Heading in the Right Direction

Leonard Haynes, EVP for Supply Technologies, Renewables and Demand-Side Planning at Southern Company, talks to Next Generation Power & Energy about energy efficiency, reducing emissions and how Southern is successfully overcoming these obstacles.

With the Department of Energy predicting that electricity sales will grow to 5.2 billion kilowatt hours by 2030, meeting the future energy needs of customers while ensuring that power is used efficiently is proving a key concern for energy companies. Wary of relying on unpredictable consumer behavior to manage energy, many are increasingly realizing the benefits of centrally controlled demand response systems that allow utilities to directly shift consumer loads and reduce peak demands, preventing the need for new power plants or transmission lines. Along with smart meters – which allow two-way communication and more monitoring of home energy use – around 10 million load control devices operate nationwide, with utilities in California and the southern states leading the way.

One of those utilities is Southern Company. Headquartered in Atlanta, Southern is one of the largest producers of electricity in the United States, serving 4.3 million customers in Alabama, Georgia, Florida and Mississippi. As parent company to Georgia Power, Alabama Power, Mississippi Power and Gulf Power, Southern Company is committed to delivering a service that guarantees efficiency and a cleaner environment to its enormous customer base. Improving demand management is particularly relevant for those utilities operating in the Southern states; the Census Bureau predicts that by 2030 approximately 40 million new residents will be moving to the south, a significant number of new people to cater for.

According to Leonard Haynes, Executive Vice President for Supply Technologies, Renewables and Demand-Side Planning at Southern, his firm is already taking measures to ensure capacity will be met in the future. “Energy efficiency and an increase in renewable energy is going to be an important part of meeting these growth needs,” he explains. “However, we also recognize that given the amount of population growth we’re seeing in our territory, we will not be able to meet all this need with just energy efficiency programs or with renewables – or even a combination of the two. Instead, we’re planning to meet those needs with a balanced portfolio of energy resources. We’ll ramp up our energy efficiency programs, we’ll introduce additional renewables into the mix, but we’ll also need to have new conventional technologies built in addition to those other alternatives, and the conventional technologies we’re looking at are nuclear, natural gas and clean coal.”

Managing demand
A key part of the Southern approach is to improve the management of consumer energy demand – something that falls squarely within Haynes’ remit. Southern has been involved in demand response activities and programs since 1990 and, as part of its demand-side management efforts, offers a range of innovative rates to its customers including real-time and time-of-use pricing options. “Demand-side management is a valuable resource for reducing the need for new generation,” says Haynes. “Over the years, we’ve been able to educate customers about the importance of energy efficiency to modify electricity usage, while customizing our demand-side programs to meet their individual needs.”

The company’s demand-side programs include a combination of residential direct load control, industrial interruptible programs, an innovative critical peak-pricing program at Gulf Power Company, as well as real-time price offerings. “The accumulated impact of all of those programs, including some of our time-of-use rates, is that we have been able to reduce peak demand by slightly over 3000 megawatts,” enthuses Haynes. “If you look at a system like ours, which consists of around 40,000 megawatts of retail-related generation, that’s a significant number.”

Under these programs, customers pay higher prices for their electricity when they operate during periods of high demand. Customers manage their energy use based on pricing information received from their utility. “Each individual customer decides whether or not they are a good fit to participate in a demand-side management program,” says Haynes. “Participants are then able to modify their energy use to meet program requirements. We have found that customers are more comfortable when they’re able to exercise some control over program options, and will continue to implement these programs and continue to attempt to find new ways to capture some of the demand control opportunities that may be out there.”

The renewable challenge
The other key element for Haynes’ team is examining the potential for integrating renewable technologies into Southern’s overall energy portfolio. Recent concerns over climate change and its potential impact have been a catalyst for energy companies to seek out ways of making their energy production methods more environmentally friendly. Renewable energy in particular has been moved up the agenda, and Haynes expects to see renewable sources continue to grow in importance and generate significant momentum. “They are going to play an increasing role in the generation sector, of that there’s no doubt,” he confirms.

Currently, Southern is not mandated to conform to a specific renewable energy standard. “We’re not covered by either a state renewable energy portfolio standard or a national renewable energy portfolio standard at this ppoint, so our actions to attempt to introduce renewables into the generation mix are purely voluntary,” says Haynes. “We’re attempting to introduce renewables wherever it appears they are cost-competitive with conventional technologies, and we also introduce renewables into the mix even if they’re more expensive than conventional technologies so long as customers are interested in purchasing the output of those renewable sources. We subsidize this cost under our green energy programs, making up for the difference between the cost of the renewable and the conventional technology.”

Geographically, the southern states are at something of a disadvantage when it comes to their ability to produce certain types of renewable energy. For instance, the states in which Southern Company and its holdings are active are lacking in major wind power capability, and this is also the case with solar – it is only possible for Southern to extract about a 15 percent capacity factor out of photovoltaics in this region, compared with a potential 25 percent in the deserts of California and New Mexico. “I think the role of renewables will depend to a large extent on which region of the country you’re in,” agrees Haynes. “If you look at areas of the country where wind generation is proving popular, the cost of wind generation has dropped to the point where it is, once the tax credits have been taken into account, competitive with conventional generation in some instances. But we don’t have that type of wind capability in the southeast, so you won’t see additional huge development of wind generation in our service territories. I would say that the impact renewables are going to have on the industry will grow over a period of time, but the types of technologies and the amount of impact will vary from region to region.”

Alternative sources
As a result, Southern is looking at a number of alternative technologies to help build up its energy portfolio, with biomass being one such area. “Biomass is interesting for us because we have more opportunities for biomass generation here in the southeast than we do for wind or solar,” says Haynes. “For instance, we are doing studies on a number of our existing old coal plants to look at the opportunity to re-power those plants as biomass plants. We’re in the process of developing the fuel studies, determining the availability of biomass resources in the area, and looking at the technical, economic and permitting issues associated with that type of conversion.”

Biomass certainly holds potential, but Haynes does have some concerns. “I think that the growth in the use of biomass for ethanol may actually limit or reduce the use of biomass for electricity, because ethanol is a much higher-value product than electricity in terms of the use of the resource,” he says. Another thing he believes will limit the amount of energy – whether be it liquid fuels or electricity – companies can get out of biomass resources in the long-term is the availability of the resource and the industry’s ability to transport the fuel. “Biomass is much less dense than coal in terms of energy density,” he says, “so when you’re talking about burning coal in a unit, you can afford to transport coal from Powder River Basin in Colorado to the southeast and still make a competitive product. However, if you’re looking at a biomass plant, you can really only afford to look approximately 50-100 miles for that fuel if you’re talking about taking woodchips and forest waste and using it in the plant, so that limits your plant size to around 50-70 megawatts per plant. Ultimately, there’s a limit to what we can do with biomass based on our ability to transport the fuel over long distances.”

An additional source that is proving difficult to incorporate into the energy mix at the moment is landfill methane, although Haynes envisions that there is significant potential in this option too. “Tapping the methane that is produced when waste is put into landfills is an area that we think is going to be an economic opportunity for us,” enthuses Haynes. “In fact, we already have a contract with one of the county governments here in our territory to purchase the output of a landfill methane generation plant that they installed at one of their landfills, and we’re using that energy as a part of our voluntary green energy program that we offer to our customers to allow them to buy renewable energy.”

As a result of the limitations of these and other renewable energy resources, the company is set to turn its attention towards other opportunities including natural gas and nuclear. “We expect to be building additional natural gas generation, and in fact we’re in the process of retiring a coal plant just north of Atlanta and replacing that capability with natural gas,” explains Hayes. “We also expect that we’ll be building additional clean coal facilities, and we are looking at nuclear as an option to meet part of this growth too.”

Clean coal
However, it is coal that still makes up the bulk of Southern’s capacity, and Haynes doesn’t see this changing any time soon. Because of this, the company is doing much to clean up its act with regards to its coal facilities, and one of the technologies it has in the pipeline is coal gasification technology. “It’s a relatively unique coal gasification process that works very well with sub-bituminous coal,” he explains. “About half the coal in the entire world is low-rank coal, and our gasification technology, we think, has a unique advantage in taking that coal and producing a synthetic gas that can then be used to burn in a turbine to create electricity or be converted into liquid fuels. So that’s one of the emerging generation technologies that we are really excited about.”

Indeed, Southern recently began construction on a ‘first-of-its-kind’ advanced clean coal electric generating facility. The 285-megawatt integrated gasification combined cycle (IGCC) facility near Orlando, Florida is set to be among the cleanest, most efficient coal-fueled power plants in the world. The unit will produce 20-25 percent less carbon dioxide emissions than the company’s existing pulverized coal plants.

The company is also doing a significant amount of work with regards to the co-firing of renewable generation in existing coal plants – something Haynes is very excited by. “The concept there is to take either some sort of biomass material – woodchips or switchgrass, which is a crop grown primarily for the purpose of generating energy – and basically blow or inject that fuel into the boiler at the same time as the coal,” he explains. “It allows us to reduce the amount of coal we are burning to produce the same amount of electricity, therefore reducing the sulfide oxide emissions associated with the coal that would have been burned and also, because we’re using a renewable product, eliminating the carbon dioxide issue that would be associated with the portion of coal we don’t burn. So we’re excited about that technology.”

While recognizing their importance, Haynes admits that incorporating clean technologies into the energy supply portfolio is a challenge. “We obviously want to incorporate technologies that are going to make sense for our customers,” he says. “Therefore, we are looking for the opportunity to introduce new technologies that can produce energy at a price that is competitive with conventional technologies. One of the reasons we’re looking so actively at co-firing biomass with existing coal plants is that it looks like a technology that may have an opportunity to be relatively competitive in terms of price. That’s also the reason we’re looking at re-powering. That may be a technology that can be relatively competitive in terms of price, too. So we’re beginning to introduce those technologies – landfill methane, co-firing, looking at re-powering – and as an example, our Georgia Power Company subsidiary has just submitted a plan to its local regulator about how it plans to invest in three 30MW renewable projects. We also offer to purchase renewable energy out of renewable generation projects so long as those projects can produce energy at or below our avoided cost for customers.”

Future plans
Looking to the future, Southern Company hopes to continue to deliver cleaner, more efficient and competitively priced power to its customers. As part of this, the firm plans to invest $4.6 billion in new environmental controls and equipment for its coal fleet in order to comply with Federal Clean Air Act requirements. “I think one of our biggest challenges is to successfully and economically execute that large capital investment program to install scrubbers, backhouses and selective catalytic reduction and other environmental controls to our plants,” says Haynes. “The amount of money that we are spending over the next three to four years means this is a huge construction program for us. It’s key for us to implement that program well and get that built.”

Another major challenge that the company hopes to overcome is one that is affecting many organizations in the southeast – skilled labor shortages. The company has already foreseen the impact this might have and is keen to ensure it does not find itself in a position where it has a skills deficit. “We along with many others in the southeast and along the Gulf Coast – particularly following the rebuilding going on in the aftermath of the hurricane activity of the last two to three years – are seeing the possibility of skilled labor shortages in our region. It’s going to be very important and challenging to make sure we have the skilled labor to ensure our construction programs go ahead.”

“We’re going to see tremendous growth in the southeast part of the United States. A lot of that growth is going be driven primarily by residents moving to this area and increases in population growth. And clearly it’s much more difficult to offset all of the energy growth that you’re going to see from increases in the population growth and the number of households than it is simply from increases in use per customer. So over that period of time our expectations are that we’ll ramp up our energy efficiency programs, we’ll introduce additional renewables into the mix, but we’ll also need to have new conventional technologies built in addition to those other alternatives.”

Nuclear power development
Nuclear power is re-emerging as a viable way to meet new demand for electricity with the added benefit of no air emissions. Southern Company is a member of NuStart, a nuclear technology energy consortium comprised of power generation companies and reactor vendors. The group is pursuing a new combined construction and operating license process, and is moving to make nuclear power an option to meet growing demand for electricity by 2015-2016.

In August 2006, the company filed an application with the US Nuclear Regulatory Commission for an Early Site Permit for new units at Plant Vogtle, located near Waynesboro, Georgia. The permit will allow the Nuclear Regulatory Commission to review and pre-approve the plant site for future construction of new nuclear units, and allow Southern Company to conduct design, construction and other site-specific evaluations before making the final decision to build. The company is seeking approval from the Georgia Public Service Commission before making a final decision to build the new units, and has proposed using light-water Westinghouse AP1000 reactors at Plant Vogtle. More than 28 new nuclear plants are under construction in 10 countries around the world, and almost all of them use US light-water reactor technology. The new reactors are safe, efficient and simpler than current models.