Before we discuss big issues like global warming, carbon pricing and renewable energy, I toss a couple of “lightning round” questions at Ralph Izzo, the chairman, president and CEO of New Jersey-based PSEG, a $13.3-billion a year energy company with strong commitment to solar power and action to curb climate change.
First, Yankees or Mets? Izzo grew up in Queens (Mets country) and pitched for the baseball team at Columbia University (Yankee territory), where he earned an B.S. and M.S. in mechanical engineer and a Ph.D in applied physics. “Yankees, Knicks, Rangers, Giants,” Izzo replied. He’s still a big sports fan.
Second, Democrat or Republican? After a stint as a research scientist at the Princeton Plasma Physics Laboratory, Izzo worked as a science fellow in the office of Sen. Bill Bradley, a New Jersey Democrat, and then as an energy-and-tech policy adviser to New Jersey Gov. Tom Kean, a Republican. “Independent,” he said. “Pretty much down right down the yellow stripe.” True enough–he’s given money to George Bush and Hillary Clinton.
Third, nuclear power or “clean coal”? Much as it would be nice to light up the world with wind, solar or geothermal power, odds are that the U.S. will need nuclear power, coal or natural gas to provide baseload (i.e., round the clock) electricity for the foreseeable future. Izzo, as a utility CEO and a scientist, gave nuclear his qualified endorsement over clean coal.
“The technology is in existence already,” he said. “It has a more benign environmental footprint. It doesn’t have the mercury, NO2, SO2 or carbon baggage. Having said that, all of our investments right now are in natural gas.”
For about a decade, Izzo explained, new conventional gas and then combined cycle gas plants will satisfy growing demand for peak power from PSE&G’s 2.1 million customers. PSE&G is the regulated utility owned by parent company PSEG, which also owns an independent, unregulated power producer called PSEG Power. PSE&G probably won’t need a big baseload plant until the early 2020s, at which point the company hopes to have a nuclear plant ready to go, as it told the Nuclear Regulatory Commission last month. That’s risky, given the cost and regulatory uncertainty surrounding nukes, but less so than relying on unproven technology to capture and store CO2 from coal. “To build a new coal plant with a 40-year expected life is a risk that we’re not comfortable taking,” Izzo said.
PSEG and Izzo aren’t well known outside of New Jersey, but they should be. I’d heard Izzo speak a few months ago, and was impressed by his straight talk about climate; we met again last week here in Washington. Unlike some CEOs and politicians, who take what author Eric Pooley calls the “Trojan Horse approach that tucks climate into the belly of the beast and lets clean energy and green jobs pull the contraption along,” Izzo says straight out curbing global warming is the right thing to do, for environmental reasons.
“I don’t understand why we can’t recognize that this is an obligation we have to future generations,” he says.
“I don’t have a problem with saying it’s OK for our generation to pay more for electricity—the EPA is now saying it’s a little more than $100 a year – so that our children and grandchildren and children can inherit a better planet.”
PSEG’s actions reflect those sentiments. Just last week, the Solar Electric Power Association ranked PSEG No. 3 of 143 participating utilities in its solar rankings (PDF available for download here), meaning that the New Jersey firm has integrated more megawatts of installed solar (29.55MW) into its system than any others except No. 1 Pacific Gas & Electric (85.2MW) and No. 2 Southern California Edison (74.2 MW). PSEG has a program called Solar 4 All under which it is installing small solar panels on about 200,000 utility and street lights, building small installations on its own sites and lending money to business and residential customers to buy solar panels. These make business sense because of New Jersey’s generous renewable energy subsidies. Meanwhile, PSEG’s unregulated arm has built solar systems for an M&M factory in New Jersey (lending new meaning to the term “green M&Ms”), and for American Electric Power in Ohio and the Jacksonville Electric Authority in Florida.
PSEG also would like to deliver what it calls “universal access to energy conservation” in much the same way as utilities historically provided universal access to gas and electricity. Targeting cities like Newark and Trenton, the company is bringing energy audits, insulation, programmable thermostats and efficient lights to families and small business–and getting reimbursed by regulators, just the way it would get paid to build new generating plants. Efficiency, it’s sometimes said, is the cheapest and best form of renewable power.
Some other things I learned from my conversation with Izzo:
The company’s energy storage efforts are coming along slowly. Energy storage is often seen as a technology that will enable broader deployment of renewable sources, and PSEG is part owner of a company called Energy Storage & Power, which owns compressed air energy storage (CAES) technology. The idea is to compress air using cheap off-peak electricity from wind or coal plants, then release the air and resell the electricity during peak hours to replace more costly natural gas-fired electricity. Unfortunately, the economics of CAES are challenging for now because natural gas prices are so low, Izzo said. CAES “works from a scientific and technology point of view without question,” Izzo said. “The challenge is, is it economically viable?” Batteries may turn out to be better long-term approach to energy storage. (See Electricity that’s cheaper than free for more on CAES.)
A price on carbon is necessary, but not sufficient to stimulate renewable energy, Izzo says. Some economists say that a national renewable energy standard won’t be needed if the government puts a price on carbon, but Izzo said solar and wind won’t be able to compete with coal and natural gas until the carbon price gets significantly higher than anything proposed on Capitol Hill. “To simply say, let there be a price on carbon, so that renewables are built on the base of the new market price, would result in many parts of the country not building renewables,” he said. Better to nurture the solar and wind industries right away, so that utilities can turn to them at scale when carbon prices rise years from now.
That’s assuming that the U.S. Senate listens to CEOs like Izzo and acts soon to regulate global warming pollutants–no sure thing, alas.