This month, while I was researching electric vehicle power stations, I came across a Northeastern utility company that is leading the nation in the push toward a more sustainable future - National Grid (NYSE: NGG). National Grid has made investments in many large-scale clean energy projects, including The Sustainability Hub, smart meters for 15,000 electricity customers in Worcester, Massachusetts, 160 new Electric Vehicle Charging Stations in New York, Massachusetts and Rhode Island, Clean Line Energy, Cape Wind and Deep Water.
And those projects aren't even the half of it. National Grid routinely assists in making health facilities more energy efficient, offering power conservation tips to customers who are suffering through a scorching heat wave, while at the same time keeping the lights on for New York, Massachusetts and Rhode Island through Superstorms, like Sandy. Even with that aggressive, forward-thinking to-do list, U.S. President Tom King, still finds time to co-chair the Alliance Commission on National Energy Efficiency Policy. Needless to say, I thought I'd get a "Thanks, but no thanks" response to my interview request from this busy executive. But I was pleasantly surprised to find myself on the line with Tom King after business hours on Wednesday, July 24, 2013.
Natalie Pace: Thank you for taking the time, Mr. King. You, along with U.S. Senator Mark Warner, co-chair the Alliance Commission on National Energy Efficiency Policy, with a mission of saving money, creating jobs and reducing waste. Can you tell me a little more about the Energy 2030 report and particularly, how the U.S. can double its energy productivity, create over a million jobs, and achieve a one-third reduction in carbon dioxide emissions by 2030?
Tom King: Energy efficiency is the most efficient per dollar investment in energy of all of the options -- turning off energy instead of increasing consumption. Here's the bottom line. We're the largest, most successful economy in the world, and one of the least efficient. If we as a country doubled our efficiency and invested roughly $100 billion, we would create $300 billion in value, a million jobs and we would modernize our energy infrastructure.
It's one thing to support Energy 2030 and energy efficiency, and quite another to run a profitable company. Please give us the Twitter version of how a utility makes money by convincing customers to use less of its product. For most businesses, that is a strategy that takes them right into bankruptcy.
In the Northeast, we have some progressive regulators who are really pushing forward on clean energy. The concept is decoupling our revenue from the volume of gas and electricity that we move through the system. That's already in place. Ultimately, where we really add value and offer earnings growth for our investors is by investing in infrastructure. Whether it is photovoltaic, smart grid or clean transmission, it is creating tomorrow's utility infrastructure that is really the growth opportunity. That allows us to achieve our policy objectives for the regulators, while ensuring that we are performing financially as a company.
Here in Southern California, there are lot of individual homeowners and businesses buying solar panels and connecting them to the grid. Photovoltaic (PV) may not be the best solution for the East Coast, as clean energy solutions tend to be location specific. How much do you see the desire for PV where you are located? What energy sources are you embracing? Are you seeing residents connecting their own sources to the grid, or are most of your projects large-scale?
It's both. We are backing Deep Water, Cape Wind and Clean Line. Those are all important, large-scale renewables. Our number one ask for our marketplace is to assist them in getting PV. You're right. The overall efficiency level with solar in the Northeast is not as high as you're going to see in California or Arizona. However, the market interest is so high that we're finding it necessary and important that we help customers achieve that objective.
We've seen the Department of Energy set up Green Building Challenges to encourage energy efficiency retrofits in the commercial community. Have you seen any great examples of local governments and corporations making efficiency upgrades and embracing the DOE challenge? Who is taking the lead on this?
Building codes have had one of the most successful outcomes. The Alliance continues to advocate pushing forward on Energy 2030, which has a lot of Congressional interest. The Shaheen Portman Energy Bill, which is currently sitting in the Energy committee, hopefully makes it to the floor over the next week or so. Senator Warner and Senator Manchin just introduced a Race to the Top bill to incentivize states to race to the top on energy efficiency.
New York has one of the highest growth rates of electric vehicles in the country. According to the New York State Department of Motor Vehicles, the number of EVs in the state has tripled in the past year. Tell us about National Grid's partnership with ChargePoint and NYSERDA to install 80 charging stations throughout New York state and why your company chose to support this. (67 of 80 will be in National Grid territory.)
First of all, it's not just New York. We have roughly 160 EV stations that are going in across Massachusetts, Rhode Island and New York. We are serving a market area that has a high interest in EVs. We went out and did research on which organizations can help us create an EV charging network. Through that process, we landed on Chargepoint. It's a great relationship and it will continue to grow as we see the interest continue to expand.
Can EVs continue to triple? When will they hit critical mass?
Just to give you an idea of where this is going. 3800 EVs are sitting in New York. New York and Massachusetts are two of the fastest growing states. If you look out to just 2015, the PEVs sold in New York are up to 9500, and Massachusetts has the same expectation. So we basically double between 2013 and 2015. Our objective, and why we chose Chargepoint and are going down that path, is that we are making sure the market has access to charging stations.
Do you drive an EV?
I do not! But it will be something that I look at the next time I purchase a new vehicle.
You have become a leading authority on sustainable policy, and a big investor in clean energy projects and infrastructure. Is this good policy because your customers want it? Or is sustainability something that is important to you personally?
It's beyond important. It's critical. You have a nation that is heavily dependent and reliant on fossil fuel. We're a heavy consumer of energy as a nation. In my view, there is not any room for argument over this climate issue. We're directly seeing the impacts, with the storms. We can't be reliant on fossil fuels as a nation forever. The reason I say that it is critical is that there is not a silver bullet out there on what tomorrow's energy resource is. It's important that we're pursuing all. We need to move in the direction of ensuring that we've got long-term sustainable resources for generations to come. Cape Wind, Deep Water and Clean Line are all large-scale renewables that are redefining what utilities and infrastructure look like in the future. It's up to us to ensure that we are taking action to make this happen.
Tell us more about National Grid's $40 million investment in Clean Line Energy? What is high voltage direct current (HVDC) transmission? Why is this important to sustainable energy?
The Clean Line project is a transmission project. HVDC is an efficient technology used to transport renewable energy. Ultimately the resource is large-scale wind in Oklahoma and Texas, and the target is the market in the East. When you look at the amount of coal that is now being retired in the mid-Atlantic states and Southeast region by Duke, Southern, First Energy and AEP, the intent is not only to ensure that the project gets built, but that it is clean renewable energy into a market that can compete with some of that retiring coal. It is a strategic project to ensure that resources are available, as those units begin to move off of the system.
Investors have been burned on clean energy over the last 4-5 years. Do you think the return on investment for clean energy is going to be better going forward, or is this simply the right thing to do - at any cost? Are you concerned that there are cyclical trends in this industry, or that if the next election puts in a different President, who is not clean energy friendly, this agenda will become back burner?
I'm very optimistic about where this goes and there is a whole host of reasons why. The U.S. will have a smart electric grid and a smart gas grid, and this is all embedded in Energy 2030. I'm very optimistic that will happen. Secondly, the U.S. general public knows that we have had a significant change in weather patterns. Whether we call it climate change or not, I don't think it matters. The need for clean energy doesn't go away. It is increasing. This, over time, moves away from being a partisan issue and becomes a social issue, with the country, the people living here, asking for it.
I was speaking with an executive from a LED company last week and he was eliminating green buzzwords from his message, making the case that LED is a no-brainer from a wallet standpoint, so as not to push partisan buttons. Are you seeing that your customers have an aversion to the words green and clean energy?
In this part of the country, in the Northeast, there is absolutely nothing wrong with the word green. We have sophisticated, smart consumers who are very interested in these issues. They very quickly tie it to, "It's about tomorrow. It's about economic development. It's about jobs. It's a much cleaner environment for future generations to live in."
How big of a role does natural gas and fracking play in this picture?
It plays a role because it is one of those fuels that is 50% cleaner than coal. Natural gas is 50% cleaner than oil. So, it absolutely ought to be a fuel that we use. The question is, "How can we use it as efficiently as possible?" That gets back to productivity. The overall issue on shale and fracking needs to be debated. We need to ask and make sure that we are as efficient and clean as possible in the fractionation, and that we are supporting the resource because today we don't really have a choice. Until we develop Clean Line and Cape Wind and these other large-scale renewables, we've got to make sure that we have resources available to keep energy available for consumption because we've got a large economy and a large energy use. As we get more efficient, and double our productivity, we'll need less of that energy.
What Energy Savings Tips can everyone employ right now to lower their energy bills?
First of all, if I could ask anyone to do anything, I would ask Congress to make sure that Energy 2030 and the Shaheen Portman Bill take place. Secondly, we find that the more we educate, the more conscious consumers are about energy consumption. Reducing the thermostats, more energy efficient windows, insulation, etc. can be done person by person. It reduces their energy consumption. It eliminates waste and it reduces their energy bill.
Senator Jeanne Shaheen makes a great point about energy efficiency when she says, "The cheapest energy is the energy we don't use. That's why energy efficiency is something we can all support." Thank you, Mr. King, and your company National Grid, for being a leading investor and advocate in getting us to a cleaner, greener, more productive and fuel-efficient tomorrow.
About National Grid:
National Grid's job is to connect people to the energy they use, safely. National Grid is at the heart of one of the greatest challenges facing our society--delivering clean energy to support our world long into the future.
About Tom King
Mr. Tom King has been the President of U.S. Business for National Grid Plc since April 2011. Mr. King joined National Grid on August 13, 2008 as Executive Director of Electricity Distribution and Generation. King is the co-chair, along with Senator Mark Warner, of the Alliance Commission on National Energy Efficiency Policy, with a mission of saving money, creating jobs and reducing waste. He has more than 20 years of experience in the energy industry.