The Future of Clean Energy with Kenneth J. Sheehan, Esq.

Genova Burns has been serving our clients' corporate needs for 35 years. As John Quincy Adams said, he who tells the best story wins. This is our story. My name is Ken Sheehan, Counsel. I am the chair of the Energy and Utilities Department here at the Firm. And today we're going to be talking about energy and clean energy.

What are the major issues on the energy front that I'm seeing these days?

Primarily one of the major issues we're seeing right now is cost. In the State of New Jersey, the Assembly held a hearing not too long ago to discuss the impact of electricity costs on consumers. One interesting takeaway from that was the time spent on residential consumers, but very little time was spent on commercial consumers, despite the fact that in New Jersey commercial and industrial customers use nearly 60 percent of the electricity, therefore paying about 60 percent of the costs.

Electricity, as you can imagine, is one of those things that is not the bill you can push back too far. So small and mid-sized businesses are religious in keeping an eye on what they're spending, how they're spending, what it does to the bottom line. The state of New Jersey is pushing for an increase in clean energy. That certainly comes at a cost. And as that cost continues, small, mid-sized, and even large companies are having to face questions about can they stay in New Jersey, should they stay in New Jersey, what type of energy process should they use, should they stay with the standard electric companies that you're aware of, the PSE&Gs, the JCP&Ls, should they go to the third parties, should they take a look at time of day, where you can change what you're doing, should they be looking into things like interruptible gas service, where you agree to pay less for your gas, but the gas company can shut you off when they need to. So, all of these are the types of things that we're seeing set the framework for the government's actions on pushing offshore wind, nuclear, solar, geothermal, and other clean energy technologies that hopefully we're going to get a chance to talk about. Offshore wind in New Jersey has been a process.

What am I seeing and where do I expect that to go?

The original offshore wind act in New Jersey actually started in 2010 with what was supposed to be a very small test project off the coast of Atlantic City. That did not work, as you can imagine, since you can't see any windmills off the coast of Atlantic City right now. And the process since then has been growing in fits and starts. New Jersey's in competition with other states up and down the east coast. Massachusetts, Virginia, New York, Delaware, Maryland. And in each case, each of these states is setting up a process by which companies can bid and be awarded subsidies. Two of the major issues we're seeing in the process is, one, nobody yet has a beachhead. So there's no place on the east coast where you can really build the turbines, set up the manufacturing, reach the open ocean, and move forward on that one. And the other one in complete candor is many of the offshore wind companies have been using a ready fire aim process where they've bid, been awarded, and unfortunately come back some time later to the entity that has awarded them the subsidies to say they can't do it, it's not enough. We've seen that in New York, we've seen that in New Jersey. The hope is that we're going to get an industry going. State of New Jersey is doing its darnedest to support that. But it's the kind of thing where we're going to have to really get a process whereby companies can bid and then build. But wind has not been a New Jersey success to date. That being said, the government is doing everything in its power to set an expectation of enough gigawatts coming out of offshore wind that when they're all running and spinning and producing electricity, that should cover probably the entire base load of the state of New Jersey. But we will see if and when that can happen. Nuclear power has been in the news a lot lately.

What's the significant concern and impact of nuclear power in today's energy market?

You've likely seen that Three Mile Island is about to be restarted in order to serve the needs of data companies, Microsoft, Google, Facebook. These data centers and artificial intelligence companies have been sprouting up and they need significant, continuous, uninterruptible energy power. They're probably at the forefront right now of restarting a nuclear renaissance. That is me being a little optimistic and probably showing my true colors on that one. Whether it's the... Restarting of recently shuttered nuclear power plants, like Three Mile Island, the construction of new nuclear, which we have seen in Georgia at the Vogel plants, where we've got two new turbines up and running, although at a cost of about $35 billion. Or small modular nuclear reactors, which is a technology where you're taking facilities that are going to be 10 or 20 megawatts, chain them together, and they are considered to be extremely safe. Each of these are likely going to be something that New Jersey and the United States are going to have to look as we're moving forward. One advantage of them is the energy independence. The United States has the ability of its own cache of nuclear fuel. It does not have to depend on other countries for that. You've got the safety. I mean, these are well built, well maintained facilities. You also have the advantage of these are clean energy technologies. There are no emissions from nuclear power, and nuclear power is one of the few technologies that will operate 24 hours a day, seven days a week, 365 days a year, whether the sun's out, whether the rain's out, whether the wind's blowing at night, at day. So that base load, which again in New Jersey, a good 40% or more of the power produced in New Jersey is produced from just three nuclear power plants that we have in the state. This is the kind of power that we're likely going to be looking for at least for the near to midterm.

What do you see as the most important next step in the clean energy transformation?

In my opinion and in my hope, I hope there's a young man or a young woman in a garage somewhere working on battery technology because the day we have effective, inexpensive batteries is the day the entire energy economy changes. Don't think I'm overstating it, it would be similar to the importance of the transistor. If we have an ability to store energy created whenever, wherever, to be used whenever and wherever, much of what we've discussed becomes moot. You don't need natural gas, you don't need coal plants, you don't need fossil fuels. The fact that solar and offshore wind only produce electricity anywhere between 20 to 50% of the time is a non-issue at that point. Good, solid storage technology will allow for you to use power when you want to, where you want to, no matter when it was generated. That will be transformational. I would advocate if we were to be looking at a Manhattan project for energy, I think the place to spend the time and the money would be on that battery technology. Find something that the United States has in abundance. Find a technology that the United States can develop. In the absence of cold, cold, cold fusion, I think this is our absolute best chance and I think this has the advantage of actually not being 30 to 40 years away. With luck, these batteries will be the types of things that can be everywhere. There will be power plant size batteries which will be used to service municipalities and regions. There will be batteries in hopefully your home or your apartment. As we move forward on cars, those cars will become two-way. As much as you're charging that vehicle and sometimes that vehicle may be charging your house. The expectation, I hope, is that we're going to see a full transformation of the way power is generated and delivered. New Jersey as a state and the United States as a whole is going to really need to step up the clean generation. Nuclear will have to be in the mix. Solar will have to be in the mix. Offshore wind will likely have to be in the mix. And the state of New Jersey needs to not only continue where it is, but continue to push to get more better generation onboard as quickly as possible to work in cooperation with its existing utilities, with new technology and with the existing customer base, residential, commercial, and industrial, to reduce usage where they can, increase generation where they can, develop new technologies as they become available, all while trying to ensure that the state remains a place where everyone can afford to stay and pay their electric bills.

My name is Ken Sheehan. I am Counsel at the law firm of Genova Burns, working in the utility industry. If you have any questions, any concerns, would like to continue the discussion, please do not hesitate to reach out. I look forward to working with the industry, working with individuals, working with corporations on New Jersey and the United States' energy future.