Overshadowed by the debate over natural gas exports, a battle is brewing in the Western United States over exports of coal to Europe and, especially, to the booming economies of Asia.  Buoyed by rising overseas demand for American coal, big coal producers including Arch Coal and Peabody are seeking to build new ports and new shipping facilities, particularly along the West Coast, to send U.S. coal from the Powder River Basin, in Montana and Wyoming, across the Pacific.

Those plans have met with fierce resistance from local residents and environmental groups.  ”I want to make it absolutely clear: I am vehemently opposed for a private, for-profit corporation to use eminent domain to condemn my private land for a rail line to export coal to China,” Clint McRae, a rancher whose family has owned their ranch in the Powder River Basin for 125 years, told a an Army Corps of Engineers hearing in Seattle last December, according to The Los Angeles Times.

Also lining up to oppose the exports are elected officials in Oregon and Washington who don’t wish to see huge coal export facilities built on their coastlines.  Saying that rail links to bring Powder River Basin coal to the West Coast “threaten the health of our communities, the strength of our economies, and the environmental and cultural heritage we share,” Seattle mayor Mick McGinn announced last month the formation of the Leadership Alliance Against Coal, which includes Native American tribal groups as well as politicians from towns in Washington State.

Black Piles

Behind the export push are the remaining Big Coal companies, particularly Arch Coal and Peabody, who have largely abandoned their mines in Appalachia and have seen their share prices drop by as much as two-thirds over the last 2 years as utilities across the United States have moved to burn low-cost natural gas rather than coal.  Peabody actually projects that U.S. coal consumption for power generation will rise in 2013, by 60 million to 80 million tons. Even as coal consumption drops in the United States over the long run, though, demand continues to climb in China, India, and even European countries like Germany, which is phasing out its fleet of nuclear power plants.

U.S. coal exports set a record last year of more than 124 million tons, topping the previous record set in 1981.  Because of “must-take” contracts signed years ago, some utilities in 2012 literally found themselves with piles of coal they didn’t want, and dumped these supplies of “distressed coal” on the international market. As a result, exports of coal are expected to drop this year, while remaining high.

Of six proposed coal export facilities on the West Coast, three have already been defeated. The battle over the remaining facilities could be Big Coal’s last stand in the United States.

Still, as I’ve written here before, the end of coal is likely to be prolonged.  The Economist Intelligence Unit, in a report released this month, said that increased overseas demand for the “surprisingly dynamic commodity will drive world coal consumption to more than 8.4 billion tons in 2015.  By far most of that growth will come from China – which puts the United States in the uncomfortable position of cutting its own use of the world’s dirtiest fuel, while feeding the coal hunger of less-developed economies.

Demand-side management must become a significant element of the European energy market if the EU’s ambition to build a low-carbon economy is to be realized.  The latest survey of European smart grid projects by the European Commission’s Joint Research Centre (JRC) points out the importance of this requirement.  Smart Grid Projects in Europe: Lessons Learned and Current Developments (2012 update), a follow-up to a similar study carried out in 2011, notes that a majority of the 281 projects covered focus on “distributed ICT architectures for coordinating distributed resources and providing demand and supply flexibility.”

One of the latest projects to join the roster of demand-side management pilots is the Danish city of Kalundborg.  The fact that Denmark already obtains 30% of its electricity from wind power – and targets 50% by 2020 – is making such projects an increasingly urgent requirement for the country.

Symbiotic System

Kalundborg has a population of around 16,000 within a local kommune (or municipality) of the same name extending to 50,000 people.  Its relatively small size belies the fact that it is the second-largest industrial region in Denmark after Copenhagen.  It is also notable for its long established cross-industry program, Kalundborg Symbiosis.  This program has evolved over several decades as an integrated system for waste recycling within the local industrial system.  Residual products from one industry, such as steam, dust, gases, heat, slurry, or any other waste products, are physically exchanged between enterprises, thereby reducing energy consumption, production costs, and environmental damage.

Smart City Kalundborg is a 3-year smart grid pilot with a budget of $18 million.  Launched in November 2012, the project is led by Danish utility SEAS-NVE, Dansk Energi (Danish Energy Association), Spirae, and the municipality of Kalundborg.  Other participants in the project include ABB, CleanCharge, Clever, Danfoss, Gaia Solar, DONG Energy, Gridmanager, and Schneider Electric.  Smart City Kalundborg will look at the integration of energy management across power, water, heating, transport, and building systems.  This entire system will be based on an open, intelligent platform called the Energy Services Hub.  The Hub will enable diverse participants to make specific energy resources available to the system via a publish-and-subscribe model.  An individual enterprise, water utility, or demand aggregator, for example, could use the platform to offer a specified demand response capacity to grid operators looking to manage fluctuations in power supply or reduce the need for network reinforcement.

The technical and market challenges to delivering such a system at a city scale are significant, of course.  However, the biggest question may be who is in the best position to operate such an Energy Services Hub.  One solution would be a joint venture between a municipality, one or more utilities, and a platform operator, but other models are possible.

Smart City Kalundborg is an innovative approach to deepening the connection between smart grids and smart cities.  While Kalundborg has much in common with other market-focused demand management projects in Europe, it differs in its attempt to include a wider range of city operations, including water management, transportation, and district heating.  Kalundborg Symbiosis has provided a synergistic network for the industrial system; Smart City Kalundborg project could provide a similar network for the local energy system.

As the concentration of carbon in the atmosphere reaches a level not seen in human history, it’s worth considering how much the conventional wisdom surrounding energy has changed in the last 5 years.  In 2008, domestic fossil fuel production (other than coal) was considered to be in permanent decline, with local debates on where to site natural gas import terminals.  Coal-based electricity generation was assumed to be as irreplaceable as it was undesirable.  Increasing energy costs and volatility were unavoidable, while renewable generation cost parity appeared within reach as the bar moved lower.  A nuclear power renaissance was effectively promoted as the only carbonless solution with the potential capacity to displace coal.  The dawn of transportation electrification seemed upon us, while the smart grid took a laser focus on peak load reduction.

Much has changed since then.  Conventional wisdom has caught up with the gas industry experts (including some of my Navigant colleagues), who foresaw how the shale gas boom would reshape the North American energy landscape.  With domestic oil and gas production up sharply, costs are expected to stabilize and volatility decrease.  Planned natural gas import terminals, while still locally controversial, are morphing into export terminals.  Natural gas generation is rapidly displacing coal, leading to significant carbon emissions reductions, though the enabling fracking technologies trigger new concerns.  Even as the cost parity goalposts keep moving, the cost of renewables continues to decline.  The Fukushima accident stalled a North American nuclear renaissance while driving Germany and Japan, at least notionally, to nuclear exits.  Home refueling of natural gas vehicles could replace electric vehicle charging stations in consumer imaginations.  Meanwhile, long-haul trucks, fleet vehicles, and even locomotives are adopting natural gas.  And the smart grid is becoming more important as a means of power resiliency in the face of hurricanes and superstorms than as a vehicle for peak load reduction.

Cheap Gas, Smart Buildings

This all came to mind recently when I moderated a panel discussion titled “The Future Direction of Energy in North America and the Impact on the Intelligent Buildings Sector” at CABA’s Intelligent Buildings Forum in Toronto.  CABA is the Continental Automated Buildings Association, a 25-year old organization dedicated to the advancement of intelligent home and intelligent building technologies (I am privileged to serve on CABA’s board).  The panel participants represented the perspectives of commercial property owner/managers (Cadillac Fairview), utilities (Ontario Power Authority), suppliers (Siemens), and technology researchers (CanmetENERGY).

So what do the major shifts of the last half-decade mean for intelligent buildings?  The panelists agreed that demand for improved energy efficiency remains strong, even if all the incentives for deploying the technology to deliver such efficiency are not always aligned.  Local codes and mandates may be drivers, but even lower-cost energy is not free energy.  Building-to-grid technologies and distributed generation may become even more important if natural gas enables local generation, which is becoming an intriguing option for the storm-ravaged Northeast United States.  Most importantly, all agreed that “cheap, abundant” natural gas is unlikely to spur new interest in dumb buildings.

As intelligent energy management technology has evolved, it has expanded considerably beyond the initial systems and platforms designed to help enterprises manage energy in their facilities.  We’ve seen some energy management players – from enterprises to utility customers – reorient their offerings to serve as a demand-side management tools.  Others have decided to specialize in certain high-value applications such as demand response.

One of the newer frontiers in intelligent energy management is the integration of energy management and facility management technology.  At first, it might appear that these two services have little to do with one another.  The former is concerned primarily with monitoring and reducing energy consumption and consumption, while the latter is focused on a range of issues affecting interior spaces (such as space planning, mail management, catering, janitorial services, and security).  However, several of the IT systems used to monitor and govern many of these facility management services also create data relevant to energy management.  Thus, they create opportunities to build additional applications onto the same IT backbone.

Yin, Meet Yang

One of the best examples of this integration is Jones Lang LaSalle’s IntelliCommand offering, which is a white-labeled version of Pacific Controls’ energy and operations management software.  The tools provide Jones Lang LaSalle’s commercial real estate customers with a suite of applications, such as energy visualization, energy management, and demand response, that help reduce energy costs while maintaining (or improving) building operations and the quality of the interior environment.  In addition, the system ties directly into Jones Lang LaSalle’s existing workflow management system, which its customers are already familiar with, an advantage over similar offerings that have independent user interfaces and functionality.  Meanwhile, IBM’s acquisition of facility management software firm TRIRIGA in 2011 and Ameresco’s acquisition of FAME Facility Software Solutions in 2012 also demonstrate the rapid integration of facility management with business operations and energy efficiency offerings.

The Jones Lang LaSalle model, which integrates energy management into a broader facility management offering, would appear to be the inverse of the IBM/Ameresco model, which adds facility and asset management capability to energy management systems that offer a multitude of energy-related applications.  Rather than arguing that one or the other is the “right” model, I will say that both models will likely coexist within the building industry for years to come.  This yin-yang effect – with facility management nested into energy management and vice versa – will ensure that customers have options that suit their priorities, budget, and existing building IT infrastructure.