(IAP ’14) ReEnergize Benham

Brian Bowen, Ryan Cook, and Christian Desrosiers  (G, Urban Studies and Planning) will work with together to assist the town of Benham, Kentucky in the development of a municipal energy plan. They will attend community meetings, conduct technical analysis for the town, and participate in a working group of public, private, and non-profit groups to establish and finance an energy-efficiency program and investigate the area for potential renewable energy installations. These steps will lower energy costs for Benham, a small coal mining community in economic decline, and hopefully turn it into an example of how even small towns can make a difference through sustainability.

 

What Will It Take To Re-energize Benham?

(January 21, 2014) – Ryan Cook

Benham, Kentucky is a small town with big-city plans.

A rural community in the Appalachian mountains of east Kentucky, Benham got its start the same way that many towns in the area did: as a coal mining camp. Benham was founded in the early 20th century as a mining town, a history that it wears proudly on its sleeve. On the drive from the neighboring town of Lynch, Benham’s welcome sign proclaims it “the little town that International Harvester, Coal Miners, and Their Families Built!” The town has a Coal Mining Museum, as well as a memorial dedicated to the miners that made the community what it is today.

Today, the coal mining industry has mostly left Benham, and the town’s population has decreased by more than half to number only 500. Benham’s economic and population decline was recently matched by a political scandal that the town is only now recovering from. One effect of the town’s political struggles was that it fell behind in its electric payments, touching off a messy legal situation that has left Benham’s future energy supply in doubt even after it has returned to fiscal solvency. To add to the community’s energy troubles, it possesses an aging distribution grid at high risk of failure, and many residents live in poorly-insulated homes and as a result consume—and pay for!—far more energy than most Kentuckians.

But in the spirit of never wasting a crisis, a group of Benham residents has begun to articulate a vision of Benham that is both economically self-sufficient and environmentally sustainable. These community members have partnered with Kentuckians For The Commonwealth—a state-wide grassroots non-profit that helps communities empower themselves to accomplish their goals—and the Mountain Association for Community Economic Development to devise a plan for Benham’s energy future. This group is working to finance energy efficiency retrofits for the town’s residents, develop local renewable energy resources in Benham, and ensure a reliable and locally-owned distribution grid for the community. This week we spoke with Carl Shoupe, a retired coal miner and self-described “eternal optimist” who has been a driving force behind the town’s interest in renewable energy and sustainability. Carl explained that he feels that the group’s success will not only lead to more sustainable and secure town, but will also make Benham a model for countless other communities across America that face the same set of challenges.

Our role.
In the last few months we’ve built a relationship with the town of Benham and are supporting the community in its efforts to transform the way it generates and uses energy. We’ll be assisting the town as it works to implement efficiency program, investigate renewable energy development, and secure financing for needed distribution grid upgrades.

We’re three MIT graduate students in the Department of Urban Studies and Planning with different backgrounds working in energy. Brian comes from a demand response service provider, Christian co-founded a solar energy development startup in Somalia, and Ryan previously worked with utilities to plan energy efficiency programs.

We’re fortunate to work with a fantastic group of organizations and individuals who are excited and capable of creating a new future for Benham. We’re joining this process partway through, and are looking forward to contributing to the town’s success!

In the coming weeks we’ll be posting about the work that we’re doing with the Benham community. These will culminate in a trip (the first of many!) to Benham, where we’ll meet face to face with residents and stakeholders and discuss how the community can power its own future. Our work with Benham will continue into the spring, when we’ll continue to work with the community to make their goals a reality. Check back soon for more updates about our work with the community to re-energize Benham!

 

Can A Kentucky Coal Town Get Energy Efficient?

(January 23, 2014) – Brian Bowen

It’s 20 degrees in Lynch, Kentucky, but Mayor Johnny Adams is glad to report that it’s plenty warm inside Town Hall. Last year, he wasn’t so sure that’d be the case.

A town of about 700 residents, Lynch is nestled at the foot of Black Mountain, the state’s tallest peak, and it’s next door to Benham. Although it was once one of the largest coal mining camps in Kentucky, Lynch has seen its population drop almost 20 percent in the past 15 years, along with the decline of the coal mining industry. When Adams came into office in 2011, the town was also in the midst of unraveling a financial scandal involving a town clerk, and it was clear things needed to change if city services were to continue into the New Year.

Most of Lynch’s city infrastructure was built more than 50 years ago and was showing its age. The town’s water treatment and sewer stations needed repairs and upgrades, and the heat pump in the nearly 100-year-old Town Hall had broken, meaning that town officials had to work through the summer without the benefit of air conditioning. During the winter heating season, it was also far from efficient. The town’s power bills were edging higher and higher, and Adams didn’t like the trend.

“If you asked me a year ago, I don’t know if we could have even heated the place this year,” Adams said.

Times weren’t always so lean in Lynch. Beginning in 1917, the town was built by U.S. Steel to be a self-sustaining community. The coal came out of the mountains, employed the people, and powered their homes, businesses, and the town itself. The rest of the coal was shipped to steel mills across the U.S. Although the scars of old mines are still visible in aerial photographs of the surrounding hills, the mines have been dormant for more than two decades.

Interestingly enough, coal played a role in Lynch’s turn toward energy efficiency. At a meeting with surrounding towns over a coal mine permitting lawsuit, Adams began talking with neighboring town officials about how to weatherize Lynch’s aging homes. A former town administrator from the town of Benham, Roy Silver, suggested writing a small grant to retrofit a few homes with the help of the Mountain Association for Community Economic Development (MACED) and Kentuckians for the Commonwealth (KFTC). When those groups got involved, however, it was clear the grant could be even bigger, and it could be used to help finance the upgrades at Lynch’s municipal facilities.

Ultimately, Lynch received $125,000 in federal grant funding and an additional $25,000 from the state legislature. The funds were used to upgrade lighting, insulation, water pumping equipment, and install new HVAC systems at the town facilities. Adams estimates that the energy bills of the water plant alone are now 20 percent lower.

“We couldn’t have done it without the grant,” Adams said. “That saved us. It really took the pressure off us. At the water plant, we had one of our pumps down, and we were relying on just one. Now we’re back to two. We have lower energy bills, and Town Hall looks a lot nicer now that we’ve fixed the air leaks and got new lighting.”

Adams cites the collaboration with MACED and neighboring communities as the real reason behind the town’s energy efficiency push.

“We’re really beholden to Roy Silver from Benham, KFTC, and MACED for getting this going,” he said.

Now, Benham may look back to Lynch to learn which energy efficient strategies to implement at its own town facilities. Along with the Public Service Center, CoLab, and KFTC, our three-student MIT team is hoping to play a part in making that happen.

One strategy we’re reviewing could be a no-cost way to lower energy bills. It involves simply shifting power demand from peak periods to off-peak periods. I’ll explain that process in much more detail in my next post.

 

What Is Peak Demand And Why Does It Matter?

(January 31, 2014) – Brian Bowen

Whenever you look at your electricity bill, you might think the only way to save on energy is to use less of it over the course of the month. While that’s true for individual users, big power consumers like industrial, commercial, and municipal customers like towns and cities get charged for electricity in different ways.

For them, it’s important not only to minimize the amount of electricity they use over the course of the month, but also to reduce the maximum amount of energy they’re using at any given time. Why? Electricity grids are built to serve the absolute peak in demand. That means power providers need to build enough power plants, transmission cables, and distribution networks to serve the hottest days of summer and the coldest days of winter, when everyone is using the most energy. That process gets expensive, so power producers charge separately for peak demand.

These peak demand charges can make up a big chunk of what a town or city pays for electric power. That means they’re also a big opportunity for savings. If peak consumption can be reduced even slightly for just a few hours, the town would see substantial savings on its energy bill. Here are a few strategies we’re exploring in Benham, KY as part of our work with the Public Service Center, CoLab, and Kentuckians for the Commonwealth.

Shift Load At High-Demand Facilities To Off-Peak Hours

In many towns and cities, municipal facilities like water and sewer plants are among the biggest energy users. In California, for example, nearly a fifth of all power generated goes into water-related uses, like pumping and water treatment. Fortunately, towns can often control when these facilities use the bulk of their energy. By shifting pumping and other water-related energy use to off-peak hours, it may be possible to save on peak demand charges, which would reduce the cost of power in towns like Benham.

Optimize Start-Up And Shut-Down At Municipal Buildings

Municipal buildings like town halls, schools, and administrative facilities are often able to reduce peak power consumption by optimizing start-up routines. In Benham, the highest winter peaks occur between 6 and 9 AM during the winter months, when everyone wakes up and turns on their electric heat pumps. If building managers could shift HVAC equipment start-up to off-peak periods, it is possible to reduce overall town peak consumption. This could mean starting equipment either earlier or later in the day, and it will depend on each building’s particular characteristics, including equipment type, building use, and level of insulation. In addition, it’s important to ensure that building systems are set to their minimum levels when everyone leaves for the day.

Establish Outage Restoration Routines

In addition, demand peaks often occur after power outages, when electricity  is restored and equipment turns on all at once. Since this is an inefficient and costly way to consume power, each town facility should also establish a power restoration routine that would ensure an orderly re-initiation of equipment after an outage.

Encourage Voluntary Residential Demand Response

The vast majority of Benham’s energy use is residential. That means that citizens can do their part in reducing peak demand. For more than 30 years, my hometown utility, Marblehead Municipal Electric Department, has encouraged residents to make voluntary reductions in electric use during peak periods. In the early 1980s, utility staff simply placed signs at high-traffic areas around town asking residents to “Stop Peaking.” Although it was a low-tech solution, the program was highly successful, and according to the utility, it became the model for other municipal utilities throughout the Northeast.

Establish Alert-Based Demand Response

Marblehead Electric has since adopted a more modern version of the “Stop Peaking” program that incorporates automated alerts via phone calls, text message, or email on days when peak conditions are expected. In addition, the utility can alert customers to the possibility of outages during weather events, or in the case of an outage, provide information on when to expect power to be restored.

Take Control Of A/C And Water Heaters

Another approach is to install equipment on residents’ central air conditioning and electric water heating units to enable the utility to turn off electricity to the unit during designated periods of peak electric demand. Usually utilities offer small incentives of between $25-75 a season for these types of programs. These programs require a bit more technology to be effective, including smart meters, but they can offer interesting benefits for consumers, including neat gadgets like the Nest Smart Thermostat.

These are just a few of the strategies we’re exploring to reduce peak demand in Benham and look forward to working with the community to find ways to improve energy efficiency so that residents can be comfortable in their homes, while paying less for power.

 

Finding the Right Strategy

(February 1, 2014) – Christian Nicolás Desrosiers

The emergence of modern renewable energy generation offers an opportunity to democratize energy access and energy sector jobs.  Because the input resource is free, it can liberate communities from supply chains and infrastructure that renders them beholden to larger corporate interests.  Before coming to MIT, I co-founded Qorax Energy, a renewable energy start-up currently focused on improving energy access in Somaliland, the autonomous region in northwest Somalia.  Having started work in this field in a frontier market, I’m excited to try to apply and augment what I’ve learned through this project with the town of Benham.

In my work in Somaliland, we have focused on solar photovoltaic (PV) generation largely because there are already maps of solar resource potential and maintenance of solar PV systems requires much less technical knowledge.  Wind turbines, by contrast, require lengthier wind resource assessments, installation requires cranes, and repairs are more logistically complicated.  The necessary equipment is difficult to come by in Somaliland, which is what has led us to focus on solar PV solutions. If a solar panel malfunctions, it can be easily removed and replaced by nearly anyone.

At Qorax, we have partnered with a Somaliland university (Gollis University) to create Qorax-Gollis Renewables.  Qorax-Gollis Renewables is an energy and entrepreneurship training center that runs post-baccalaureate programs to train renewable energy micro-entrepreneurs.  Developing local capacity to build and maintain renewable energy generation allows for swifter proliferation of renewables and minimizes turnaround time for repairs.  I’m interested in investigating whether there is interest in creating a training center local to Benham.

The renewable energy working group in Benham had its first meeting a few weeks ago and there is an exciting group of people.  I am particularly looking forward to working with representatives from the Appalachian Institute for Renewable Energy (AIRE).  Kentuckians for the Commonwealth (KFTC), an interesting New Economy organization, has brokered many of the relationships in this project, and I am also to learn more about the applied practice of economic democracy in the US.

Financing the up-front investment is one of the biggest hurdles in creating community-run renewable energy assets.  It is an area that I know little about in the US context, and I am looking forward to working with AIRE, KFTC, and others involved in the Benham project to search for the optimal solution.

However, renewable energy, while a contemporary buzzword, is only one approach to helping Benham and similar communities with energy issues.  I’m eager to be working with Brian and Ryan to help round out my understanding of the sector.  My work in energy has largely been technology-based, perhaps myopically so. Power co  ntracts and energy policy are large blind spots for me, and I have been learning a lot from my teammates on these issues.  Working on this problem from multiple angles simultaneously will give me a holistic sense of how these approaches complement each other, and the relative cost effectiveness of each.

 

A Closer Look at Demand Charges

(February 1, 2014) – Ryan Cook

Brian wrote earlier about peak demand, and how reducing the maximum amount of energy that Benham consumes over the course of a year or a month can save the town a lot of money. Let’s dig a bit deeper into what that means using some numbers on Benham’s energy use (after all, we are MIT students!).

We analyzed a year of Benham’s energy consumption and costs to see where the greatest potential for demand savings is. First, let’s look at Benham’s overall energy costs. The town buys its power wholesale from a larger private utility in the state at a set rate per kilowatt-hour, but this—called the “energy” cost—only accounts for 43% of what the town pays over the course of the year. Benham is also charged on a per-kilowatt basis for its peak energy consumption—the maximum amount of energy that the town consumes at any time during a given month. This is called the “demand” or “capacity” charge, and it ends up accounting for just over half of the town’s electricity costs.

Benham’s energy use varies dramatically from month to month, a predictable swing caused by the changing seasons. Kentucky’s climate is cold in the winter and hot in the summer, and many homes in Benham have both electric heating systems and air conditioning. So the town consumes (and pays more for) energy in the winter and summer than in the spring and fall. In 2013, Benham’s highest electric bill came in January in the heart of winter, when electricity costs were over double what the town paid in September, when mild weather meant that residents weren’t using their heating or cooling systems.

The relationship between temperature and energy consumption is very strong. We modeled daily energy use against heating and cooling degree-days in a simple linear regression and were able to explain 83% of the variation in daily peak energy consumption.

Changing seasons also affect the time of day when residents use the most electricity. The chart below shows average hourly energy consumption over the course of the day in the winter, summer, and shoulder (spring/fall) seasons. In the winter, when consumption is the highest overall, the monthly peak in consumption always comes in the early morning, on cold mornings when residents wake up and turn on the heat and various appliances. In the summer, the monthly peak always comes in the late afternoon, when residents use their air conditioners the most to cool down after a day’s worth of strong sunlight.

This means that, to save money on demand charges, Benham will have to reduce its energy consumption in the mornings in the winter, and in the afternoon in the summer. But how big of an effect would this have? One way to demonstrate the possible savings is to show how much less the town would pay if it could reduce its energy consumption in a small number of hours when its consumption is highest (meaning, if Benham reduced its use in the five highest hours of consumption, its demand charge would be based on what is now the sixth-highest hour). Let’s look at January:

This is a “load duration curve”, it takes the hourly energy consumption values in a given period and reorders them from highest to lowest. The bars across the top show where peak demand stands now, and where it’d be if consumption were reduced in the 5 or 10 hours of highest use. If Benham could curtail its consumption in the 5 hours of peak demand in January, it would save $770 in capacity charges. If it curtailed the top 10 hours, it would save $3,000.

If Benham did this every month for a year, the town could save $15,500 by curtailing the top 5 hours of consumption in each month, and $28,200 by curtailing the top 10 hours. That money could be put to a lot of good in a small town, either by investing in distribution upgrades or more efficiency improvements, or by passing savings along to the town’s residents.

Knowing what drives Benham’s energy bills, we can work with the town to think about how to lower costs by reducing peak demand, using some of the strategies that Brian brought up earlier.

We’re working on getting more detailed data on Benham’s energy consumption and will be using it to put together some estimates of the savings that individual residents could see on their utility bills as a result of energy efficiency improvements. Stay tuned!

 

Looking at Options for Benham

(March 26, 2014) – Christian Nicolas Desrosiers

We visited Benham a few weeks ago to look at different options for reducing the power costs.  After a presentation at the city council by Brian and Ryan, we spent the rest of our visit visiting different places around the town looking at options to implement energy efficiency improvements and renewable energy installations.

The low-hanging fruit here is energy efficiency.  Renewable energy requires significant capital investments, whereas energy efficiency can be done at lower cost.  For this reason, the focus of this initial meeting has been with Brian and Ryan’s plan to assist the town as it attempts to make these improvements.  We devoted a small amount of time to looking at the opportunity for renewable energy.

The main focus has been the rooftop of the Benham Coal Mining Museum.  The museum is a large building next to the city council and it has a large flat roof that is a prime location for a solar energy installation.   In addition to the practical utility of such a project, putting solar on the roof of the coal mining museum – as coal jobs continue to decline in the region – would have significant symbolic value as Benham and Kentuckians for the Commonwealth (KFTC) seeks to transition to from to a new, more robust economy.

Over the coming weeks, I will work with faculty at Southeast Community College (SCC) to look at the possibility of creating an enterprise program for the region.  The goal is to institutionalize a program that builds on local capacity and opportunities for new modes of energy generation.  In this work, I will attempt to adapt what I have done with my start-up, Qorax Energy, which operates in Somaliland, the autonomous region in northwest Somalia.  There, we partnered with a university to create a renewable energy and entrepreneurship training program.  Although many of the infrastructure challenges are quite different between the two communities, I believe there is enough of an overlap to be productive.

The main skills necessary are with electrical work.  Having access to licensed electricians will be the key part of building a renewable energy industry in the region.  The solar-specific parts are relatively less technically complicated compared with the basic skillset of an electrician.  We could build on those skills with training in enterprise development.

There are strong partners that have been involved in the Benham project that will play a key role.  In particular, there is the Mountain Association of Community Economic Development (MACED), which does a lot of energy work.  I’m looking forward to advancing discussions with them after talking with the SCC faculty in the coming weeks.  One of KFTC’s objectives is the development of cooperatively-owned businesses, so I am confident that we will find strong partners in this work.

 

The Potential for Worker Cooperatives

(March 27, 2014) – Christian Nicolas Desrosiers

The laws governing distributed solar energy generation in Kentucky inhibit a profitable industry being built up.  The state’s “net metering” law says that if a homeowner produces his own solar energy, he can get credits from the utility up to the point at which he puts more energy on the grid than he consumes.  This means that the customer can never turn a profit from the utility for producing solar energy.  This makes it very difficult to arrange financing because investors will not have much potential to earn a return.

Kentuckians for the Commonwealth (KFTC) is working on passing a “feed-in tariff” law which would allow generators of distributed renewable energy to get paid for that energy so that they can calculate a guaranteed return on investment.  KFTC has introduced this into the public discourse over the past few years and it has gotten multiple hearings at the state legislature, but it is still unclear when it will be passed.

In the meantime, I have spent this second visit to Benham – and to Harlan and Letcher counties in general – talking with community members about options in the interim.  The primary opportunity seems to be organizing worker coops around energy efficiency upgrades.  The idea is to have the coop supply the initial capital investments for the efficiency upgrades and then the customer repays from the savings on the electric bill.  The interest will be then reinvested in the coop.

We have an idea to create a non-profit investment fund – hopefully seeded by philanthropic donations – to provide financing to the coop for such work.  The idea is based around the Acumen Fund model.  Acumen is headquartered in New York City, but develops most of its projects in Latin America and Africa.  They are effectively a socially-minded private equity fund that provides growth capital to social enterprises.  Most notably, they allow for long repayment horizons to allow businesses to look beyond short term profits and pay more attention to social externalities.

The first step will be estimating the size of the potential market in Appalachian Kentucky.  I will attempt to do this by using statistical analysis of sample data from the Mountain Association for Community Economic Development (MACED).  MACED has data on the investment required and the cost savings from around 200 homes in the area.  If, after analyzing this data, it appears that there is enough of a financial opportunity, I will begin to work with KFTC and people from the area to develop a business plan around this idea.  There is already a lot of interest for this, so I am hoping that the numbers do indeed work.

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