Many individual entities are already addressing the problem on their own:
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Do-It-Yourself Power Catching On
Companies, Institutions Build Plants as a Safeguard
By Martha McNeil Hamilton
Washington Post Staff Writer
Friday, August 22, 2003; Page A01
After surviving the California energy crisis of 2000, with its recurrent blackouts and price spikes, Pokka USA Inc., a manufacturer of bottled health drinks, decided it needed its own source of electricity to make its beverages. So the Napa Valley company decided to have a power facility built on its property.
In doing so, the company became one of a growing number of U.S. businesses, universities, government agencies and others that rely on their own power sources for part or all of their operations, often to help protect them from outages.
The U.S. Combined Heat and Power Association says about 8 percent of electrical capacity in the United States comes from these facilities -- called cogeneration facilities or distributed power. But the number is expected to grow.
In the Washington area, the University of Maryland has its own power plant supplying electricity, heat and chilled water for air conditioning. The new Washington Convention Center has a combined heat and power facility, and the General Services Administration is upgrading its plant at 13th and C streets SW, which heats and cools many government buildings. Companies with their own power sources include Dow Chemical Co., Frito-Lay Inc., International Paper Co., Exxon Mobil Corp., Johnson & Johnson and Eastman Kodak Co., according to the heat and power association.
"It's a growing trend in the industry for a couple of reasons -- reliability and efficiency but also for reducing emissions," said Jim McVaney, director of federal government relations for the American Chemistry Council, many of whose members rely on cogeneration for a substantial part of their power needs.
Advances in technology have made it easier to produce power at factories, refineries and office parks rather than rely on massive utility-operated power plants and the large regional transmission grids that serve most customers. As opposed to backup generators that are designed to be used in emergencies, the units serve a company's ongoing power needs. They take natural gas or other fuel, run it through a turbine to produce electricity, and then use the heat produced in power generation for other commercial or industrial processes.
In most cases, the companies remain connected to the grid, continuing to purchase part of their power and occasionally selling power back to the utilities when they have excess capacity. New technology also allows the companies that use distributed power to almost instantly disconnect from the grid if a problem arises outside their sites.
In the case of Pokka, which was acquired earlier this year by Coca-Cola, the company can disconnect from the grid in a twentieth of a second, according to Northern Power Systems of Waitsfield, Vt., which built Pokka's new power-generating equipment. Some switches work even faster.
But a quick disconnect mechanism does not guarantee that power will be unaffected by problems elsewhere. The University of Maryland lost power for 24 minutes during the blackout last week after the campus power system suddenly disconnected from Pepco. It was unable to supply all the energy demanded at the time and shut down, U-Md. officials said.
Although the on-campus plant can meet all U-Md.'s needs in the winter, the university buys additional power from Pepco in the summer when its air-conditioning demands exceed the campus plant's capacity. Most Pepco customers were unaffected by the blackout because the local company is connected to the mid-Atlantic grid, which continued operating after the one to the north went out at 4:11 p.m. But the U-Md. power system automatically disconnected from Pepco at 4:12 p.m., less than a second after sensing that the frequency of the electricity coming from Pepco had risen too high. The university power system was able to keep most of the lights on for three more minutes but became overburdened and shut down.
"The system did exactly what it was supposed to do," in the sense of disconnecting to protect itself and the grid, said Jack T. Baker, the university's director of operations and maintenance. After consulting with Pepco, U-Md. officials quickly reconnected their power system to Pepco and restored power gradually throughout the campus, he said.
Pokka decided to build its own power source after electricity prices climbed by 43 percent in 2001 and after experiencing 24 power failures in two years. It chose a natural-gas-fired system designed to support about 70 percent of its needs, enough to keep critical operations going during an outage.
The installed cost of the system was $1.92 million, said Dan W. Reicher, a former assistant secretary of energy for energy efficiency and renewable energy who is now a vice president of Northern Power. The cost was reduced by a self-generation incentive from the state of California, leaving the net project cost at $1.34 million. With annual savings on electricity and heat generation of $635,000 a year, the project is expected to pay for itself in 11/2 years.
Most power outages are not blackouts but mere blips in the system. Those blips can cause large losses, however, if they shut down equipment that takes a long time to get running again or take down computers that handle hundreds of thousands of transactions an hour.
Another incentive for companies to build on-site power production is that large industrial customers often fall into the category of "interruptible" customers -- customers whose power may be cut back by utilities when demand is heavy in order to keep the system from going down.
John C. Felmy, chief economist for the American Petroleum Institute, said about half of all oil refineries have their own power facilities. Felmy said he did not know how many, if any, of the refineries shut down by the blackout had their own power-producing ability.
But even if they did, he said, it might not have kept them running. The issue is not just the power at a single facility, but the rest of the system on which it relies, he said. "The real problem is that the pipelines weren't working, so they didn't have crude coming in or refined product going out."
Kodak, based in Rochester, N.Y., operates two power plants for its own use and therefore was largely unaffected by the blackout last week.
The company's two power plants, with 300-foot stacks that loom over the Kodak industrial complex, supply steam for cooling and heating processes needed for film and paper manufacturing. The company did lose some power because before the blackout it had shut off some of its own supply to save money and conduct routine maintenance, and it took a few hours to restore full power. But no work shifts were canceled, said Kodak spokesman Christopher K. Veronda.
"When you talk about vertically integrated companies it can be a slam, but there can be advantages to controlling your own destiny, particularly for critical things," he said.
Staff writer Kirstin Downey in Rochester contributed to this report.
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