An Interview with the Energy Czar

An Interview with Paul Kjellander, Administrator of Idaho’s newly created Office of Energy Resources. Kjellander is past president of the Idaho Public Commission. Bruce Reichert interviewed Kjellander in April, 2008.

What is the goal of the office of Energy Resources?
To help coordinate and facilitate the development of energy resources within the state, as well as to look at a variety of issues related to energy efficiency, demand-side management and conservation. And it’s our office’s responsibility to insure that we’re doing everything we can as a state to help move forward and to insure that we have a secure energy future for the state of Idaho.

How would you describe the energy proclamation that Governor Otter signed?
The Governor has created the “25 by 25” Council, and he put that underneath the office of Energy Resources. The objective is that, by the year 2025, the state of Idaho is producing 25 percent of its power through renewable resources and renewable resources that are generated within the state of Idaho.

Can we meet that goal?
What I like about the Governor’s approach is that it’s not a mandate; it’s a target; it’s an expectation; it’s a hope. And because it’s not a mandate, I think it gives us the opportunity to get it done right without from the very beginning rushing into things that may not be cost effective or economical.

I think ultimately what we want to insure is that in the state of Idaho we still have relatively low prices. If it were a mandate, and we had to get it all done by a certain year, and there were guns held to our head, I think there is a very good possibility we could make some uneconomic choices. We’re not under that burden, but we are under the expectation that we do everything in our power to move in that direction; and I think that has been extremely helpful.

To get to “25 by 25,” what has to happen?
What has to happen is, first and foremost, we need to quit talking about energy efficiency and demand-side management, and we need to deploy it and implement it, and it needs to happen at every business, industry, government, and residential home, because the more energy efficiency we get, it improves the percentage of renewables that we have in the system.

Then we need to go out and bring in more renewables, and we need to look at all fuel sources and fuel types, and we need to do it in a cost effective manner. We need to bring those resources on in a fashion in which they are cost effective. And then we also need to recognize what the costs are for those that today are out of the money and what the parameters will look like when those will be resources that we can develop, and we need to be ready to develop them when the costs are right.

How would you rate the energy situation in Idaho?
We have citizens in the state of Idaho who have grown to expect low-cost power and in large part because of our vast hydropower system within the state and the region. As we move forward, the opportunity for those large scale hydro-facilities to be built and added to our energy integrated resource plans really isn’t there. That doesn’t mean we won’t see some development and some attempts to develop, but our energy future is going to be more dependent on higher-cost fuel resources; and so I think we have to expect that costs are going to rise accordingly.

So has hydro pretty much reached its maximum potential?
There are efforts to consider building some large scale hydro facilities. I don’t know where they’ll go. I don’t oppose them, but certainly there are a lot of obstacles. There are also opportunities on the table today for some smaller renewable projects that might be in-stream opportunities. There could be some opportunities for some pump storage hydro facilities. Those will be smaller in scale. So there will likely be some new hydro development, but not to the extent that we saw forty or fifty years ago in this state.

It seems that some parts of Idaho are very well situated for alternative green energy.
We all have to recognize that, while energy efficiency, demand side management and conservation are important tools that we need to deploy, by themselves they won’t solve our problems. We have to look forward to the reality that we’ll have to build new generation resources; and obviously renewable resources will be a part of that.

From the Governor’s “25 by 25” Council and his objectives with that, we’re tasked with trying to bring more renewable resources into the mix. And I believe that Idaho has some very strong resources. We have some good wind sites. We have some good geothermal sites. We have the potential for solar, and we also have the opportunity for other resources in bio-fuels that we need to explore; and then bio-mass.

We have a very large dairy industry in this state that continues to grow, and there are opportunities there to take the dairy waste and convert that to either electricity or to pipeline quality natural gas. And we need to be exploring that more fully, but go beyond just exploring it. We need to get it developed, and we need to get it scaleable, and we need to get it brought to market, and Idaho has a tremendous degree of potential in that arena.

Are some parts of the state more blessed with potential?
The better resources seem to be in the southern part of Idaho, as it relates to wind. Obviously, for solar the desert areas seem to have more opportunity as you look at development there. Geothermal is sort of scattered throughout the state, but the sites that seem to have the most initial potential seem to be in southern Idaho today.

I was struck by how optimistic the wind people are.
There are some extreme positives with wind. Wind is a very abundant resource, and that is great. There are also some negatives, and with every renewable resource, there are negatives. Wind has some negatives. Among them is the reality that the wind blows where it blows, and it’s not always near transmission lines.

And when you look at transmission lines costing any where from 1.6 to 2.6 million dollars a mile, and then distribution lines being substantially less but still very expensive, if you’re not close to those transmission lines, that can add quite a bit of cost to a project.

So the secret is having good wind near good transmission, and there are some sites in Idaho that have that potential, and certainly those need to be developed and exploited and brought to market.

I’ve heard Idaho is ranked 13th for wind potential.
Some resources are very strong and very accessible while some other resources are in the moderate category and not as accessible. So, I’m always somewhat hesitant to look at some of those figures and say that that is something you can count on, because the ability to get that to the marketplace could be very restricted.

Transmission lines are a real problem, aren’t they?
Transmission throughout the west is at or near capacity; and that’s something that, quite honestly, everybody needs to be concerned with. Regardless of what generation resource you want to bring to market, you have to have the transmission capacity to move it. And you are seeing a lot of activity among utilities in the region and other outside developers too, to build new transmission; and it’s necessary and essential, and we’re seeing some progress along those lines in Idaho today.

Is the solution a federal one or should private enterprise solve the problem?
It’s a little bit of everything. Obviously the Federal Energy Regulatory Commission has a huge regulatory role to play. State regulators have a role to play, too, in terms of some cost recovery. But, ultimately, if you are an investor-owned utility and you have an obligation to serve your customers, and you have transmission lines that are at or near capacity, and you need to move power, you are going to have to build transmission, and so that’s what is happening today. Those plans are well underway, and you are actually seeing a lot of people being contacted about right-of-way access onto their property.

Whose responsibility is it to increase connectivity?
Basically, every utility that puts power into the system has that responsibility. But on a larger scale basis, you have a multitude of regional organizations that are working daily on those issues and monitoring the system. And you are also seeing federal entities that are engaged in the process as well. This truly is of national interest, and it’s something that you have a wide variety of organizations that are engaged in that process.

What about the potential for more solar energy in Idaho?
I think solar will have a future in Idaho. Is it today a cost effective reality? Perhaps not, but I think we’ll see a lot more consumers in the residential sector begin to look at that as an opportunity. If they plan to stay in a home for a long time, they’ll build that into the project, and there is some innovation in that arena.

And I think we’re also seeing the utilities start to pay more attention to it as well, as part of some of the longer term solutions. What we’re also seeing in that industry is that the technology is advancing. Just like wind technology has advanced over the last few decades, solar is taking some extraordinary strides as well; and I think we’ll see those costs continue to come down.

How do the utilities view this push for more solar, wind, and other renewable resources?
When you are looking at being told you have to take a project, you are looking at where it is coming into your system; you are looking at how to integrate that resource into your system; and you are also looking at the impact that it might have on some of your other integrated resource plans, as well as your transmission capacity. So I think all of those factors come into play for a utility.

But what we’re finding, also, is that utilities recognize that they are going to need to bring renewable resources on. So, on the other side of the equation, I think utilities are beginning to learn more about those technologies as they slowly bring some of those projects on line; and they’re beginning to get a little more comfortable with how to integrate those into the system. So, in the long term, it is good.

I think, from a utilities perspective, too, would you rather bring on a lot of smaller projects that might be scattered through a region, or would it be easier for you to integrate one or two or three very large scale wind farms where you have much more control over how to integrate that into your system? I think that’s what they are looking at as well: what is the best way to bring that resource into the system? Is it through multiple projects that are scattered throughout the system, or is it through a more planned and organized approach where there are larger scale facilities?

Geothermal seems to have fewer critics.
Of the renewable resources, it is one of those resources that is considered to be more firm, meaning, you know it’s going to be there. The difficulties that people have again with it is, geothermal is located where it is, so it’s that combination of finding it near transmission lines and near property that you can actually access.

We have a lot of wilderness areas in the state; there is some geothermal within that, but you can’t get to it. So you’ve got to be able to develop that resource. Some of it is on federal land, and the federal government has actually done some innovative things as far as their leasing projects.

Geothermal, being more firm, has a lot of positives; and again, it’s easier to integrate into a system. The downside with geothermal is you can drill a lot of holes and at the bottom of those holes you don’t find anything; and those holes cost a lot of money. So it’s not a simple resource to bring to market; but if you can find it, and you have the right temperatures, and you put together the right system, you can have a very, very valuable resource.

What incentives does the state provide?
We’ve been seeing a lot of activity in the state legislature over the last couple of years to try and provide incentives for renewable energy. We’ve seen some that deal specifically with wind and with geothermal; and most of them deal with the taxing structures for those; and those are starting points.

There is one more thing that the state is doing. The state is also looking at its leases on state lands in trying to promote more renewables on state lands, because I think they are starting to recognize that that does have the potential to bring in money to the state, if we can develop those resources there and move them to market.

The advantage of a lot of those renewables on state lands is you can still have multiple use on the same property. You can have cattle grazing near wind sites; and that’s good in terms of the potential revenue and opportunities to maximize the financial benefit from state lands; and we’ve seen some good progress there.

Forty nine year leases for wind sites. That’s excellent. That’s very good, and before that, it really didn’t make sense to try and develop wind on a state site. A ten year lease just isn’t sufficient. You’re not going to get financing for it. But with a forty nine year lease there is an opportunity to attract investment for state property.

Ten years from now, where will we be and what has to happen on the energy front?
I think ten years down the road, what we have to have is an educated public that recognizes that energy isn’t this unending resource that is always going to be there for us.

We need to build into our lifestyles conservation, energy efficiency, and demand-side management. That shouldn’t be something that we only do when there appears to be a crisis, that it is something that we actually transform the market place, so that you can only buy technology that is extremely energy efficient, that when we buy our homes, they are extremely energy efficient.

I think that within ten years we’ll have the ability to bring coal back into the market place, because what “clean” means will be defined; and I think we’ll have that opportunity to have access to more of our energy resources that we have in this country.

But, ultimately, it’s going to depend on each and every one of us as individuals – for lack of a better phrase – to be doing our fair share, to do what we can do to use less energy. And I think it’s also incumbent upon business and industry and manufacturers to be producing products that, from the very beginning, use less energy.