NJBIZ panel explores energy outlook in the Garden State

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As part of NJBIZ’s latest virtual discussion, experts in the energy sector spoke on the various issues New Jersey faces, such as the overall transition to clean energy and challenges associated with it.

Moderated by NJBIZ Editor Jeff Kanige, the March 31 panel featured:

• Eric DeGesero, executive vice president of Fuel Merchants Association of New Jersey, a Cranford-based advocacy group representing more than 600 petroleum marketers and industry suppliers
• Scott Eversman, managing director and practice leader, Energy, at Diversified Search Group, an executive search firm headquartered in Philadelphia
• Laurie Wiegand-Jackson, president of Utility Advantage LLC, an energy consulting firm in Woodstown that works with utility companies, businesses, government agencies and institutional entities
• Michael Makarski, external affairs manager with Engineers Labor-Employer Cooperative 825(ELEC), a Springfield-headquartered union for the construction industry

During the 90-minute roundtable discussion, panelists dove into topics such as the impact of the war in Ukraine and Gov. Phil Murphy’s clean energy goals. They also discussed the push for electrification as well as the condition of New Jersey’s energy infrastructure and grid capacity.

The speakers weighed in on their thoughts on legacy sources and alternative sources, along with preparing and retaining a workforce for the future.

A full recap of the panel will be available in the April 10 issue of NJBIZ.

‘What can I do today?’

When it comes to the state’s energy master plan, DeGesero said there are many questions.

“We still do not know what it costs in the building electrification sector and in the transportation sector … We are now entering what will be the fifth July that I have spent with the energy master plan and we still have no idea what it’s going to cost,” he said.

So far, the New Jersey Department of Environmental Protection (DEP) has provided a ratepayer analysis but not offered an estimate for how much it would take to convert residences, commercial buildings and industrial facilities, DeGesero said.

After doing its own analysis using economists from The Manhattan Institute for Policy Research, Makarski said the estimated cost of implementing New Jersey’s energy plan is around $1.4 trillion between 2020 and 2050, which includes a 5% inflationary component. According to him, the estimate encompasses the entire energy master plan, from renewable generation upgrades to infrastructure for electric vehicles and grid updates.

Wiegand-Jackson said she believes pinpointing an exact cost is “nearly impossible” because “we still don’t know yet what technologies are going to end up being the winners that really bear out to be cost-effective.”

She went on to say it’s also unknown “where the dollars will go as we develop more solutions.”

“That’s part of what money does — it prompts R&D and it gets businesses starting to invest and then we move to commercialization and things start to be affordable,” she said. “So it’s really hard to say what the future is going to look like in 10, 15, 20 or 30 years from now,” Wiegand-Jackson said.

That’s part of what money does — it prompts R&D and it gets businesses starting to invest and then we move to commercialization and things start to be affordable.
– Laurie Wiegand-Jackson, president, Utility Advantage LLC

She went on to stress that there are steps businesses can take today.

“Energy efficiency is an important part of the New Jersey Energy Master Plan. It’s also an important part of the Inflation Reduction Act – a lot of money is going into that,” she said. “… Energy, efficiency or projects that replace less efficient equipment with more efficient equipment upgrades that equipment to use less energy.”

“The impact that we can have on the demand for energy helps us to address things like how much it’s going to cost to build resources, to supply that energy. So, we should be doing everything we can to reduce demand, and then be looking on our supply side as to how to manage that.”

“One of the first things to do is look at how you’re using energy. How can you participate? And what kind of equipment do you have that could benefit from an upgrade and start spending money on that,” she said. “And then there’s programs that are buying down the cost of that to give decent ROIs … Now is the time, because there is more money being put into giving you incentives to help buy more efficient equipment and the … financing programs that they’re putting out there.”

Wiegand-Jackson said, “I always bring it back to ‘What can I do today?’ As a business owner myself, I’m not paying attention to what’s going to happen 10, 15, 20, 30 years from now. I’m paying attention to what’s happening this year, maybe the next year and potentially the year after that in terms of my planning process – the commitments that I’m making, where I’m going to spend capital and where I’m going to invest in growing my business.”

“We have to have policy people and have to be focused on the future — we can’t ignore it,” she said. “But as a business owner, we’re really focusing more on the near term than those long-term objectives.”

Charging ahead

DeGesero and Makarski also spoke on the challenges of transitioning to a fleet of electric trucks.

“First and foremost is the cost of a truck cost of a new class 8 tractor trailer today is about $150,000,” DeGesero said. “And the cost of an EV tractor trailer, if you can find it, is $450,000.”

“Then, there is the battery. A truck can only have about 80,000 pounds max weight. The truck, the cabin and the trailer can have about 35,000. So that gives you 45,000 of payload, but the battery configuration you need is about 4,000. So, now you’re looking at 8,000 or 9,000 of your total payload that you can operate with in heavy duty trucking because of batteries,” he said.

Another obstacle involves the amount of time it takes to charge heavy duty trucks, according to DeGesero.

“You’d need the equivalent of anywhere from a couple of hundred to a couple of 1,000 homes, depending on the size of the charging array that you need to charge heavy duty vehicles quickly. That is such a massive undertaking,” he said.

“On top of everything else there are better answers today as relates to low carbon, liquid fuel and hydrogen, potentially as a long term answer … I don’t see how they’re going to do it electrically with big vehicles anytime soon, and if you run a passenger bus, you know systems like we have in New Jersey, and a pretty big one, an electric bus in cold weather, with the heat on, is going to get you 10, 15 miles until it needs to be recharged,” DeGesero said.

We never planned for having 90,000 electric vehicles in the State of New Jersey. They didn’t exist yet … so our infrastructure, from a road and bridge standpoint, is just not necessarily ready for that.
– Michael Makarski, external affairs manager, ELEC

Makarski said, “When you look around the state of New Jersey … you know we are a populated dense state with infrastructure that’s a little older, and because of the complications around that, you know, the cost to repair our infrastructure is significantly higher than if you were building a road in Wyoming, where it’s less complicated.”

“We never planned for having 90,000 electric vehicles in the State of New Jersey. They didn’t exist yet and we weren’t prepared for that, so our infrastructure, from a road and bridge standpoint, is just not necessarily ready for that,” he said.

“These are things that we need to start thinking about going forward, as we’re going to put heavier vehicles that are going to do more damage to the roads. And I would be remiss in saying that if these vehicles are going to be doing more damage to the roads, we then need to figure out how electric vehicles – which don’t pay gas tax to contribute to fixing the potholes – how they are going to contribute to the state’s Transportation Trust Fund, because right now those 90,000 EVs are getting a free ride. They’re not paying state sales tax, nor are they paying state gas tax. So, that’s a whole separate conversation that folks are going to have to have in in the legislative chambers,” Makarski said.

Energy independence

Eversman, who served as a Russian linguist while in the U.S. Air Force three decades ago in Europe, said, “Europe has to transition away from dependence on Russian oil and gas and the United States has a critical role to play in that process. So, our decisions in our energy mix are going to impact directly how quickly Europe can wean itself from Russian oil and gas. And it’s also going to it also has ramifications for us because we have our issues of you know, how do we invest in infrastructure? What kind of infrastructure? Where do we put our investment dollars?” he said.

He noted that the Inflation Reduction Act “had a profound impact on European thinking” because many large energy companies abroad, some of whom are very active in New Jersey, such as offshore wind company Ørsted, “These companies began to discuss shifting capital to the United States because it had a more favorable investment environment, quicker return on investment, and that prompted the EU to kind of try to get its arms around its legislation, which it hasn’t entirely done yet,” Eversman said.

“National security has always been closely interwoven with the energy policy, and so today, I’d love to see us take the necessary action to ensure that Europe can transition away from Russian dependency and that we can be the big swing producer in the transition and make sure that our European friends are able to continue with their industry as uninterrupted as possible,” he explained.

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Eversman said, “Energy independence is a must have because it gives us optionality and so many other things when it comes to our national life. That said, how does that calculus change? If we have another couple of frequent, you know, hurricanes here on the East Coast that bash New York, Philadelphia and New Jersey, and cost billions of dollars to rectify that will certainly sober people’s views on it.”

Wiegand-Jackson said, “I’ve been talking to businesses, business owners and people in government about what’s going on in our energy markets right now and how that’s going to impact them. And one of the things is that we’ve had sort of a decade, very stable and fairly low natural gas prices, and that was really brought about by the technology that allowed us to go in and pull natural gas out of shale. And then what we’ve done is heavily invested in that, and we have a significant supply.”

“And so here we are with this great capacity and the idea of being energy independent,” she continued. “We’ve always understood that as being important for those of us that remember back in the ’70s, the oil crisis, and you know, waiting in line to fuel our cars. So, here we are again looking at ‘How do we become energy independent?’ and ‘And how do we help our allies be energy independent?’”

Wiegand-Jackson went on to note that the public isn’t necessarily aware of how dependent Europe is on Russian oil and natural gas.

“So, we have the role to play. It’s a great opportunity. We’re already exporting natural gas out. This is a good way for us. Natural gas is a transition fuel. It’s not the ultimate fuel, but it’s a very important transition fuel while we figure out how to become more renewable and have reliable systems that are renewable based,” Wiegand-Jackson said.

Market volatility

Panelists also discussed price increases in the energy market.

“When demand increases, it’s going to cause an increase in prices, and we saw that last year, with prices going up and being much more volatile than they have over like the past decade. But for this, you know, kind of warm winter that we had, we’d be looking at kind of different picture on our utility bills. But we did see some of that in terms of going into the summer and fall of last year, and prices being higher,” Wiegand-Jackson said.

“As a business owner, I would say that you need to start paying more attention to your utility bills, and how to manage those costs more effectively, because we’ve come out of that period where things have been more stable and lower priced, which was great. Natural gas is also the driver for electric prices in the state of New Jersey, so, it’s impacting both your natural gas and your electric prices,” she explained.

New Jersey’s mild winter is just one of a few factors playing into the price of energy today, which is lower than it was when Russia invaded Ukraine in February 2022, according to DeGesero.

“But I think it’s the volatility that you are seeing in the market, and from a business owner’s perspective, the one thing that business owners – especially in energy intensive industries – like to do is hedge their risk,” he said.

“One [component] is making sure you have the physical supply of your diesel, or natural gas, or heating oil, etc. And the other is to make sure that you can anticipate a reasonable cost that you can factor into your manufacturing and transportation and the challenges, while the price is lower because of the volatility in the market, the cost to hedge your exposure has dramatically increased,” DeGesero said. “ … We’re in a good swing to the downside now, but that makes hedging your risk going forward more expensive because of the increased volatility in in the marketplace.”