In the Chinese art of character writing, a crisis is represented by combining the individual characters for the words threat and opportunity. The intertwined meaning captures the city of San Diego's experience during the California energy crisis of 2000 and 2001.

The city rang in the New Year of 2001 in the midst of an unprecedented energy emergency resulting from the 1996 state energy deregulation plan devised by California's legislature. The plan deregulated the wholesale, but not the retail, price of electricity and required investor-owned utilities to divest themselves of their generation facilities and to become energy distribution companies.

The plan was built on the assumption that competition would result in new energy facilities being brought on-line and a lowering of overall energy costs. But that didn't happen. Instead, out-of-state generation companies found they could increase energy prices and profits by not generating as much energy and creating a scarcity of energy on the spot market.

City of San Diego metropolitan wastewater facility

This strategy was highly effective because utility companies were precluded from entering into long-term energy-supply contracts at fixed prices and the energy spot market became highly volatile with wholesale energy prices increasing as much as 4,000% in one hour of trading on a day when demand significantly exceeded predictions.

The results were skyrocketing energy costs that threatened San Diego's economic well-being and an energy shortage that left the city facing the potential of rolling blackouts for the first time since World War II.

The seaside city of 1.3 million people already had declared a state of economic emergency in July 2000 after its energy bill surged from $17 million to $34 million in one fiscal year, placing some public services on the budgetary chopping block to absorb the difference. During that summer, energy prices had gone from being stable and based on the cost of production to being highly volatile and based on what the market would bear.

By January 2001, Governor Gray Davis had proclaimed an energy state of emergency because of the high probability of electricity-supply shortages that could significantly impact California's economy, health, safety, and environment.

Power-plant outage rates had increased to three times the normal amount and resulted in 40 days of Stage I, II, and III electricity supply emergencies in December 2000 and January 2001. California was hit by rolling blackouts throughout the state on January 17, 18, and 21, 2001.

Just a few days after Governor Davis declared an energy state of emergency, San Diego's newly elected mayor, Dick Murphy, delivered his first State-of-the-City address in which he proposed 10 goals to address major issues and develop opportunities for the city.

Goal No. 9 was to pursue energy independence and have San Diego carve out its own path as a model city in terms of energy conservation and renewable energy resources rather than depend on actions in Sacramento. To get there, Mayor Murphy called on the city manager to create the position of "energy czar" within the city's Environmental Services Department.

Two weeks later, the city council unanimously approved Mayor Murphy's recommendation to establish an energy conservation and management program. The following day, the city manager appointed an interim energy administrator to implement the program and develop a permanent central staff to manage the city's energy programs and accounts.

The new Energy Conservation and Management Division was assigned to the Environmental Services Department under the direction of Richard L. Hays. The department already had a track record of advancing energy efficiency and the use of renewable-energy sources, including development of the Ridgehaven Green Building, the first in the nation to be designated as an Energy Star Building by the United States Department of Energy and the US Environmental Protection Agency.

Establishing the city's energy program in the Environmental Services Department was a clear message that energy use was not just a financial issue but an environmental issue as well.

A Stepping-Stone Approach
But energy independence doesn't happen overnight. The city developed an intertwining energy strategy that began with simple, low-cost measures at its foundation and branched out toward long-term solutions. The city's five-part energy strategy is as follows:

1. Conserve energy and increase awareness of the need for energy conservation.
2. Manage city energy use.
3.Improve the energy efficiency of existing city facilities.
4. Ensure that all new city facilities are highly energy efficient.
5. Pursue energy independence in city facilities through self-generation of electrical energy using renewable resources.

Ridgehaven Green Building's photovoltaic installation

While the city's energy strategy was simple and straightforward, it began at a time when the staff to manage the program still was being assembled and statewide energy conditions were so highly dynamic there was a great deal of uncertainty about whether there would even be adequate energy supplies to meet the state's energy needs.

The city started by focusing on energy conservation and gaining control of the city's energy bills, then expanded to starting the ball rolling on the final three items while continuing to concentrate on energy conservation improvements and management of the city's energy use.

Some of the programs and actions undertaken to initiate the strategy included the following:

Conserve Energy
With an expectation for immediate results looming, the city started by raising employee awareness of energy supplies and costs. The focus was on simple low-cost or no-cost measures to reduce energy use. Notes reminding employees to turn off lights when leaving a room were posted near light switches. Thermometers were turned up a few degrees, and use of natural lighting was encouraged.

While it had been the city's practice to continuously leave on computers and other office equipment under the belief it lengthened the machines' operating life, a campaign was mounted for employees to do just the opposite.

Just turning off a computer and monitor at night and on weekends was estimated to save $8 a month in energy costs. Multiplied by 10,000 computers, the city saved $960,000 a year with the flip of a few thousand switches.

In calendar year 2000, total city energy use was 203 million kWh. Through the city's Summer Action Plan and Winter Action Plan, employees reduced energy use in 2001 by 23 million kWh to 180 million kWh, or by 12% compared to the previous year.

Because of the success of the initial programs, conservation efforts will be a continuing priority in the city's energy management strategy.

Manage City Energy Use
In July 2001, the city established the Energy Conservation and Management Division, with an $800,000 annual budget, to focus on reducing the city's energy consumption and costs, develop a public outreach program, and facilitate the use of renewable-energy resources as an initial step toward energy independence.

At that time, the city received paper bills for each of its more than 2,800 electrical and natural-gas meter accounts on a monthly basis. Each bill had to be manually entered into the city's database twice: once for consumption data and once for fiscal control and payment. The process was labor-intensive, was prone to errors, and left little time for analysis and reporting of energy use to decision-makers. Energy usage reports were normally three months in arrears, and each city department was responsible for its own energy-use planning and management.

To form a more accurate view of the city's energy use, the Energy Conservation and Management Division began taking over administration of the city's energy bills and developed a plan for automating the payments, called Electronic Data Interchange, so more time could be spent on analyzing energy usage.

Instead of 2,800 individual accounts being paid by different departments, all the bills are transmitted electronically to the energy division for review, where software automatically checks to verify all billings are for valid city accounts and creates an exception report if there are unusual usage trends that warrant a review of the tariff being charged.

After approval, the bills are forwarded to the city auditor's office. Here, more software automatically validates that each bill was allocated to the proper budgetary account. The bills are then transmitted to the city treasurer's office where a wire transfer of funds is made to the utility's bank on the day before payment is due.

All of this takes place without paper documentation. Any errors detected during the review process are corrected in the next billing to ensure that the process flows smoothly. The new system not only reduces paper waste but also allows for greater oversight of energy consumption.

The system took two years to develop, including validating each meter, account number, and city facility receiving electrical services from the local utility. The system went live on September 1, 2003.

Enhance Energy Efficiency in Existing City Facilities
The city changed out T-12 fluorescent lights for more energy efficient T-8 fluorescent lights with electronic ballasts. Across the city, 30,000 traffic signals were converted from incandescent lighting to LED bulbs. The city also replaced older heating vent and air-conditioning systems with new high-energy efficient units, which were up to 40% more cost-effective.

Another area of potential energy efficiency often ignored is "plug load," which can be 30%–40% of a facility's daytime usage. The plug load includes computers, monitors, printers and copiers, fax machines, fans, and space heaters. San Diego banned the use of personal fans and space heaters by employees and began a transition to replace all printers and copiers with Energy Star–rated electronic equipment. Additionally, the city standardized its computers with thin-film-technology monitors that use 90% less energy than cathode-ray tube monitors do.

Pursue Energy Independence
The city is fully committed to distributed generation as an essential component of achieving energy independence. Currently four city distributed-generation facilities, fueled by landfill gas and methane gas from the wastewater treatment facility, generate almost 17 MW of electrical energy. In 2003, more than 130 kW of solar energy panels, or photovoltaic (PV) energy generation systems, were installed at three city buildings. More are in the development stages, including an ambitious plan to power the city's famous Balboa Park museums and zoo using solar cells and electrical energy generated from landfill gas from a landfill located within the park.

Ensure Energy Efficiency in New Facilities and Major Remodels
In 2002, the city council passed a resolution mandating all new city buildings and major remodels meet the Silver Level Certification standards set by the US Green Building Council Leadership in Energy and Environmental Design (LEED), which are 25% more rigid than California's energy efficiency requirements.

All buildings designed to achieve this level of energy efficiency will qualify to be designated as Energy Star buildings once they have operated for a full year and validated their energy efficiency. Currently 16 new or replacement fire stations are being designed to the LEED Silver Level Certification and the city's new landmark central library is being designed to achieve the Gold Level Certification as a symbol of the city's commitment to energy conservation and sustainability.

Although the immediate crisis faced in those tense months of the energy crisis has faded, high energy prices still are an issue, with costs remaining higher than prederegulation levels, says Tom Blair, the city's first energy administrator.

"Years ago, most companies viewed energy costs as a fixed cost," Blair points out. "Now companies view energy as a variable cost and a cost that needs to be controlled."

A Building Makeover
A $6 million project currently underway at the city's police headquarters encompasses most of the goals set out in San Diego's energy independence strategy. The seven-story building built in 1986 is the city's second-largest energy user with its antiquated heating, cooling, and lighting system consuming about 800 kW of electricity and costing nearly $1 million to operate 24 hours a day, seven days a week.

Inside the massive blocklike structure sits the nerve center of San Diego's police force with the department's administrative and support staff, including the chief of police's office, central communications, police records, and the crime laboratory, all housed inside the 165,000-ft.² building. An additional 265,000-ft.² parking lot is located beneath the structure.

The main goal of the retrofitting is twofold: Make the police headquarters self-sufficient for its power while reducing energy consumption by replacing major mechanical components and bringing in new technologies, such as cogeneration engines to make electricity at the site. "Not only are we creating our own renewable power, we're also trying to better use the power we're already using," Blair says.

The $6 million price tag is being financed by a master lease agreement with a San Diego County company, Onsite Energy. Using energy savings, the police department will contribute an amount equal to the net cost from the department's energy budget, not to exceed the $500,000-a-year savings guaranteed by Onsite Energy, until the project is paid back over the next 12 years.

Blair says the city has worked on several other similar projects with the company, which makes up the difference if the savings guarantee is not met. Other Onsite Energy projects have come out far ahead of savings estimates, he adds. "The numbers we're using are very conservative. We've already seen significant improvements."

The police headquarters project consists of eight major components, which bundled together allow the city to pay back the cost in 12 years, although some of the modifications won't generate the savings needed to equal the installation cost for twice that period of time. Others changes will be paid in two to four years.

Take the application of Lumar high-performance reflective window film on the outer surfaces of the building, which primarily is made of glass. New technology in the industry will reduce outside glare and the amount of solar heat coming into the building by 55%. The $108,000 cost is estimated to be absorbed in less than four years.

As with other city buildings, the headquarters lighting is also being converted from T-12 fluorescent lights to more energy-efficient T-8 lamps with electronic ballasts, a major source of savings in a building that never closes down.

That change reduced wattage from 123 W to 107 W, with a total reduction of 4 kW. Motion sensors also will be installed in the parking garage and office areas to control lighting levels and reduce daytime use. The net cost of $128,713 is estimated to take almost six years to pay back.

One of the larger measures is the installation of a Hess Microgen 250 cogeneration power plant, which will burn natural gas to produce 500 kW of electricity—enough to provide 80% of the headquarters' electricity needs.

Heat captured from the exhaust, which then is used to bring water to a temperature of 205°F, will provide 90% of the building's heat. On the flip side, an absorption chiller to cool water for the air-conditioning system is expected to generate 35% of the power needed to keep employees comfortable in the enclosed building.

Because the system uses its own waste to produce the heating and cooling, the 500 kW generated by the Hess 250 is comparable to about 695 kW in electricity savings. "From one piece of equipment, we get two beneficial uses," Blair says.

In case of maintenance or plant failure, the building still will be able to utilize electrical energy from the utility using two separate feeds from two substations. An energy management system optimizes its operation and prevents self-generated power from entering the utility grid.

The cogeneration plant's $2.1 million cost is estimated to be paid for in eight years. In addition to the onsite power plant, a 30-kW PV power generation system is being installed on the headquarters' rooftop to provide power during peak energy-demand periods on hot summer days.

The city also is replacing the building's uninterruptible power system, which consists of hundreds of large lead acid batteries that can maintain power in key sections of the building for four hours in the case of a massive power outage. The batteries' main purpose is to keep continuous power flowing for the computers and communications systems until the backup generators can reach full power and take over the building's full electrical load.

Replacing the existing lead acid batteries with new-technology gel cell batteries will cost between $150,000 and $250,000. By replacing the system with state-of-the-art batteries, maintenance is reduced, reliability is increased, and the batteries will have a longer life before the next replacement while providing power reliability for the police department's vital communications and computer systems.

The installation of the distributed-energy systems not only allows the vital functions of the San Diego Police Department to operate independent of the grid—an important detail highlighted by the recent blackout on the East Coast—but it also is more ecologically aware.

"Because distributed energy is generated at the site where you use the power, that is a much more efficient operation than generating power a long distance away and then transmitting the power to the site," Blair says, who adds that up to 30% of the power can be lost over transmission lines.

Blair says the project at the police headquarters is also a working example of what private businesses can do to reduce energy use and control costs. "It does provide a model showing what can be done using the different technologies," he adds.

Pursuing Energy Independence
In the two and a half years since Mayor Murphy first established the goal of pursuing energy independence, San Diego has taken a number of steps in that direction. The city established an energy division to manage its power use, launched a major conservation effort that reduced energy consumption by 13%, completed major energy efficiency upgrades on city hall, commissioned a unique 1.35-MW "poop-to-power" hydroelectric generator at the city's wastewater treatment plant outfall, and replaced more than 30,000 incandescent traffic-signal bulbs with low-energy-use LED bulbs.

Three city buildings now use solar energy to meet peak energy needs, with one facility generating enough power to equal its annual energy usage and initiate the project to retrofit San Diego's police headquarters building.

Under policies adopted by the city council, all new city buildings or major remodels larger than 5,000 ft.² will meet strict energy-efficiency standards. Another long-term goal includes increasing the amount of distributed generation—using renewable resource fuels and solar energy—in San Diego by 50 MW over the next 10 years.

But there are still some barriers. Right now the city has to sell back any excess electricity it generates to the utility at a loss. Blair says San Diego is looking at lobbying the state legislature to allow cities to pay the utility company for using the grid to transmit surplus electricity to other municipal sites.

And while solar energy is clean and doesn't make noise or release pollutants into the atmosphere, there are high costs involved in its installation. Blair believes solar cells are bound to follow in the footsteps of computers. Once cost-prohibitive, the computer is now a staple in most American homes. "The same thing is going to happen with solar panels. As the panels become more commonly used, the price is expected to drop significantly," he maintains.

"There are a lot of opportunities. Whether eventually they will be able to be developed in a project has yet to be determined, but we're looking into it. We need to be looking at ways we can efficiently produce energy for growth in the future," Blair emphasizes.

A Look Ahead
City leaders see projects like the police headquarters as a positive step—but just the beginning of what San Diego hopes to accomplish in the next 10 years and beyond.
Energy use in San Diego is predicted to double over the next 30 years as the city's population continues to increase. City leaders are looking ahead to a more independent future by creating new opportunities for clean, renewable-energy sources with the hopeful added benefit of capturing a developing job market for the services needed to provide that infrastructure.

And the city has put the goal in writing. City leaders have taken on an ambitious plan to bring an additional 50 MW of locally generated electricity from clean renewable-energy sources on-line for both public and private uses by 2013. That's enough energy to power 32,000 homes.

"This plan will not only reduce the burning of fossil fuels and contribute to cleaning our air, it will help free the city of San Diego from the whims of the volatile electricity market," Murphy says. "Creating renewable sources of power is the key to pursuing energy independence."

The electricity would come from renewable-energy sources—roughly 35 MW from solar and 15 MW from landfill gases. Currently the city generates nearly 17 MW of power at three sites using sludge digester gas and landfill gas and harnessing the energy potential in the outfall from a wastewater treatment facility.

The mayor and two other city council members have set out on a campaign to garner support for the new energy project, which had its first public hearing on September 3, 2003, by taking their message to the public several times during the last few months at press conferences and in newspapers' editorials.

The plan likely will require a $10 million bond, says Mayor Murphy, who maintains that the energy crisis taught San Diego a painful lesson: Overdependence on fossil fuel–generated electrical power can be the city's Achilles' heel.

Councilwoman Donna Frye agrees. "We are determined to learn our lesson from the 2000/2001 energy crises and take control of San Diego's energy future. By conserving energy and by generating locally produced renewable energy, we will ensure that our homes and businesses have a stable source of energy."

Out from the darkness of California's energy crisis, San Diego is looking to turn a major economic threat into an opportunity to emerge as a city in the midst of an energy renaissance through its pursuit of energy independence.

KIMBERLEY EPLER, a native of San Diego, is a freelance writer based in Arcata, CA.

DE - Jan/Feb 2004