Purchasing and Negotiation Training

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Apparently, not very many people are interested and manufacturers are getting the message.  The high profile troubles of Tesla Motors and most recently, Toyota,  are proof that the electric car is far from ready for prime time.  Tesla, a US company known for marketing its electric cars markets well- heeled customers but are also notorious for its fire prone batteries.

This week, Toyota announced a priced reduction of its Prius Plug-in for the 2014 model year.  Without altering the vehicle specs, the MSRP for 2014 Prius Plug-in Hybrid will be $29,900 after the $2,000 reduction.  Press accounts quote unnamed Toyota officials as admitting that “price repositioning” is the only way that Toyota can hope to sell the Prius Plug-in.

What are the problems with electric cars?

The 2013 Toyota Prius plug-in hybrid gets a combined 95 miles per gallon gasoline equivalent(mpge), or 50 mpg in gas hybrid mode. In electric only mode, however, it has a mere 11-mile range.  That is a severe disadvantage.  Despite the hype surrounding Tesla, with a near decade long history, sells only a few thousand vehicles per quarter.  A fully loaded Tesla S carries an MRSP of about $90,000 and the Tesla Roadster sports an MSRP of $109,000. Because of low production capacity, customers must to wait months to get one of these toys for the wealthy.

Further, the reputation for the dangers associated with electric cars is exceeded only by their deserved reputation for impracticality.  A fully charged battery cannot take the car only a tiny fraction of the distance as can a hybrid or gas engine.  Location of charging stations is a significant worry.  Service technicians who can fix these electric cars are extremely scarce.

Most of all, the inane concept of charging an electric car with fuel produced by fossil fuels is the height of foolishness and an insult to any serious student of sustainability.

The price reduction conundrum

With the popularity and market share of the Prius line, which arguable has made the hybrid car a mainstream product, it would seem that the brand association, at the very least, would fuel success for the Prius Plug-in.  Neither has its 95 mpg mileage.

Toyota’s price reduction aligns with price drops across the board for plug-in vehicles, whether sold or leased.  The Nissan Leaf, Fiat 500e and the Chevy Spark can be leased for $199 a month. In June, Honda dropped the Fit EV from $389 to $259 a month. In July, Ford slashed the Focus EV by $4,000. In August, GM cut $5,000 off the sticker price of the Chevy Volt.

The manufacturers claim that the price reductions in the Volt and Leaf have arisen from the economies of scale of increased production and lithium-ion batteries.

What is driving the price reduction?

The main motivation for the electric vehicle price wars, however, is to move units at a discount and reevaluate the strategy given the Zero Emission Vehicle (ZEV) Effect. which claims that  the only reason Tesla finally turned a quarterly profit was its sale of carbon tax credits, hardly a sustainable phenomenon in both senses of the word.  The ZEV mandate in California aims to achieve a 15 percent level of emission free vehicles by 2025.

Would you buy an electric car?

I certainly would not and for the impartibility, safety, and cost problems cited above. Most of all, this whole electric concept is a slap in the face to the environment.

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note: This is the fourth and final part of a series on the battle that ended the American Civil War and the negotiations between Confederate General Robert E. Lee and Union General Ulysses S. Grant.  Click here for Part One and here for Part Two.    Part Three is available here.

Negotiation Lesson Six         Always close with honor, dignity, clarity, and amity

After Lee’s departure for the evening, Grant telegraphed President Lincoln in Washington.  Grant also commanded a cessation to celebration by the Union forces that were firing volleys into the air so that no exultation would be shown to the Confederacy over their downfall.

Before Grant left for Washington “with a view to putting a stop to the purchase of supplies, and what I now deemed other useless outlay of money” he visited Lee with one last request.  In negotiation we call this nibbling.    “…so next morning I rode out beyond our lines towards his headquarters, preceded by a bugler and a staff-officer carrying a white flag.”

“Lee soon mounted his horse… and met me. We had… a very pleasant conversation of over half an hour, in the course of which Lee said to me that the South was a big country and that we might have to march over it three or four times before the war entirely ended, but that we would now be able to do it as they could no longer resist us.  He expressed it as his earnest hope, however, that we would not be called upon to cause more loss and sacrifice of life; but he could not foretell the result.”  

“I then suggested to General Lee that there was not a man in the Confederacy whose influence with the soldiery and the whole people was as great as his, and that if he would now advise the surrender of all armies I had no doubt his advice would be followed with alacrity.  But Lee said, that he could not do that without consulting the President first.  I knew there was no use to urge him to do anything against his ideas of what was right.” 

Grant had no choice but to agree to Lee’s demurral, based as it was in reality.  Further, Grant had use the “higher authority” tactic just a day earlier.  While both generals desired no more loss of life or destruction, they recognized that the vastness of the country and the state of communications could require months before the news was accepted.  Indeed, the last Confederate General to surrender was Cherokee chief Stand Watie on June 23, 1864.

As to amity, Grant recorded this observation.  “I was accompanied by my staff and other officers, some of whom seemed to have a great desire to go inside the Confederate lines.  They finally asked permission of Lee to do so for the purpose of seeing some of their old army friends, and the permission was granted.  They went over, had a very pleasant time with their old friends, and brought some of them back with them when they returned.”

With obvious great desire to return to some form of normalcy, Grant wrote, “When Lee and I separated he went back to his lines and I returned to the house of Mr. McLean.  Here the officers of both armies came in great numbers, and seemed to enjoy the meeting as much as though they had been friends separated for a long time while fighting battles under the same flag. For the time being it looked very much as if all thought of the war had escaped their minds. After an hour pleasantly passed in this way I set out on horseback, accompanied by my staff and a small escort, for Burkesville Junction, up to which point the railroad had by this time been repaired.” 

Would this ending has been anywhere near as good if both generals, and particularly Grant, had not been so gifted in negotiation?

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note: This is the third part of a four part series on the battle that ended the American Civil War and the negotiations between Confederate General Robert E. Lee and Union General Ulysses S. Grant.  Click here for Part One  and here for Part Two.   For a short but instructive video filmed on site describing the days leading up to the surrender, please see this instructive video.  These next two post are filled with quotes taken from Grant’s memoir.

During their meeting to discuss the terms of surrender, as Grant wrote in his memoir, “I said I meant merely that his army should lay down their arms, not to take them up again during the continuance of the war unless duly and properly exchanged.  He said that he had so understood my letter.  The two generals shared some small talk, during which time Lee informed Grant that he remembered the junior soldier well from years before, an observation that Grant doubted, although he did not verbalize his suspicion at the time.  This is another gesture of respect for his honorable opponent.

You may recall hearing in history class that the initials “U S” for Grant stood for “Unconditional Surrender”.  That is an unfortunate myth not deserved by the compassionate and heroic measures extended to his fellow general and countrymen at the time.  Curiously, Lee considered the Confederacy to be a separate country and Grant did not.  Nevertheless, Grant was wise enough to know that depriving Lee, and the confederate citizens, of dignity might well foment a future rebellion.

Negotiation Lesson Four       Never drive your counterpart beyond a reasonable position

General Lee suggested that the terms proposed by Grant ought to be written out.  Here is some of that text written by Grant.  “…I propose to receive the surrender of the Army of N. Va. on the following terms, to wit:  Rolls of all the officers and men to be made in duplicate.  One copy to be given to an officer designated by me, the other to be retained by such officer or officers as you may designate.  The officers to give their individual paroles not to take up arms against the Government of the United States until properly exchanged, and each company or regimental commander sign a like parole for the men of their commands.”

More importantly, Grant added, “The arms, artillery and public property to be parked and stacked, and turned over to the officer appointed by me to receive them.  This will not embrace the side-arms of the officers, nor their private horses or baggage.  This done, each officer and man will be allowed to return to their homes, not to be disturbed by United States authority so long as they observe their paroles and the laws in force where they may reside.”

The actors at Appomattox that late August day added texture to the presentation by stressing that a condition of the surrender, insisted upon by Grant, was that no Union soldier would abuse, taunt, or otherwise demean any confederate soldier.  Consider how humane and singular this condition was.  It may well have saved another war caused by lingering resentment of the vanquished brewing below the surface of imposed servitude, frequently the case in history.  The Confederate soldiers were allowed to carry their government issued arms and pile them in rows along the roadway with the dignity of erstwhile warriors intent on resuming their pre –war roles as farmers and ranchers.

By this concession, Grant drove the negotiation to what we could call today the “Win-Win” strategy.  The Confederate soldiers were fellow countrymen, heroes and honorable men who fought for their beliefs but lost.  Now was the time for healing.

So what does that mean for commercial buyer and seller negotiators?  Grant’s message is a simple as it is elegant and timeless.  Never drive the buyer or seller to untenable positions.  If so, you risk certain retaliation at the first opportunity.

online training in purchasing, negotiation, and sales

Negotiation Lesson Five        Allow your counterpart, no matter his station, to thrive

Grant continued in his memoir to relay the exchanges between him and Lee about “…the [Confederate] officers’… private horses and effects, which were important to them, but of no value to us; also that it would be an unnecessary humiliation to call upon them to deliver their side arms.”

Now consider these written words from Grant, “No conversation, not one word, passed between General Lee and myself, either about private property, side arms, or kindred subjects.  He appeared to have no objections to the terms first proposed; or if he had a point to make against them he wished to wait until they were in writing to make it.  When he read over that part of the terms about side arms, horses and private property of the officers, he remarked, with some feeling, I thought, that this would have a happy effect upon his army.”  

“Then…General Lee remarked to me that in their army the cavalrymen and artillerists owned their own horses; and he asked if he was to understand that the men who so owned their horses were to be permitted to retain them.  I told him that as the terms were written they would not; that only the officers were permitted to take their private property.  He then, after reading over the terms a second time, remarked that that was clear.” 

This is an astonishing tour de force in this negotiation.  Grant was willing, indeed in high favor of allowing many Confederate soldiers (not just officers) to keep their horses that they would need for basic transportation and agricultural services.  Lest wise, they might starve and rejoin an insurrection.  These are Grant’s words.

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“I then said to him [Lee] that I thought… that most of the men in the ranks were small farmers.  The whole country had been so raided by the two armies that it was doubtful whether they would be able to put in a crop to carry themselves and their families through the next winter without the aid of the horses they were then riding.  The United States did not want them and I would, therefore, instruct the officers I left behind to receive the paroles of his troops to let every man of the Confederate army who claimed to own a horse or mule take the animal to his home.  Lee remarked again that this would have a happy effect.”  All romance aside, as Grant noted, there was not talk of Lee surrendering his sword or side arms to Grant, in ceremonial submission.

Grant clearly harbored no intent of revenge or harvest of the spoils of war.  On the contrary, Grant sought to reunite a severely damaged national psyche and character by drawing upon the well of American goodness.  Lee was his willing companion, and all of us, the beneficiary of their wisdom, should be eternally grateful.

In a magnanimous gesture of good will and brotherhood, Grant acceded to Lee’s request for “rations and forage” for his men.  Grant asked how many men to which Lee replied “about twenty-five thousand”.  Grant authorized Lee to “send his own commissary and quartermaster to Appomattox Station, two or three miles away, where he could have, out of the trains we had stopped, all the provisions wanted.  As for forage, we had ourselves depended almost entirely upon the country for that.”

How honorable that the Confederate soldiers were allowed merely to speak their renouncement of the war (paroling) as a condition of going free with his animals and arms.

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note: This is the second part of a three part series on the battle that ended the American Civil War and the negotiations between Confederate General Robert E. Lee and Union General Ulysses S. Grant.  Part One is available at this link .  It is hard to imagine in today’s instant telecommunication world that correspondence was done then by officers on horseback, allowed to proceed behind enemy lines to consult with counterparts.  Such initial contact was followed by handwritten correspondence between the two generals, culminating in a face to face meeting and hand written surrender documents.  Try to imagine the restraint exhibited by these soldiers whose job it was to kill the other side and destroy their civilization.

The cost in lives of the Civil War was about 620,000 men, an estimated 2% of the population at the time.  Nearly as many men died in captivity during the Civil War as were killed in the whole of the Vietnam War.  Hundreds of thousands died of disease. As a percentage of today’s population, the fatality toll would be about 6 million.

Lee and Grant were trained generals, educated in warfare, but most importantly, they bore the defining imprimatur of honorable men.  As the war and its terrible costs dragged on, each was eager to end the war.  It was becoming clear by 1864 that the Confederacy was on an irreversible slide.  Grant noted in a letter to Lee that, “By the South laying down their arms, they will hasten that most desirable event, save thousands of lives, and hundreds of millions of property not yet destroyed.”

In order to appreciate the enormity of this quote, it is necessary to understand the interpersonal relationship of the two generals, both of whom were educated at the US Military Academy at West Point, NY.  Lee was in is late fifties and Grant in his early forties and Grant had served under Lee who was chief of staff to General Winfield Scott  during the Mexican War.

Negotiation Lesson Two     Respect for the other side at all times

They had been opposing commanding generals for much of the Civil War.  Both men were acutely aware of the enormous toll the war had taken in terms of blood, treasure, and sorrow.  In March 1864, Grant made the unilateral decision to suspend the exchange of prisoners-of-war, harsh as it may have been on the prisoners of both sides.  He reasoned, quite appropriately, that the exchange was prolonging the war by returning soldiers to the outnumbered and manpower-starved South.

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In his memoirs, Grant wrote of the meeting with Lee and the subject of negotiations at Appomattox.  “What General Lee’s feelings were I do not know.  As he was a man of much dignity, with an impassable face, it was impossible to say whether he felt inwardly glad that the end had finally come, or felt sad over the result, and was too manly to show it.  Whatever his feelings, they were entirely concealed from my observation; but my own feelings, which had been quite jubilant on the receipt of his letter [proposing negotiations], were sad and depressed.  I felt like anything rather than rejoicing at the downfall of a foe who had fought so long and valiantly, and had suffered so much for a cause, though that cause was, I believe, one of the worst for which a people ever fought, and one for which there was the least excuse.  I do not question, however, the sincerity of the great mass of those who were opposed to us.  

Note the utmost level of respect Grant reserves for his opponent.  He does not think of Lee as an enemy, an adversary to be sure, but also a man of feelings, commitments, and honor.  Grant recognized the personality factors that play into negotiation and was scrupulously careful to try to understand Lee’s while controlling his own.

Negotiation Lesson Three   Expect the unexpected

Grant would later write that “General Lee was dressed in a full uniform which was entirely new, and was wearing a sword of considerable value, very likely the sword which had been presented by the State of Virginia; at all events, it was an entirely different sword from the one that would ordinarily be worn in the field.  In my rough traveling suit, the uniform of a private with the straps of a lieutenant-general, (and no sword) I must have contrasted very strangely with a man so handsomely dressed, six feet high and of faultless form.  But this was not a matter that I thought of until afterwards.”

Grant had been ill the day before and was widely rumored to be a heavy drinker.  A line, attributed to Lincoln in response to allegations of Grant’s drinking is, “If all my generals could fight like Grant, I’d send them all a barrel of Grant’s favorite whiskey.”

Could Grant’s disheveled appearance been due more to a hangover than other illness?  Who knows, but without doubt, the appearance of the two generals created an obvious imbalance.  Was power shifted by having the surrendering general out dress the winning general?  Was this sartorial reversal an intended negotiation tactic by Grant?  The answer lies buried in history.

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note: This is the first part of a three part series on the battle that ended the American Civil War (although not the final battle as the war dragged on) and the negotiations between Confederate General Robert E. Lee  and Union General Ulysses S. Grant .  On a personal note, I was privileged to have visited Appomattox this past summer, soon after touring the Volvo New River Truck Plant  in the rural idylls of western Virginia.  These posts are not about history or the military.  There are hundreds of thousands of scholarly works running into the tens of millions of pages written on these two men and the Civil War.  Rather, these posts are the result of research prompted by the great professional work of two actors on the Appomattox site who provided a wealth of information on the negotiations that saved the greatest nation ever to grace the face of the Earth.  A principal source of my research is U. S. Grant, Personal Memoirs of U. S. Grant (New York, 1885).

Upon first sight, the Appomattox Courthouse and National Monument struck me much as my impression of the first time I saw the Alamo.  These two icons of Americana are so much larger than life in our culture that seeing them in person can be nothing but disappointing.  At the Alamo, the most visited tourist site in Texas, my initial reaction mimicked that of Timon, the meerkat, in the Lion King  who stated incredulously, “We are going to fight your uncle over this?”   If you have never seen this movie, rent it as a study in negotiation.

As to the Alamo, if you were raised on oaters , as was I, you will no doubt be or have been stunned by the incredibly small scale of the Alamo.  Upon realizing that my reaction was one drawn of my own expectation, I resorted to a silly observation to assuage my naiveté.  I wondered, without reason, why the Alamo was located in downtown San Antonio.  Perhaps Mexican General Santa Ana  and the Texans Davy Crockett  and Col. Travis did not realize just how important March 6, 1836, and the Alamo site would become as monuments to history.

Negotiation Lesson One      Negotiation occurs constantly, anywhere and everywhere

I never could have imagined that the history lesson before me in the rustic buildings and preserved pastures of Appomattox would become such an indelible lesson in negotiation.  The actors in Appomattox that summer day of 2013 did a great job in portraying the events of the final days of the Civil War.  We will leave the many historic military details to the experts as our focus is on the negotiations.

Click here for Bob’s book and CDs

To set the negotiation table, the Union forces had the Confederacy on the run, cut off from the east, toward Richmond, the south, toward Atlanta, and the west toward Tennessee.  The blistering campaigns of General William Tecumseh Sherman  and others had forced the Confederate Army into virtual submission.  After four tortuous years of war, brother against brother, the Confederacy’s only path of retreat was to the north, into the volleys of Union infantry.  The Union forces had captured the replenishments of food and armaments intended for the Confederate Army at a rail station east of Appomattox.  Both sides had endured the starvation and fatigue of forced marches  just days before as the misery of the Civil War seemed close to denouement in early April of 1865, mere days before the assignation of President Abraham Lincoln.     

For a visual presentation, Grant’s personal memoirs are memorialized in this YouTube interview,  called Chapter 67, Negotiations at Appomattox.  On April 09, 1865, General Grant responded to General Lee that he was not authorized to negotiate on the matter of peace between the two warring parties.  This is the skillful application of the “Higher Authority” tactic.  To the skilled negotiator, this crack in Lee’s armor signaled the beginning of the end for the Confederacy.  The Union forces had long been winning this destructive Civil War, savaging and burning much of the South’s crops, cities, and infrastructure.  War is certainly not pretty and both generals recognized that the Civil war had become too ugly.

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note: A June series of three blog posts highlighted a supplier plant visit at the largest Volvo truck manufacturing plant in the world.  They are posted in consecutive order beginning with Part One.   A series of four posts in August dealt with Green Purchasing and Sustainability. This post deals with both Volvo and sustainability. 

Consider the importance of this statement made by Gunnar Stein, Volvo Construction Equipment’s  global director of driveline systems about Volvo’s hybrid-wheel-loader.  “All technology comes with a cost tag, and the hybrids are not there yet.”  While these words in English, presumably translated from Swedish, are a tad cryptic, the result is an about face for Volvo’s hybrid wheel loader plans announced with such vigor five years ago.  This link is Volvo’s Construction Equipment (VolvoCE) hybrid-wheel-loader landing page which as of the date of this post, remains up on VolvoCE site.  

Because of the high costs involved with hybrids, all other global competitors except John Deere Construction & Forestry  have also backed off.  Stein further added that “The L220F (hybrid-wheel-loader model) suffered from not giving a return on investment, from a customer perspective.”  This is so curious because Volvo claims that the extra expense of an electric motor and batteries was offset by the ability of the electric motor to assist in overcoming inertial startup or load conditions, and reduce carbon emissions by taking over for the diesel motor during idling, a whopping 40% as claimed by Volvo. 

The cost tag to which Stein apparently refers is the extra expenses of an electric motor and substantial batteries.  The cost is too high, the payoff too low, and the advent of new technologies such as Continuously Variable Transmissions are improving fuel efficiency by as much as 25%, according to Volvo Construction Equipment estimates.   

For those interested in the sustainability aspects, in my book, Green Purchasing and Sustainability, link, the concept of fuels and how they are impacted by price changes is mapped out in detail.  The significance of Btu/$ cannot be understated.  The concept nis thoroughly misunderstood by most so called sustainability experts.   Clearly, Volvo does not fall into this class.

Stein also made a clear reference to competitive fuels by noting that while Volvo cannot fuel prices but would position itself to quickly re-enter the market should diesel prices rise dramatically. 

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note: This is Part Two of a two part series on this specific solar power project in the U.S.  Part One  deals with the potential for great success.  Part Two provides an alternate view of why the accomplishment may be financially risky and not subject to duplication almost everywhere else in the U.S. and other perspectives. 

In Part One, we noted a very substantial potential for financial disaster.  Specifically, the $1.6 billion loan guarantee from the U.S. Dept. of Energy raises difficult and sensitive issues.  Why should private investors with the substantial means of Google be protected by taxpayers in the form of federal loan guarantees?  Runaway policy dictated more by politics than economics and reality has led to enormous failures in the solar industry on the scale of billions.  Solyndra  is the most notorious but just one of the many economic disasters resulting from the ill-conceived and poorly managed Economic Stimulus Bill of 2009, otherwise known as the American Recovery and Reinvestment Act. 

Politics and economics aside, we move to geography.  We mentioned that certain unique factors make the Ivanpah project difficult and certainly impossible to duplicate in vast regions of the United States.  Nowhere in the eastern one-third or northern half of the U.S. can a suitably similar plot of real estate be found. The vastness of the real estate, desolation, and terrain conditions required for such a solar plant is simply not available in the overwhelming
majority of the 50 states.  Highly populated areas of the country such as the northeast megalopolis or southern California, the Appalachian states, or the intermountain west cannot host such a facility. Even in the flat expanses of Iowa, solar has lost out to wind as a proposed 1,050 Mw wind generation plant worth $1.9 billion has been approved for MidAmerican Energy  of Des Moines.   

The primary reason that the Ivanpah project works is its dessert wasteland location, otherwise unsuited to development for other purposes without prohibitively high costs.  It is also federally owned land.  Acquisition and repurposing costs would be a substantial barriers in most other locations.  Because of the remote locations and very unusual use as a solar farm, Low Impact Development techniques are relatively easy to deploy.  Such would not be the case in most other locales and thereby drastically drive up project costs.  This photo shows less than hospitable human accommodations. 

In the August 13, 3013 companion article in ENR cites the figure of 900-MW total of solar power generating capacity will be commissioned during 2013, according to the industry advocate group, Solar Energies Industries Association.  This rush toward putting solar into place is fueled by a crucial federal tax credit.  Tax credits, which reduce tax liability on a dollar-for-dollar basis (as opposed to deductions that reduce taxable income) set to expire in 2016.  This Renewable Energy Investment Tax Credit provides up to 30% credit on new solar and wind power projects.  There is no maximum credit amount. 

Congress should authorize extension the tax credit to encourage more renewable energy infrastructure. What it should not do is provide loan guarantees.  Back off on foolish and ill-advised regulations that choke the interests of coal and drilling technologies in particular.

Allow the marketplace to compete.  The result will be an energy independent country within the next five years, a dream that has eluded the U.S. for at least 40 years.

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note: This is Part One of a two part series on this specific solar power project in the U.S. Part One deals with the potential for great success. Part Two (link) provides an alternate view of why the accomplishment may be financially risky and not subject to duplication almost everywhere else in the U.S.

The Ivanpah Dry Lake Solar Electric Generating System is bringing the world’s largest solar thermal  plant to life. When completed, this single 377-MW solar power plant in California will double the solar generating capacity in the United States by producing 1 million-MW of electric power annually. Considering that less than 1% of electric power in the U.S. is produced via solar means, this plant is a very big success.  Electricity generated by the plant is expected to come on in stages beginning in 4Q 2013. Press releases claim that at capacity, Ivanpah will generate enough electricity for 140,000 homes and displace 400,000 tons of CO² emissions annually.

Bechtel of San Francisco, CA began construction in 2010 for BrightSource Energy, Inc of Oakland, CA on a vast plot of federally owned dessert land located about 50 miles south of Needles, CA and a few miles west of the Nevada border tucked up near Arizona. Power purchase agreements in place show PG&E and Southern California Edison  to be customers.

In basic technological terms, and skipping over the tall weeds, the veritable ocean of mirrors focuses collected sunlight onto three 120 foot tall receiver generators. Each generator sits on a 339 foot tower making the total height 459 feet, about 50% higher than the Statue of Liberty. Concentric circles of solar collectors surround each tower. For a very cool video, please click on this virtual tour link.

Investors for this $2.2 billion project include NRG Energy, Inc.,‎ a publicly traded NJ firm which has put in $300 million and Google which has invested $168 million. The project, which covers 3,471 acres or 5.5 square miles, enjoys a $1.6 billion loan guarantee from the U.S. Dept. of Energy.

Certainly, this project, presuming no financial failure, could be a significant boost to the solar industry. However, it has inherently unique factors that make this project difficult if not impossible to duplicate anywhere else in the U.S.  We will discuss these in Part Two.

QUICK FACTS

• According to US Energy Information Administration  Electricity consumption totaled nearly 3,856 billion Kilowatthours (kWh) in 2011. U.S. electricity use in 2011, more than 13 times greater than electricity use in 1950

• In 2011, coal was the fuel for about 42% of the 4 trillion killowatthours of electricity generated in the United States

• Natural gas, 2011, was the fuel for 25% of the U.S. electricity

• Petroleum was used to generate less than 1% of all electricity in the United States in 2011

• Nuclear power was used to generate about 19% of all the Country’s electricity in 2011

• Hydropower was the source for 8% of U.S. electricity generation in 2011

• Biomass accounted for about 1% of the electricity generated in the United States.

• Wind power remains a small fraction of U.S. electricity generation, about 3% in 2011

• Geothermal power comes from heat energy buried beneath the surface of the earth. generated less than 1% of the electricity in the Country in 2011

• Solar power is derived from energy from the sun. Both photovoltaic (PV) and solar-thermal electric combined in 2011 for less than 1% of the U.S. electricity

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

In August 2012, I blogged about Chrysler’s new Compressed Natural Gas (CNG) pick up trucks to compete with Chevy and GMC vehicles.  This 2014 model year, Ford  jumps into the fray for half-ton pickups.   

As with all matters of sustainability, nothing is clear or obvious.  The vehicles can achieve up to 750 miles on a single fill up, about double that of a traditional gasoline or diesel powered truck but the size of CNG and Liquefied Petroleum Gas (LPG) , primarily a mixture of propane and butane.  There are substantial detrimental factors that impact sustainability of these pickups.  These include upfront costs which must be paid back, lack of refilling stations, and reduced cargo space.   

According to ENR’s August 12, 2013 edition, the cost of a gaseous bi-fuel equipped half ton truck runs between $7,500 and $9,500 more than comparable gasoline equipped models.  Inexplicably, “Ford covers the gaseous-ready engine components only under its standard five-year, 60,000 power-train warranty.”   

A CNG industry advocate website notes that CNG prices in June 2013 ran about $2.06 per gasoline-gallon equivalent or $1.61 per gallon less.  This sounds good but I can find no accounting of Btu/$, the acid test for equating alternative forms of energy.  Research for my book, Green Purchasing and Sustainability,  proved that gasoline is intrinsically 25% more energy dense, in terms of equivalent units of fuel.  This inherent difference would alter the website’s calculus.  Assuming no change in CNG or gasoline prices over the payback period, the 25% per gallon advantage of gasoline reduces the CNG price per gallon to $1.20  

A Ford spokesperson is quoted in a statement, “With the money saved using CNG, customers could start to see payback…in as little as 24 to 36 months.  No substantiating calculation was offered in the brief ENR story so let’s do our own.  Using $8,500 as the up-fit charge for the bi-fueled engine, $8,500/($1.20/galloon)= 7,083 gallons.  No mileage is specified in the ENR story, and resort to Ford’s website  showed no mileage figure either.  This payback calculation is unjustified by any means.   

The lack of refilling stations is a substantial impediment.  Have you ever seen one?  My radar is set high for these events and although I travel the country fairly regularly, I have only seen a few, mostly in the usual suspect locales like Washington, DC, San Francisco, and similar venues.  In Texas where I live, which has more pickup trucks than any state, I have never seen one!   

As to reduced cargo space, here is a photo of the pickup truck’s bed. Note that what otherwise would be seen as a tool box is actually a gaseous fuel tank.  It extends from the rear of the cab to the wheel wells, severely reducing the payload capacity in terms length, volume, and weight.  

So, where are we?  First, Ford deserves recognition for its efforts to improve sustainability.  It is also trying to respond to customer demand and appeal to those in its sales programs who favor sustainability, but do not fully understand how to achieve it.   

The individual and corporate buyers must take all factors into account and decide which fuel alternative is more sustainable when buying half ton pickups.  

Tell me your opinion.

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

In short, no one truly knows.  In the centuries that mills have been used to power pumps and motors, little progress has been made on large scale technology to make wind powered electricity efficient.  Storage and distribution of generated power also present great challenges.  Greater problems may reside in reliability  issues. 

Reliability is a complex issue and will not be investigated here.  Even the subset issue of the reliability of wind power is not simple.  There is disagreement amongst advocates, let alone opponents, about whether small or large scale generator systems are more reliable.   Another complicating factor involves geographical location and the relative frequency and velocity of wind streams so the issue of reliability of wind generated electricity is nowhere near resolution.   

The larger issue needing full scale evaluation is whether this headlong sprint toward wind power amounts to little more than tilting at windmills.  Let’s examine some facts beginning with technology.  Wind mill farms have populated parts of the US and off our shores for decades but despite the expansion of wind generated power over the past decade, it accounts for only 3.91% of all US electricity as of July 2013, according to Electric Power Monthly. 

 There are 39 states with some form of wind generated electric industry but no unifying technology.  To solve some of the technology puzzles, a small scale research project called SWiFT (Scaled Wind-farm Technology) is underway in west Texas.  The $4.5 million venture is a partnership between the US Dept. Of Energy , Sandia National Laboratories , a unit of DOE and Vesta Wind Systems , a publicly traded major player in wind.  Group NIRE (affiliated with the National Institute for Renewable Energy and with the National Wind Resource Center,  provides assistance in development, finance and consulting, and Texas Tech University  round out the cast of characters.  That sure seems to be a lot of hands on such a small pie.   

ENR,  a leading construction periodical quotes John Schroeder, director of the Wind and Science and Engineering Research Center at Texas Tech , “There are a lot of black boxes – proprietary technologies in this industry.” 

The first three turbines are erected and studies will continue over a year period.  Among the engineering questions to answer are what is the formula for optimal spacing of turbines and angle and pitch of the blades .  Although there is no press recognition of these potential problems that I could find in popular sources, the turbines are smaller than utility-scale turbines.  This was done to keeps costs at 90% of full scale production costs.  A troubling conclusion foisted by a Sandi representative in Albuquerque is that, “All the research can be scaled up to benefit larger-size turbines.”  Hmmm… 

To address my doubts as to the physics and engineering involved, I contacted several practitioners and academics.  I had two major issues, aside from the reliability and storage questions that may be more of an enduring obstacle.  These are spacing and pitch. 

The spacing issue is the thornier bramble.  Since I travel often, I live near DFW International Airport (DFW International Airport) , one of the best designed and operated in the world.  Some years ago, DFW extended the length of several runways to about 13,400 feet, very long compared to most US airports.  The stated justifications were phrased in marketing speak, “Reducing delays to aircraft operation on the existing runways and taxiways” and “Increase overall aircraft operations capacity.”  All of that is true.  The engineering and aeronautics origins are more revealing.   

The runway extensions, called pods, allowed departing aircraft to stagger their departure locations so as to avoid the “wake turbulence” caused by jet engines.  Visualize the wake from marine vessels and you can imagine the swirling turbulence in the air.   

Green Purchasing and Sustainability

Here is the troubling part.  Air planes, like wind powered turbines, are directionally dependent.  A principle of aeronautics requires that planes must take off and land into the wind.  Anyone who has ever attempted sailing knows the impact of wind direction.  Fortunately sailing ships can adjust their orientation – turbines cannot; they are set in concrete into the ground.    

What happens when wind velocity, a vector quantity that accounts for speed and direction, changes?  The spacing is fixed so does turbulence negatively impact the neighboring turbine tower by reducing efficiency?  No one yet knows the answer. 

As to pitch of the blades, experts in air and water transportation (both media are called fluids) note that adjustments to pitch can affect rotational (angular) speed and generation efficiency.  How pitch plays into the spacing issue of changeable wind velocity is an open question that one hopes can be addressed, if not completely answered by the research. 

Underlying all of this doubt is the fact that the United States has wasted billions in search of publicly financed boondoggles involving both wind and solar power.  While I am happy to learn of this scientific research, can we at least take our collective heavy government foot off the pedal on wind power, at least, until we know more?      

Returning to the larger issue, if we as a country in the US had applied all the wasted billions in search of alternative fuels, and instead invested in reducing the detrimental effects of plentiful and energy dense fossil fuels, would we have been better served?