Championing renewables

Exelon’s Helen Howes takes P&E through the aggressive measures the company is taking to cut its carbon footprint and generate more power through alternative energy sources.

“The value of nuclear as a climate change strategy is being more and more acknowledged”
-Helen Howes, Exelon

Environment strategies and policy decisions are crucial, considering both the current economic crisis and the recent election of an administration that is very keen on carbon reduction. As VP of Environment, Health and Safety at Exelon, Helen Howes is responsible for implementing the company’s most efficient environment and safety programs, and ensuring they comply. “I have oversight responsibility, which is tracking progress, looking at our compliance track record, looking for opportunities for us to improve our compliance and looking for opportunities to save some money, as we’re meeting our environmental objectives,” she explains.

Exelon, Fortune’s number one utility company, pre-empted America’s recent move towards carbon reduced policies, and began its own program to reduce emissions back in 2005. “We established a goal in 2005 and that was to reduce our emission 3 by eight percent by the end of 2008. We’re doing very well and are currently working with the Environmental Protection Agency on final validation of our numbers.”

The Department of Energy’s 1605(b) program, created in 1992, was established to keep track of programs to reduce emissions. Along with complying to this regulation, Exelon has also aggressively committed to the EPA’s Climate Leaders Program: “Climate Leaders is a little different as it’s an inventory plan to reduce your greenhouse gas emissions through a variety of programs,” explains Howes. “The program was more focused on reductions and how utility companies were to achieve the goals they established. We have done that through a range of low carbon offset opportunities, such as through our own internal energy efficiency program within Exelon 2020.”

“We’ve also procured renewables for our own use, along with offering some renewable programs to our customers in Pennsylvania. We have customer energy efficiency programs that we did on a voluntary basis that we will be counting in our Climate Leaders Program. We are blessed because we have other technologies that the corporation is using to bring about greenhouse gas reductions via our very large nuclear generation fleet, which gives us one of the lowest carbon footprints among the major generators in the US.”

More nuclear
Exelon’s nuclear operations mean it is one of the largest nuclear fleets across the whole of the US, but with continuing concerns around the safety of disposal, how have Howes’ policies assured the consumer public that nuclear expansion remains safe? “There are some who realize the value of nuclear as a low carbon option and recognize that nuclear generation produces about 20 percent of the electricity in the US. That it is one of the options that must be on the table for any low carbon strategy. In terms of critiques, there are probably some non-government organizations who might put themselves in the antinuclear category, but who acknowledge that with a limitation of fossil fuels, there has to be a role for nuclear.

“What we’re now seeing is an evolution of thinking regarding the value of nuclear as a contributor to the solution. There are still a number of those who are anti-nuclear, I think that’s inevitable, but the value of nuclear as a climate change strategy is being more and more acknowledged. It’s certainly not done so as the only option, but it’s raised its status be one of a number of options on the table,” says Howes.

Howes believes that the acceptance of nuclear as a viable and safe form of renewable energy is a challenge that has already been dealt with; a growing demand to increase the supply of nuclear is proof in itself that the consumer public no longer have the same attitude to it they once did. Instead, the challenges that Exelon, along with every other nuclear operator, now faces are in making those critical choices as to how to safely deploy nuclear as an energy source.

“The focus right now clearly is on safe operations of our existing plants; we’re in the middle of seeking life extension for them, as most of our plants have 40-year licenses. At the end of the 40 years, we have the ability to submit to the Nuclear Regulatory Commission documentation to extend the license another 20 years. At this stage, we have looked at around half of the fleet and extended the licenses for another 20 years.

“For example, life extension of plants that might have retired last year have another 20 years of life; that’s the second focus of our nuclear plan. The third focus is to look at the potential of a new nuclear plant. We have been looking at a location in Texas and are in very early days of what looks to be about a 10 to 15 year process. During this timeframe we would look at a site, get agreement on what nuclear technology we will use, and then go through a combined operating and construction licensing approval process until actualization of the plan is reached when the shovel hits the ground. That’s a relatively long period of time and we’re currently at the early days of that process.”

Alternative sources
As a company whose projects do not involve the actually building or operating of renewable energy, Exelon tend to be towards the back end of the energy process. “We buy electricity from renewable projects: we have under contract some wind projects, as well as some solar projects. Epuron 1 is one example of this: we buy the electrical output and the renewable energy credit associated with those projects. There are two facilities in Pennsylvania; one is a three-megawatt wind farm that’s just north of Philadelphia, the other being only a one-megawatt facility in Philadelphia proper.

“We continue to look for other opportunities, such as working with other solar providers where we’ve provided the funding for the installation, for example, of solar panels at schools in the Chicago area. We’ve also been involved in funding projects to demonstrate the potential for solar power. One example of this is in Millennium Park here in Chicago, where we installed solar panels in a parking pavilion, which was LEED certified,” she says.

The Leadership in Energy and Design (LEED) certification program, a product of the United States Green Building Council (USGBC), is yet to be made compulsory. Despite international communities such as Abu Dhabi and Dubai becoming more and more stringent in accepting the LEED certification with each of their new developments, it remains to be seen if this will be implemented by Obama’s new Administration.

“We’ve not seen all of the elements of the stimulus package. We’ve only seen some of the bare bones of what the House is looking at, and as it stands I don’t see anything there that is making LEED certification compulsory. But, these are early days, and there is much yet to hope for what is to emerge.

“The proposal is to extend production tax credits. Right now, it’s year-over-year, which is not effective in driving renewables. Multi-year makes sense. There seems to be a fair amount of dollars being set aside for energy efficiency and conservation, and the best delivering mechanism for this could be our distribution utilities like ComEd and PECO,” says Howes.

The formation of a concrete extension of the production tax credit scheme is certainly something that is desired by all within the renewables industry. It seems typical of Obama’s energy efficiency plan, but as with the plan for the permanence of the LEED certification program, at this point we can only speculate as to what will happen.

Encouraging compliance
“It’s hard to know whether there will be a federal renewable portfolio of standards, but it certainly is possible. Many of the states that we operate in already have renewable portfolio standards and that does drive investment in renewable energy. It’s one of the major reasons why we entered into this partnership with Epuron, because a number of the renewable portfolio standard’s requirements have a solar set-aside. Compliance does encourage investment in renewables, certainly renewable portfolio standards have provided incentives for companies to invest in solar,” says Howes.

Compliance between companies to integrate via a uniform set of standards and bring about a federal transmission infrastructure is one energy efficiency plan that is already underway. However, for Howes, the current system still leaves much to be desired and she views the transmission grid as still very much in its infancy. “The US is a very large country and there are places that have good renewable resources, but there isn’t the transmission infrastructure to bring the electricity from that location to where the consumers are.

“We are looking at working with others to expand the transmission system, to bring some of the wind generation from remote areas into populated areas. The same is true for solar. There are many details to work out, not the least of which is how to plan for the transmission grid’s expansion, given that it covers many jurisdictions and states. Some states have market drivers and other states don’t, and of course there is the issue of financing for it and the question of who will build it. We truly believe transmission planning is an important element. I haven’t seen a lot of details in the stimulus package related to transmission, but it will be a critical success factor for the integration of more renewables and certainly for greater service reliability across the US.

“We will continue to invest in renewables to meet compliance requirements; we plan to have more retail product offerings for our customers, like PECO Wind, which is a retail product that we offer customers in Philadelphia. We will also continue to consume renewables for our own operations. For example, in the headquarters where I am, the building itself is to LEED certified platinum standard, there being at least 10 renovated floors, and 100 percent of the electricity that we consume here is from renewable energy.

“There will be a number of pushes and pulls, but I think the big unknown that could change things pretty dramatically is federal legislation on climate. We’re certainly advocates of federal legislation on climate change, we favor cap and trade programs, and I suspect federal legislation on climate change would do a lot to promote more renewables, more energy efficiency and more low carbon generation opportunities. Depending on how the carbon offset program is designed, it too could promote both energy efficiency and renewable energy,” concludes Howes.

Exelon is a company that has certainly been waiting in the sidelines for the American consumer attitude to become more receptive to renewables, and with the election of Obama and his New Energy for America Plan, now is the time to take charge. There is much speculation on how his policies will unfold, but there is confidence across the industry that energy efficiency is here to stay.

Helen Howes joined Exelon Corporation as Vice President, Environment, Health and Safety (EH&S) in July 2003. In this role, Howes leads Exelon's EH&S group, monitors the performance of corporate compliance with EH&S policies and programs and helps to develop recommendations for improving environmental risk management. She has 23 years experience in environmental management, environmental strategy/policy development, environmental planning and sustainable development work at the corporate level for Ontario Power Generation/Ontario Hydro, plus 3 ½ years of environmental management in a private consulting firm.

Exelon 2020

As a participant in the US EPA’s Climate Leaders Program, Exelon is already on track to reduce its greenhouse gas emissions more than eight percent below 2001 levels. The company’s goal is to reduce, offset or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020. This is more than its current annual carbon footprint and is equivalent to taking nearly three million cars off the roads and highways.

Of course, Exelon will still emit greenhouse gases in 2020, although less than today. When compared to 2001 levels, best estimates indicate that the plan will reduce Exelon’s direct emissions in 2020 by 10 percent to 15 percent (from 2001 levels). This will very much be determined by future economic factors and demand growth for electricity and natural gas.

If it achieves its goal, the emissions that Exelon will displace or offset as a result of this plan will, lead to a reduction in the total amount of greenhouse gases reaching the atmosphere by 15 million metric tons per year or more.

Exelon plans to achieve this through energy-efficiency programs that can provide the least expensive near-term reductions. Many of these programs produce net benefits for Exelon’s customers because the energy savings they generate more than outweigh the cost of the efficiency improvements. After efficiency, their next most cost-effective options are to boost output from existing nuclear facilities, which emit virtually no greenhouse gases, and build new highly efficient, natural-gas fired power plants that will reduce utilization of older, higher emitting plants. By comparison, new nuclear plants and renewable energy are more costly, although both are needed in the long run.

The company has developed a three-pronged strategy for achieving its climate goal:
1. Reduce or offset its carbon footprint by greening its operations.
2. Help its customers and the communities it serves to reduce its greenhouse gas emissions.
3. Offer more low-carbon electricity in the marketplace.

In part, the plan states: “Getting there will require significant investment. Our best estimate is that the cost to implement the greenhouse gas abatement initiatives described in this plan would be in excess of $10 billion.

“Construction of a new nuclear plant would only increase that estimate. Actual capital commitments will depend on economic and policy developments and will be made on a project-by-project basis as the plan is implemented.

“Of course, a sound strategy is also one that is flexible and responsive to changing conditions over time. We fully expect that our plan will evolve as better technologies become commercially available and as new opportunities or constraints arise. To assure that we are meeting our goal and to collect the information needed to continually refine and adapt our strategy, we will monitor our efforts on an ongoing basis and measure and report results at regular intervals.”

Exelon Corporation is one of the nation’s largest electric utilities, with nearly $19 billion in annual revenues. It distributes electricity to 5.4 million customers in Illinois and Pennsylvania, and gas to 480,000 customers in the Philadelphia area. In addition to energy delivery Exelon’s operations include energy generation and power marketing.
Exelon has one of the industry’s largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. It operates the largest nuclear fleet in the United States and the third largest commercial nuclear fleet in the world.
Headquartered in Chicago, Exelon trades on the NYSE under the ticker symbol EXC.