Joel Levin's observations on how finance officers have a different view of the value of energy conservation struck a real chord with readers. They share their frustration with a system that seems stacked against energy savings, despite its undeniable value.
Dear Editor:
Kudos on the letter you published from Joel Levin concerning financial investment in energy-efficiency projects. Financial managers and administrators just can't see a good thing when the numbers are right there in front of them.
For years I sold performance contracting, but I approached it from the technical side. As an engineer, I couldn't understand why customers didn't jump at the chance to save money on their utility bills.
Then I went back to school to pick up an MBA. After receiving some financial education I understood that a plant manager would prefer to invest in a widget-making machine that had a return on investment (ROI) of 40-50% than invest in a 20-30% ROI energy project. What a fool I was to try to sell energy-savings projects during a 10-year bull market with phenomenal annual economic growth.
For most industrial and commercial managers those heady days of double-digit growth are over. The most that many managers hope for is to simply keep their numbers in the black. So now that 20-30% ROI energy project doesn't look so bad any more. The magic revenue producing projects of the 90s have all but disappeared. Maybe it's time for managers and administrators to dust off those old energy saving reports and consider them again. Replace the energy cost of the 90s with today's energy costs and recalculate the ROI. It's got to look better than last year's annual corporate report.
Chris Mettes
Johnson Controls
Dear Editor:
I applaud Joel M. Levin, Ph.D., for his letter, "Green and Purple Money" (April 2003). He very incisively describes how professional management rationalizes policy contrary to wise energy conservation.
As a mechanical engineer who has addressed conservation for over 50 years, I have often encountered the adverse management decisions he describes. Currently as the patent holder of an automatic mechanical parking system (AMPS), I have been turned away by the bureaucracy of government from the federal level to the local level and by practitioners of the design and construction of inefficient concrete parking structures. These conventional facilities consume about four kilowatt-hours per stall per day.
I can understand that parking facility designers and the contractors who pour cement resist potential loss of business, but the negativity of the bureaucracy of all the government agencies I have encountered is imponderable.
Case in point, I've made three visits to the General Services Administration, the construction arm of the federal government, soliciting their interest for a development of this system that not only will save energy, but also provide a level of security never before available-a feature particularly valuable in foreign embassies and now because of homeland security.
Their response: "We don't accept any new ideas until they have been operational for two years." I suggested they grant me the million dollars for a demonstration to satisfy their need.
Their reply: "We don't have any funds for R&D."
The hell of these design decisions is that they will be with us for a long time. They will literally "be cast in concrete."
William A Sternad, M.E.
President
Safe Park, Inc.
Dear Editor:
Great reporting on the natural gas market and on energy issues overall. I'd like to make the following comments about gas. We should not be surprised about natural gas shortages. According to EIA, if we used only our own resources, we have 3 years of oil reserves and 8 years of gas reserves. However, we import over 70% of oil but only about 15% of gas. Thus we are using up gas reserves just as fast as we are our meager oil reserves. That's why we must begin to greatly increase oil and gas use efficiency, which is happening, but will happen more with higher prices for both gas and oil.
Our reserves situation explains why we are in Iraq today. Next door in Qatar there are 900 trillion cubic feet of gas reserves, the world's largest proven reserves. Iraq and Saudi Arabia have about 800 billion barrels oil reserves between them, if not more, also the world's largest.
LNG importing is said to have a breakeven cost of $3/million British thermal units (Btu). Thus, the new minimum average selling price of natural gas imported is likely to be about $4.5/million Btu.
Electricity is a different matter. IGCCs using air-blown coal gasification technology, when it is made to work, will have a fuel cost of 0.68 cents per kilowatt-hour (kWh) maximum. Natural gas-fueled generation will cost a minimum of 3 cents per kWh assuming LNG imports set a new floor on gas prices. Indeed, many IGCC plants close to mines will have even lower fuel costs. These new IGCC coal plants will have capital costs of only about 1 cent per kWh.
Projections for gas growth for power to the 30% market share area and more in the US will never happen. Instead, we can expect to see a rash of financial failures in just-built natural gas power plants. Any company building one today will have to complete with the new clean coal technology and nuclear.
Lloyd Weaver
Harpswell, ME 04079
lloyd@suscom-maine.net
