{"id":4547,"date":"2013-07-06T11:11:36","date_gmt":"2013-07-06T15:11:36","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/?p=4547"},"modified":"2013-07-06T20:04:33","modified_gmt":"2013-07-07T00:04:33","slug":"does-so-have-a-business-model-for-energy-conservation-dan-everett-so-2013-05-22","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2013\/07\/does-so-have-a-business-model-for-energy-conservation-dan-everett-so-2013-05-22.html","title":{"rendered":"Does SO have a business model for energy conservation? –Dan Everett @ SO 2013-05-22"},"content":{"rendered":"

\r\nSO has done a lot about energy efficiency, but can it do more,\r\nand how will it profit by doing so?\r\nProf. Dan Everett asked this\r\nat the\r\n\r\n22 May 2013 Southern Company Stockholder Meeting<\/a>.\r\n<\/p>\r\n

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\r\n\r\n\"Prof.<\/a>\r\n\r\nI have Mr. Dan Everett from Athens, Georgia, and he holds 11 shares of\r\nSouthern Company.\r\n<\/p>\r\n

\r\n\r\nTF: Talked to Dan earlier today. Dan is a professor at the University of\r\nGeorgia, right?\r\n<\/p>\r\n

\r\nDE: Right.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\n\"Dan<\/a>\r\nHe’s \r\nDaniel M. Everett,\r\nAssistant Professor of Computer Science<\/a>, UGA Athens.\r\nThe SO Annual Stockholders Meeting apparently doesn’t get many professors.\r\n<\/p>\r\n

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\r\nTF: Fantastic. Well, welcome.\r\n<\/p>\r\n

\r\nDE: Oh, thank you very much. And as a guy who has some professional\r\ninterest in this stuff, I totally applaud the research that y’all\r\nare doing on energy technologies and renewable\r\nenergies and efficiency technologies because it does take a while to\r\ndeploy those.\r\n

\r\nMy specific question is about energy conservation.\r\nI’ve noticed the company has invested about $10 million last year on\r\nconservation — which is fairly modest compared to the other\r\ninvestments that you’re making — but those investments have\r\nnot only been environmentally beneficial, they’ve been productive;\r\nthey’ve had a really high rate of return on those efficiency\r\ninvestments.\r\n

\r\nSo my question is about the business model.\r\nTechnically, there’s a lot more energy conservation that you could\r\ndo that would pay off handsomely, but does the company has a\r\nbusiness model that allows it to make money by actually selling less\r\nenergy?\r\n<\/p>\r\n

\r\nTF:\r\nYeah. Thank you for that. It’s a very interesting concept he raised\r\nand it’s under discussion in a lot of other parts of the United\r\nStates. So here’s an interesting point. The United States as a whole\r\nhas a challenged economy and GDP growth is really pretty low and one\r\nof the things that I’ve been promoting at a national level is a\r\nnational energy security plan where we’ve been promoting for so long\r\nan idea of scarcity behind energy. When you consider the blessing of\r\nresources that the United States has, my sense is by the end of this\r\ndecade we could be a net energy exporter.\r\n<\/blockquote>\r\n

\r\nBy “the blessings of resources”\r\nhe meant nukes, coal, and natural gas,\r\nas he had just spelled out earlier in the same meeting.\r\n<\/p>\r\n

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\r\nEnergy security for the first time in our history.\r\nAnd in fact, perhaps by 2030 we can be\r\nthe biggest producer of energy in the world.\r\n<\/blockquote>\r\n

\r\nIndeed we can, and much faster by the solar and wind\r\npath he doesn’t want to discuss.\r\n<\/p>\r\n

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\r\nThat changes the game,\r\nI think, and how we think about our own advantages in growing the\r\neconomy. I don’t accept the fact that we have a new normal with\r\nunacceptably high unemployment and low economic growth. And I think\r\nthe energy complex and we as leaders of the electricity side can\r\nreally help change the game.\r\n<\/blockquote>\r\n

\r\nSuch leadership would be a refreshing change.\r\n

\r\n

\r\nNow let me hit one other thing that’s\r\ncentral to your question and then I’ll get directly to answer your\r\nquestion. These are two background comments. So one of the things\r\nis, we’ve got to grow the economy. Energy is going to be central to\r\nthat. Look at the profile of the families we serve in the Southeast.\r\nThis is exceedingly important to get. Fortyeight percent of the\r\nfamilies we serve make less than $40,000 a year; they have\r\nrelatively inflexible appetites for energy. They want the lights to\r\ncome on, they want to be cool in the summers, they want to be warm\r\nin the winters. When you consider their ability to migrate and\r\nimprove their economic reality to live in a better place, to eat\r\nbetter, to educate their kids better, to get better medical care\r\n— all of that will require more energy, and that is a good\r\nthing.\r\n<\/blockquote>\r\n

\r\nGood or bad, it just ain’t necessarily so.\r\nA smart phone does what a dozen different devices used to,\r\nand draws far less power.\r\nAutomobiles are getting more efficient;\r\nso are air conditioners, refrigerators, etc.\r\nWith solar panels on the roof, those air conditioners\r\ncan be powered directly from the sun that’s heating the house.\r\nAnd solar hot water heating in the winter is not rocket science.\r\nBoth solar PV and solar hot water generated at the same location\r\nthey’re used are more efficient because there’s no long-distance\r\nline loss.\r\n<\/p>\r\n

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\r\nWhen I think about, now directly, energy efficiency, I am all\r\nover energy efficiency. And let me — and I’ll give you some\r\nstatistics here in just a second, but this company has a great track\r\nrecord we haven’t talked about a lot until about last year we really\r\nstarted talking about it. Energy efficiency to me translates to my\r\ncustomers, the ability to use our product more wisely. When you\r\nthink of that electricity productivity in the United States it has\r\nimproved as a percent of GDP 150 percent over the last 20 years. So\r\n\r\n\"Perspective<\/a>\r\nwe’re getting better. As we increase the economic perspective of the\r\nfamilies we serve, they will likely consume more energy. As our\r\neconomy grows at a healthier rate, it will likely consume more\r\nenergy. So energy efficiency to me doesn’t mean use less; it does\r\nmean use it more wisely. And therefore, using the same kind of\r\npermanent-income hypothesis, using the\r\nsame kind of consumption rate or an improved consumption rate, they\r\ncan actually use more energy to make their life better. I think\r\nthat’s a great thing.\r\n<\/blockquote>\r\n

\r\n\r\n<\/a>\r\nYet\r\n\r\na 2010 study by Georgia Tech and Duke University<\/a>\r\ndemonstrates that Georgia could easily use efficiency and conservation\r\nto remove all need for new electricity production.\r\nSpecifically, 3,000 MW by 2020 (enough so we don’t need the new nukes\r\nat Plant Vogtle) and 5,000 MW by 2030 (enough to shut down 3 of the\r\nfour Coal Plant Scherer units).\r\n<\/p>\r\n

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\r\nTrack record of the Southern Company and our\r\nsubsidiary companies on energy efficiency. There are kind of two\r\n\r\n\"Stewards<\/a>\r\nways to think about it. One is capacity avoidance — how many\r\nnew plants have we avoided building because we’ve been good stewards\r\nof energy efficiency. And energy efficiency, a lot of people\r\ntranslate as, you know, convert your light bulbs to CFLs and a\r\nvariety of other things. I want you to broaden your horizon on what\r\nenergy efficiency means. Energy efficiency really goes the whole\r\ngamut of make, move and sell electricity, and consume electricity.\r\nSo it’s everything.\r\n<\/blockquote>\r\n

\r\nDon’t underestimate Tom Fanning by his constant repetition of\r\nhis standard talking points.\r\nHe’s a smart cookie who does understand the issues.\r\nWhat he wants to do, what he’s willing to do,\r\nand what he can persuade SO investors and board to do\r\nare different questions.\r\nFor example, solar and wind because they have no fuel\r\nare in a very real sense more efficient than any fossil fuel\r\nor nuclear plant.\r\nHe knows that, even if he goes on to talk about thermal\r\ngeneration (i.e., nukes, coal, and natural gas).\r\n

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\r\nFor example, when you make electricity, you want\r\nto have the most efficient heat rates. That’s the rate at which you\r\nconvert a fuel stock into an electron. If you’re more efficient,\r\nthere you’re actually practicing great energy efficiency and saving\r\nthe environment and doing lots of good things.\r\n

\r\n\r\n\"Avoided<\/a>\r\nSouthern Company over\r\nthe last 20 years or so has avoided about 4,000 megawatts of\r\ncapacity, and that’s about the amount of capacity required to\r\nsupport a million homes. We serve about 4.5 million customers in the\r\nSoutheast. That’s a big deal. From an energy standpoint — so\r\nthese are the kilowatt-hours you actually consume.\r\n

\r\nSince 2010,\r\nSouthern Company has avoided something like 1.6 billion kilowatt\r\nhours through our investments in energy efficiency. That’s about the\r\namount of energy required to run the city of Birmingham and Savannah\r\nfor a year. So we are doing a lot.\r\n

\r\n\r\n\"Reduce<\/a>\r\nWe have committed over $1 billion\r\nsince 2010 through 2020 to reduce further our capacity needs via\r\nenergy efficiency programs. We have, I think, the ability, we think,\r\nbetween now and 2020 to avoid another 800 megawatts.\r\n

\r\nSo we’re doing\r\na lot and I think the presentation that Chris Hobson gave you that\r\ntalks about generation, transmission and end uses is a way that we\r\ncan show leadership. Thanks very much.\r\n

\r\nYeah, wait, wait. I didn’t\r\nanswer that. One more — you wanted to associate profit making\r\nwith energy efficiency. To us, growing the economy is how we’re\r\ngoing to make profit. So what I want to do is raise the financial\r\nreality of the customers we serve to create a more vibrant economy.\r\nAnd in fact, we’re seeing manufacturing — I mentioned before\r\nwe’re growing manufacturing employment at double the national rate.\r\nThat’s because of the blessings of cheap, plentiful, reliable\r\nenergy. And we’re growing personal incomes and making American lives\r\nbetter. That’s the kind of role we play and that’s what we’ll do.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nSO and Georgia Power on energy efficiency:\r\n