As Congress shifts its focus to unconventional energy, will the green sector continue to grow as it has in recent years? During today's OnPoint, Michael Perna, vice president of business development at ConEdison Solutions, discusses how the political climate in Washington is affecting his company's efforts to implement efficiency, smart grid and green power solutions. He also explains how New York's debate over fracking is affecting green goals.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Michael Perna, vice president of business development at ConEdison Solutions. Michael, thanks for coming on the show.
Michael Perna: Thanks for inviting me.
Monica Trauzzi: Mike, ConEdison Solutions is the green power arm of Consolidated Edison and many people are familiar with Con Ed, so how does your division fit into the broader discussion and the broader company?
Michael Perna: When people hear Con Edison they often think of the utility that serves New York City. We're part of the family of companies that the utility is also a part of. We are owned by Con Edison, Inc., which is an energy holding company. They own a couple of utilities, Con Edison and Orange and Rockland. We're on the competitive energy side, so we're not a regulated utility, but rather we do retail electricity sales, we do renewables and we do energy efficiency in various states across the country.
Monica Trauzzi: So, there's decidedly greater focus on unconventional energy, like Keystone and LNG exports, this year. Why the shift? I mean just last year we were focusing on renewable energy and in Congress they were focusing on renewables. But right now it seems like there's been a shift in tone.
Michael Perna: You know, I think some of it has to do with the high profile of the Solyndra failure. I wouldn't take that as representative of all solar energy companies, so I think-but that has changed the tone of the dialogue. I think there's certainly still interested in renewables, but in an election year in particular I think it's been a lot more challenging for renewables to sort of breakthrough a lot of the chatter. But I can tell you that we work in renewables and it's still a very active market. Whatever may be discussed at the policy level, customers are still very interested in renewables and exploring either on-site renewables or how they can purchase renewables as part of their overall purchases.
Monica Trauzzi: So, have you seen any downswing in your business operations at all because of the lack of focus on policy or has that not really had an impact?
Michael Perna: It hasn't had an impact as of yet. You know, whether or not as time goes on that will start to be challenging, I don't know, but I can tell you that as we sit here there's still a lot of interest in the markets in renewable energy in its various forms.
Monica Trauzzi: Do you think the U.S. will become greener in 2012 or does sort of the deadlock in Congress prohibit that from happening?
Michael Perna: I don't think the deadlock will prohibit that from happening. I think there's enough momentum in the markets and interest in green energy and energy efficiency that there still will be momentum carrying forward. Certainly it's always nice when the government can accelerate that, but even in the absence of that, you still have corporations whose boards are interested in the corporations being sustainable. You have the president now signing the memo saying that he wants to see $2 billion in performance contracting performed in the federal space. So there's plenty of momentum that will keep this moving forward.
Monica Trauzzi: There's been a big discussion about tax extenders in Washington and there's a lot of uncertainty about the future of some of these renewable energy tax breaks. How does that impact your day-to-day operations or does it impact your day to day?
Michael Perna: On a day-to-day basis, in the near term, it doesn't. I think that, you know, there was some uncertainty with the expiration of the cash grant provision of the investment tax credit for solar. But, you know, for a corporation that still has the tax appetite or if there's tax equity players, it still allows projects to go forward. It may be a little bit more difficult, but I don't think it's going to stop things altogether. The ITC, of course, is in place through December 31 of 2016. I think there's an open question as to what happens if we get to that point and solar is still not competitive with the grid power, at least in some states. The solar industry, when I listen to the CEOs of the manufacturers talk, they're very aware of that deadline and they're working very hard to drive their costs down in order to be ready to be at grid parity at least in some of the more populous states.
Monica Trauzzi: So smart grid can mean many different things in different parts of the country. I'm curious to hear about your experiences in implementing smart grid solutions in your part of the country and perhaps some of the pushback that you've heard from consumers.
Michael Perna: Yeah, it's interesting. You know, the concept of smart grid has been talked about for a long time. There's been some early attempts, even in the 90s, at smart metering. The utility that I worked with at the time was working at some of the forerunners to today's technologies. But the advancements in technologies has really helped smart grid along and so you're starting to see it, not everywhere, but there are places in California, a little bit in Pennsylvania, a little bit in Texas. It's still very expensive and where you're seeing some pushback has been from the regulators of utilities who want to deploy the smart grid. They're looking to put all this into rate base, which, of course, would raise rates. The regulators are saying we're not so sure we see the business case right now. Fortunately, there's other technologies out there that allow you to have greater control over end-user's loads without having the whole smart grid in place. So there's the ability now to interface right with buildings' management systems or the systems that control energy and lighting and HVAC, and actually be able to change loads. So, whereas at one point I think people were waiting for the smart grid to come to do some of those things, we've moved beyond that to the point where we're going right past the meter and working with the buildings' intelligent systems to help control load.
Monica Trauzzi: So, another big thing in New York right now is natural gas drilling. I'm curious to hear how that heated discussion sort of interacts with the work that you're doing and does it at all overshadow some of the work being done in terms of efficiency and renewables?
Michael Perna: What it does, I mean the availability of the gas from the Marcellus Shale and other places has really brought down the price of natural gas. So, we have a couple, there's one where we sell retail electricity and it's pretty good for that business, because it keeps the price of electricity low and, you know, gives customers more options, including, fortunately, when the price of base electricity is low, sometimes they'll pay extra for some premium priced renewable electricity. Where it can be more challenging is on the energy efficiency and the renewable side. If you're looking at a solar project, you're looking at an energy efficiency project. If the price of grid-connected electricity is much lower because of inexpensive gas, the paybacks on the renewables or the efficiency can be a lot longer. So that does present a challenge.
Monica Trauzzi: All right, I appreciate your time today. We'll end it there. Thank you for coming on the show.
Michael Perna: Thanks, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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