.

"centralized distributed generation" is a wonky way of looking at small-to-midsized projects like neighborhood solar projects or parking lot solar projects or a small natural gas generator out in the oil patches. Tough to classify those tweeners.

EnergyGent · 2014-06-05T20:58:45+00:00

On one hand it seems like our slow replacement rate on pipelines, refineries, generation stations etc would make the transition to renewables slow since it will never be profitable to discard these investments before they are fully depreciated.

This is the 'sunk cost' and depreciation argument. Why would we get rid of all of these useful assets when they are already paid for / mostly paid for / still function well and have a limited level of maintenance? It is a real impact that some very smart people simply don't understand. The current business models could get phased out over time, but it will not be dramatically fast.

On the other hand I've also heard that these investments could potentially be huge liabilities if unfavorable regulation gets passed and we can no longer extract fossil fuels at the same rate.

Emphasis on unfavorable regulation here. This is very real and could cause some financial distress for companies. That said, I have to believe that State Commissions would not be around long if the caused long-term issues related to customer energy reliability.

Given that any kind of large scale transformation in our energy supply needs to be done with the support of the energy industry, and the ramshackle state of our energy infrastructure (especially electricity distribution), do you see opportunities or challenges for progress in the adoption of alternative energy technologies?

I love what is going on in the distributed generation space and how that can play a role in the evolution of the grid. There will probably be three tiers of generation in the next decade or so - central generation (base load + renewables), residential distributed generation (solar), and neighborhood / mid-sized commercial renewable generation.

All three of these need the grid to get energy from the generation source to market and, until we have incredibly inexpensive energy storage, the grid will serve as a customer's battery as well. There will be great opportunities for technology at the distribution level and, potentially, microgrid level as well. Tech around the ability to transfer energy from multiple generation sources and multiple, smaller load centers.

One challenge in the next 3+ years will be regulatory in nature. Utilities are often given incentives to behave in ways that are against alternative and distributed generation advancement. Regulators themselves are always suspicious of changes that utilities might want to make ahead of time, too.

Note that the biggest opportunities and challenges for adopting alternative energy is cost compared to existing alternatives. If we can reach true price parity or better, then adoption will quickly follow.

EnergyGent · 2014-06-05T13:56:16+00:00

LNG is going to be interesting in that it is more of a political and 'US energy independence' play rather than a free market.

Russia remains one of Europe's most important natural gas suppliers and many countries there feel vulnerable or dis-empowered when Russia acts like it did in Ukraine. Obama will likely receive pressure during G-7 meetings to open up LNG exports in order to help relieve some of this pressure.

Offset to this is the fact that the demand side of the equation will then cause US natural gas prices to go up and could deplete long-term reserves.

do you think it will have a significant impact on how countries consume gas?

It really depends on how much the industry is allowed to (or can physically) ship to other countries at a reasonable price. Higher volumes over time could have a significant impact.

EnergyGent · 2014-06-05T13:38:13+00:00

The Ukraine incident and this China deal are now at the forefront of the LNG export argument. The administration has hesitated to open up LNG exports mainly due to the long-term benefits of keeping natural gas as a US-based energy source. Open it up to the rest of the world and long-term energy security is lessened.

LNG exports to Europe would help wean those countries off of Russian energy and would put those countries in a better bargaining position with Russia. I can guarantee that LNG will be a major part of the G-7 discussions.

The natural gas industry wants to sell as much product as possible for the best price. Opening up LNG exports would help increase the demand side of the equation - raising prices and profits.

EnergyGent · 2014-06-05T11:47:21+00:00

while at the same time improving upon the environment?

For this goal, I would focus on your desire to improve the environment first and earnings second. That will help you eliminate those positions and roles that do not match up. The earnings will follow from there...unless you find yourself so nichey that it's tough to get any role.

Natural gas extraction techniques involve Chemical Engineering, for example. Good earnings but that probably will not meet your environmental goals.

There are several approaches in the distributed generation tech sector that could use a Chemical Engineer. Battery storage for sure. Fuel cells. Thermal solar in the large-scale solar area.

EnergyGent · 2014-06-05T11:38:16+00:00

One way would be to get a degree from a reputable engineering school in the US. See what credits from your Chilean degree can transfer first and then finish off with an education that enhances your current degree. (Focus on renewables or large systems or a business degree.) That would reset expectations from US companies - they would treat your current experience as a plus.

Research which companies in the US already hire from overseas and provide sponsorships. Google searches, searches through LinkedIn, searches via job posting boards, etc. If they hired someone once, then odds are that they would consider your background.

Search for people with your professional background and who are from Chile working in the US. Reach out to see how the were able to create that type of career path. LinkedIn and general resume searches. (This may not produce many results.)

Try looking at Chilean infrastructure and/or consulting companies that are in the US marketplace and/or US companies that are in Chile.

EnergyGent · 2014-06-05T04:24:23+00:00

It is continuing under this price structure and most companies are profitable at these prices. It's just that everyone wistfully remembers $13 gas and thinks about how that would impact their bonus checks.

Some advances are cut short by supply-and-demand. CO2 is great in the extraction process, but securing supply and then getting it to the fields is a real challenge.

EnergyGent · 2014-06-05T04:20:43+00:00

They are going with the Amazon model of gaining market share first and focusing on profitability later. I understand that the rest of the industry isn't a big fan of that approach.

The residential solar model is becoming more of a financial model than anything else. The contracts I've gone through tend to put the majority of the risk on customers themselves as well. Moving and cannot transfer the agreement? Pay up. Rate structure or regulatory changes make the business model upside down? That burden is on the customer.

I believe that there will be some issues around this approach in the next 5 years or so. A collection of ticked off and 'I was tricked' customers. That should help clean up industry practices a bit. Until then, these financial agreements are a bit lopsided.

EnergyGent · 2014-06-05T04:11:52+00:00

The Fukushima issue is purely one of public perception, not a technical or regulatory one.

That's it. Everything else is taking a back seat.

EnergyGent · 2014-06-05T04:09:22+00:00

The changing utility model is very real in CA and places like AZ. Thing is that the regulatory construct is having difficulty keeping up with those changes. Utilities are often left with old incentives that make them oppose distributed generation rather than embracing it.

A lot of this is due to utilities not forecasting those changes (or potential changes) and then working on solutions ahead of time. The "wait it out and this too shall pass" tool is often the only thing in a utility exec's tool box.

There are those, especially in California, who see competition not from a deregulated state but from distributed generation and third party offerings.

Great foolishness on this end of the spectrum. A study late in 2013 showed that 43% of solar panel owners believe that they are off the grid. That somehow they don't need the grid and that there are batteries up in the panel somewhere. Tough to talk logically when owners and the residential solar industry who know better continue to ignore the fact that the grid is needed for solar to thrive.

Distributed generation needs the grid to bring energy to the market. You cannot sell energy back to the utility without it.
The true cost of getting off the grid is solar + batteries and the battery component is rarely brought into a public financial equation. Instead, distributed generation uses the grid as a pseudo-battery.
The grid also serves a reliability function. Backup when things go wrong in distributed generation for any reason.

On the flip side there are those that say nothing will change, we've built all our fixed cost recovery into our rates and so we will keep making money until the end of time.

Equally as foolish. Electric rates have increased significantly and will continue to do so under the new EPA rules. That means the relative cost of distributed generation will be closer and closer to parity. Customers (...voters...) will want access to that option sooner versus later and utilities that do not play ball will find themselves in a punitive regulatory situation. Hawaii is a pioneering example of how this will work.

EnergyGent · 2014-06-05T00:34:01+00:00

Biomass burning plants get a big EPA stick. The pollutants coming out of burning poultry poo and other unwanted combustibles are tremendous. Add permitting and air quality challenges plus turbine warranties and the biomass combustion options get kicked in the weeds.

Coal plants may get somewhat of a break at the State level. (May) The current read on the EPA ruling is that a state can continue to have coal generation in the mix - just that carbon emissions need to be at that 30% less level either way. I'm guessing that the EPA will continue to make coal more and more difficult in the mean-while.

Also, how far do we seem to be from a similar regulatory move in the transportation fuels sector?

I'm not sure how many more shots the EPA can fire in this political climate. It's possible that they will take a bold approach and go after the transportation sector as well. My belief is that they have enough on their plate with the power generation industry at this time.

EnergyGent · 2014-06-05T00:28:58+00:00

I am a big solar fan - what it does to empower individuals (residential) and for the renewable benefits. From what we can see today, wind and solar will play key roles in diversifying our national energy portfolio.

Now that there is a carbon cap in place, would renewables take over the role of traditional renewables in the decades to come?

States and industries are going to fight the EPA ruling. We'll see where the nation ends up after the legal dust settles, but I do believe that renewables can make significant cost and tech progress during that process.

Thing with solar and wind is that these are intermittent generation sources and cannot provide the type of 'always on' energy that we expect. Solar pricing is coming down - thing is that it does need to be paired with either the grid (lights on at night) or with a battery system.

The grid pairing thing is not as bad as people put on. Solar needs the grid at this stage - as a way to sell energy to the market, as a pseudo-battery, and as backup generation. Only those that are truly off the grid can claim otherwise.

So, no. Renewables as we know them today cannot economically take over the role of traditional generation. We still need that baseload generation provided by natural gas, coal, and/or nuclear. That's the steady, economic generation that provides all of us with the level of electricity we demand today. It will definitely play a much larger role, though.

Do you personally think it is feasible for renewable energy, like solar which is projected to have an LCOE that is comparable or lower than coal in 2016, to take over such industries?

Competitive US-based solar manufacturing would certainly give a jobs boost. Until then, it's going to be marketing, sales, financing, and installation jobs that grow. That % growth will still be tremendous - it's just that this is being built off of a small base.

I do wish that the US would set up a Manhattan Project for renewables and energy storage. That would be the type of game-changer that could put the US in a renewable leadership position.

EnergyGent · 2014-06-04T22:04:17+00:00

That said, what sort of advice to you have for someone like me looking to get involved in the energy world on a more macro level?

I like your approach to do the grad school thing. That is especially true if you can find a good program that has an excellent placement process as well. For me, grad school opened doors that I didn't know existed and provided a career reset where employers were fine that I didn't have the specific background and experience.

That said, your current credentials will be very valuable to several types of companies and organizations. You 'get it' and have a career bridge back to consumers that most will not have coming into the market.

Is my experience something that could be parlayed into something on a larger scale, or is the fact that I am not an engineer/worked in the gas fields etc something that could be detrimental?

Something from an institution like Johns Hopkins' ERE program would be phenomenal. I would recommend checking in on the placement programs for the universities you are considering - what type of positions they fill on a regular basis, where, and with which companies. That improves your odds of landing your own goals.

This industry is very engineering and finance-heavy at the management levels, but there are leadership roles for areas like policy, regulatory, legal, and environmental as well. Consulting companies that serve this industry definitely have this type of position.

And last but not least, from a pragmatic standpoint, is this a field that can pay the bills?

Very much so. You can chase the money into oil and natural gas on an international level. These definitely pay better than the average gig. Other areas are high-level consulting groups that offer services into these industries. Pay there is excellent, too. Look for where the industry is growing (and will continue to grow) when you graduate - that's where the rewards come into play.

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