Energy innovation project lauded

SAN FRANCISCO - A sun-drenched celebratory gathering Friday of energy company executives and officials from the Bush and Schwarzenegger administrations demonstrated the extent to which alternative energy -- electricity and heat made with nonfossil fuels -- has recently come in from the cold.
The event marked completion of a $15 million investment in hydrogen fuel cells, solar panels and conservation measures aimed at cutting two San Francisco postal facilities' annual power costs by $1.2 million and emissions of carbon dioxide that contribute to global warming by 6,600 tons.
The project, overseen by a unit of San Ramon-based Chevron Corp., demonstrates how energy use, pollution and costs can be cut by efforts "grounded in economics but lifted and enabled by ingenuity," said Rhonda Zygocki, the company's vice president of health, environment and safety.
The economics of California energy projects depend largely on the price of petroleum and natural gas, the key fuels for the state's energy systems. Recent high prices for oil and gas have closed the cost gap between conventional power plants and environmentally friendly but more expensive alternative energy sources, such as solar and fuel cell units.
High prices for electricity, heating fuel and gasoline have also irritated consumers, and increased the urgency with which politicians and energy companies pursue projects to boost energy supplies. "We need all the energy we can get from every available stream," Zygocki said.
The completed postal project is part of a $47 million program to upgrade energy systems at Northern California postal facilities -- including Oakland, Berkeley and Livermore -- by Chevron Energy Solutions, a small energy-consulting subsidiary that Chevron acquired from PG&E in 2000.
While Chevron Energy Solutions' $200 million business doesn't rate its own line in the income statements of its parent, which posted a profit of $14.1 billion on revenue of $198.2 billion in 2005, a stellar lineup of top government officials turned out to hail its work.
Stephen Johnson, administrator of the U.S. Environmental Protection Agency, traveled from Washington to speak at the unveiling of a project whose 0.5 megawatt of power capacity would cover only a tiny sliver of California's 55,000-megawatt peak demand. Johnson used the occasion to reaffirm President Bush's recent promise to cut oil consumption. "America is too reliant on foreign energy and the best way to break this dependency is through innovative technology," Johnson said.
The EPA chief also embraced the green character of the project: "What's good for the environment is also a good use for our energy dollars."
The U.S. Postal Service rounded up the money for this project by combining $8.3 million from energy savings, $4 million set aside to phase out refrigeration chemicals that hurt the ozone layer, a $2.3 million subsidy funded by California utility customers and $250,000 from the Defense Department.
Terry Tamminen, a special assistant to Gov. Arnold Schwarzenegger, showed up to remind the audience of that administration's commitment to hydrogen as a transportation fuel, renewable energy, adequate power supplies, energy efficient buildings and lower greenhouse gas emissions. He pointed to the new project as "the epitome" of that administration's support for public-private partnerships.
Schwarzenegger himself was in Los Angeles on Friday to announce a $1 billion project that would use oil refinery waste products to produce hydrogen fuel for a 500-megawatt power plant and then pipe the carbon dioxide emissions from that process to Central California to inject and boost output in aging oil fields.
But that more ambitious project won't be pursued unless feasibility studies show it to be viable, said Doug McFarlan, a spokesman for Edison International, a Southern California utility holding company that is undertaking the experiment with BP, the London-based oil company. McFarlan acknowledged that at $2 a watt the power plant would be much more expensive than a conventional unit, but he said that other factors, including fuel cost savings or revenue from carbon dioxide sales, could close that gap.
But public support for alternative energy has proved fickle in the past. Perhaps anticipating a day when the photo opportunities have faded and economic realities have changed, U.S. Postal Service Senior Vice President Thomas Day pointed to one ultimate saving grace for his company's new power source: "If there is a blackout, the lights at the San Francisco Distribution and Power Center will stay on."

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Rick Jurgens covers energy and business. Reach him at 925-943-8088 or at rjurgens@cctimes.com.
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