Vision – Chicago: Hub of the 21 st Century Clean Energy Economy

RED | the new green www.recycled-energy.com

1

Vision – Chicago: Hub of the 21st Century Clean Energy Economy

Growing Chicago’s Clean Energy Economy

Sean Casten,President & CEORecycled Energy Development, LLC

May 11, 2010University of ChicagoChicago IL


2

What is Chicago’s core competence?

• Richard Longworth’s question• Author, Caught in the Middle: America’s Heartland in the Age

of Globalism • Former senior correspondent for Chicago Tribune• Now senior fellow at Chicago Council on Global Affairs

• How has Chicago avoided the economic collapse that has struck the rest of the rust belt?

• Longworth’s answer: other cities specialized in making things while Chicago specialized in understanding how things are made

• World leaders in manufacturing-focused finance, advertising,

consulting, insurance, logistics are all based in Chicago

• How does Chicago clean energy economy best capitalize on these innate skills?


3

Chicago has deep understanding of how heat & power are produced and used.

• 2/3rds of US fossil fuel use / CO2 emissions is associated

with the production of heat and power.

• Any transition to a clean energy economy will ultimately be measured by its ability to reduce our fossil fuel use per unit of economic activity.

• Chicago’s industrial understanding gives knowledge base not found in other regions• GTI, UIC Industrial Assessment Center, etc.

• The premier global energy recycling firms are all based in Chicagoland, drawn by regional competencies• Recycled Energy Development, Primary Energy,

Capital Power, Lakeside, Endurant Energy, others.


4

RED representative project

• Project will generate 60 MW of power from presently wasted heat• Will produce 464,000 MWh of fuel-free power/year – same as

would be produced by 265 MW of solar PV.• Will lower the cost of silicon production - and therefore, PV.


5

Primary Energy representative project

• 95 MW of power recovered from the exhaust of 268 coke ovens.• Saves host ~$40 million/year with negative CO2 emissions/MWh.

• A clean energy economy depends upon steel, silicon, cement and other innately carbon-intensive raw materials; reducing their CO2-

intensivity is key.

Courtesy Primary Energy


6

A clean energy economy needs a goal-driven, holistic policy.

• Favored paths change over time, creating short-term incentives at odds with long-term capital investment.

• Nuclear, ethanol, wind, PV have all seen spectacular

boom/bust cycles over past 40 years in US and Europe• Incentives wax/wane with electoral cycles and energy crises

• Cyclicality of incentives ironically at odds with goals.• Regulatory volatility has raised cost of capital for cleanest

(often lowest risk) technologies.

• Chicago’s manufacturing-dependent economy will suffer so long as environmental policies are in conflict with economic policies.

• Clean energy is not innately expensive – but clean energy

policy is often incompatible with cheap energy policy.


7

Deploying low-cost, clean generation requires reforms to affect power price and contract tenure.

• No new baseload generation in nearly 30 yrs• Retail prices trended towards marginal costs as long as there

was spare generating capacity on nuke/coal/hydro fleet• Supply constraints driven prices up since 2001, will continue

• Wholesale markets also drive down to marginal cost; no generation

technology (clean or dirty) can be built & amortized based on

wholesale market signals.• Markets not yet deep enough to provide long-dated contracts

• Long-dated contracts generally not available outside of utility

commissions (which don’t work for non-utility participants) and

path-driven RPS mandates; many win/win low cost & clean

approaches have no route to market.

Documents

Vision – Chicago: Hub of the 21 st Century Clean Energy Economy