Incentives create mixed effort for cleaner fuels.

Incentives create mixed effort for cleaner fuels.

Columbus' victory in the US Department of Transportation and Vulcan Inc.'s Smart City Challenge isn't just thrilling because of anticipation for better transportation. For Vulcan, it's decarbonization from the source that ignites excitement.

Spencer Reeder, Vulcan climate & energy senior program officer, says Vulcan was looking for cities not just committed to electric vehicle use but also smarter generation of electricity. American Electric Power "is part of that story as well," Reeder says.

"They've committed to transitioning their corporate fleet vehicles, installing electric charging stations and being a part of the infrastructure buildout on the electric vehicle side. But in parallel, and just as important in our eyes, is their commitment to decarbonize that generation of electricity that will become the fuel for these new vehicles," Reeder says.

"The Smart City initiative will help advance the work we're already doing to move to a cleaner energy economy and is an important part of Columbus' and AEP's efforts to reduce our carbon footprint," confirms Nick Akins, AEP chairman, president and CEO.

One way AEP's efforts align with Smart City is through gridSMART-an optimization of power efficiency and convenience-which launched long before the challenge.

"We're focused on providing our customers with new, cleaner energy solutions like smart grid technologies, energy storage, electric vehicle charging stations and universal access to renewables," Akins says.

GridSMART meters have two-way communications, eliminating in-person meter-reading trips and the greenhouse gas that comes with them. Additionally, gridSMART uses volt/VAR control, which lowers customers' energy consumption by reducing or eliminating unproductive current in the form of reactive energy measured by the unit Volt-Amperes Reactive.

GridSMART began its demonstration project in 2009 in northeastern Columbus suburbs and reached 132,000 locations, mostly homes. AEP estimates the project helps avoids 12,819 metric tons of CO2 emissions annually. Phase two, related to Smart City efforts, will reach 263,320 more Columbus locations.

Julie Sloat, AEP president and chief operating officer, calls the company's efforts to reduce dependency on fossil fuels in AEP's backyard a privilege. "To have this in my backyard is thrilling," Sloat says.

A midstreamer's dream

As oil and gas prices remain low, shale drilling and permitting in Ohio has slowed nearly to a halt. Matt Warnock, Bricker & Eckler partner, says that's not necessarily a bad thing.

"You're hitting the pause button on drilling and allowing some of the midstream to catch up-the pipelines, the processing plants, things like that. So, you've seen a large influx of really large scale pipeline projects-many of which are regulated through the Federal Energy Regulatory Commission, which is a federal agency that oversees the siting of interstate natural gas pipelines-so pipelines that cross state boundaries," says Warnock.

There are four multi-billion-dollar Ohio pipeline projects at various stages of the permitting process: The Rover project, which cuts across northern Ohio and goes into Michigan, the Nexus project following a similar route, the Leach Xpress project running through part of West Virginia and southeast Ohio and the Utopia project, a natural gas liquids line running from Ohio's Harrison County to Michigan.

Despite the boom, midstream work isn't quite making up for the jobs and business benefits lost from drilling.

"(Midstream work) hasn't totally compensated for it, but thank goodness it's still there because that's one piece of the puzzle," says David Hill, Ohio Oil and Gas Association president.

The missing piece of the puzzle: footing the bill of drilling costs.

"I think companies have been remarkably resilient. Now, do I think there's going to be more bankruptcy filings? I do. That's just my personal opinion," says Warnock.

Nonetheless, hope is in the air-and in the ground-with the prospects of two ethane crackers, facilities that process ethane into ethylene, which is used in the production of plastics, resins, adhesives and synthetics. Shell recently announced its plan to go forward with an ethane cracker in Beaver County, Pa., and it is expected that PTT Global Chemical will decide in early 2017 whether the company will move forward with plans for a Belmont County ethane cracker in eastern Ohio.

According to Hill, ethane crackers in or near Ohio will create a business boom due to manufacturing plants that will open doors once crackers are in place and the jobs they will employ in both states. But locals throughout the Mid-Ohio Valley-including parts of southeastern Ohio and northwestern West Virginia-can't wait to see results.

In June, a campaign called "Shale Crescent USA" launched to market the Mid-Ohio Valley's resources to the world in an effort to attract companies to set up shop. The campaign, run by individuals and organizations in the valley, operates under the philosophy that locals in the region shouldn't wait for economic growth to come to them.

Claiming that the valley is the most affordable place to buy natural gas in the industrialized world, Shale Crescent USA sites a Bentek Energy graph that notes by 2020, 35 percent of the total US production is projected to come from the region, compared to only five percent in 2010.

Hill recounts, "A good analogy (for this initiative) is many years ago, Gov. Jim Rhodes here in Ohio, he serendipitously heard in the news that Honda was looking for a place to relocate their plants. Within a few days he was in an airplane, goes to Japan, sells them on Ohio and here they are in Marysville."

Unlike in shale industry, that go-getter attitude is hard to employ on the alternative fuel front.

Alternatives await demand

Ohio's unusually low electric and diesel prices mean alternative energy isn't seeing an increase in popularity akin to that in the rest of the country.

IGS Energy awaits increased demand of alternatives such as solar and distributed generation in Ohio, and in the meantime is developing solar and distributed generation in 14 states.

"It's dramatic. I mean (electric) power prices in Ohio are maybe half that of those on the East Coast," IGS Energy President and CEO Scott White says.

Demand, however, may not be the only factor stalling the growth of alternatives in Ohio.

Ohio's renewable energy portfolio standard, which requires that 12.5 percent of electricity sold through Ohio electric utilities or services must be generated from renewables by 2027 was frozen in June 2014. The freeze, still in place, makes ventures in renewables too risky for some investors.

"There's a lot of attention drawn to the fact that the legislature took an existing requirement … and they interrupted that cycle," White says.

When it comes to an energy source that individuals have more say in, like vehicle fuel, alternative fuel compressed natural gas is taking a hit, despite the fact that it remains cheaper than diesel.

"CNG is a market that is developing slowly in part because of the collapse in oil and diesel, making the price difference between CNG and diesel narrow. … But it's still cheaper to use CNG than it is diesel; it's cleaner and in the long term we still believe that there's a place for CNG, specifically in the heavy trucking industry or large vehicle industry," White says.

A standstill in alternatives, however, isn't stopping the state from reducing some of its emissions with projects ahead, like materializing Smart City Challenge plans.

Julie France is staff writer.