The first thing to know about electricity is that making it can be incredibly inefficient.
In a conventional power plant, burning fuel turns water into steam. The steam drives a turbine, which spins the generator.
Only about one-third of the energy in the original fuel is converted to electricity. Two-thirds goes up the smokestack.
Dwight Anderson says it's because of the laws of physics.
"Every time you convert energy from one form to another, you lose something," he says. "That's just the way it is, because nothing's perfect."
Anderson works for Minnesota Power. He's lived with that inefficiency for his whole working life. Now, he's trying to wring more electric power out of every drop of fuel.
He's high on something called co-generation. The basic idea is to harness the heat that normally goes up the smokestack.
There's a good example of co-generation at the Sappi paper mill in Cloquet. Like many paper mills, Sappi makes most of the electricity it needs, with a wood-fueled steam plant.
Engineering Manager Rick Morgan points to a mountain of wood chips piled next to the mill.
"We have about 20,000 tons of biomass stored," he says.
That'll last less than a month. The plant uses enough electricity to power a small city.
Inside the sprawling buildings, there are several electric generators. One of them is fueled by a recovery boiler, which burns the byproducts of the paper-making process, to run steam through a turbine.
"The actual turbine is manufactured in Czechoslovakia and the generator's made in Sweden," Morgan says.
Higher-pressure steam spins the turbine to produce electricity. Lower pressure steam goes to the pulp dryer, the paper machines, and other parts of the process.
Morgan says energy is one of the biggest expenses for paper mills.
"If you can't control energy costs in this business, you can't be in business," he says.
The main product here is paper, but sometimes Sappi sells electricity too. That happened during a recent cold snap.
"The electric demand increases and the costs go higher and higher, to the point that it's financially feasible for us to generate power for Minnesota Power," he explains.
Opportunities to produce electricity turn up in some surprising places, like along natural gas pipelines. The pressure has to be boosted periodically as the gas travels through the pipe. Compressors fueled by the natural gas do that work, and normally they vent off waste heat.
Now in South Dakota, the waste heat is fuelling small power plants. They look like the barns and silos of a prairie farm. The generator itself is about the size of a truck.
Basin Electric Power Co-op spokesman Daryl Hill says the plants are owned and operated by an Israeli company, and his co-op buys the power.
"We get basically 22 megawatts of baseload (power) for little investment," he says.
Other countries are leading in these technologies because their fuel prices have been so high. As prices go up in the U.S., power producers are finding ways to use them. And they're returning to old-fashioned ideas like combined heat and power. This is a form of co-generation that was once common across the country.
And it's still used in St. Paul and several other Minnesota cities. A central electric power plant also supplies steam for heating buildings.
Of course, most people don't want to live next to a coal-fired power plant. But Neal Elliott, with the American Council for an Energy-Efficient Economy, says with combined heat and power, cleaner fuels like natural gas can become competitive.
"Use natural gas, but use it much more efficiently," he says. "And instead of throwing more than half of the fuel value away, let's do it with co-gen."
Elliott says combined heat and power and other forms of co-generation could provide 20 percent of America's electricity needs, and save on heating fuel at the same time. And he says recovered energy generation like along natural gas pipelines could provide another 20 percent.
He says this isn't a Department of Energy priority, but market forces are pushing companies to explore their options.