Is New Hampshire on the verge of battery energy storage history?

Is New Hampshire on the verge of battery energy storage history?
The only question left to be settled is a big one: Should utilities own behind-the-meter batteries?

A small investor-owned utility in New Hampshire may be on the verge of regulatory approval for one of the most ambitious U.S. tests yet of utility-owned, customer-sited battery energy storage systems.

In the process, regulators and stakeholders of the DE 17-189 proceeding are wrestling with a question of vital interest to the rest of the 3,000-plus U.S. utilities: Should a utility own customer-sited storage or is it a distributed energy resource (DER) that should be left to private sector providers?

Utilities have already seen the benefits that large-scale battery energy storage offers in shaving peak demand, providing grid services, and making systems more flexible. There is a clear opportunity to use customer-sited battery storage in the same way. But the question of how far utilities can intrude into markets so far served by private sector vendors must first be answered.

Vermont goes first

The only major U.S. utility-owned, behind-the-meter (BTM) battery storage is the Green Mountain Power (GMP) pilot project, according to GTM Research Energy Storage Analyst Brett Simon. GMP, the dominant Vermont electricity provider, is installing 2,000 behind-the-meter Tesla Powerwalls that will provide dispatchable energy and other grid services to New England’s wholesale electricity markets. Customers pay a one-time $1,300 fee or a monthly $15 fee to participate.

(https://www.utilitydive.com/news/is-new-hampshire-on-the-verge-of-battery-energy-storage-history/525876/

Hawaii just passed a law to make the state carbon neutral by 2045

In a little less than three decades, Hawaii plans to be carbon neutral–the most ambitious climate goal in the United States. Governor David Ige signed a bill today committing to make the state fully carbon neutral by 2045, along with a second bill that will use carbon offsets to help fund planting trees throughout Hawaii. A third bill requires new building projects to consider how high sea levels will rise in their engineering decisions.

The state is especially vulnerable to climate change–sea level rise, for example, threatens to cause $19 billion in economic losses–and that’s one of the reasons that the new laws had support. “We’re on the forefront of climate change impacts,” says Scott Glenn, who leads the state’s environmental quality office. “We experience it directly and we’re a small island. People feel the trade wind days becoming less. They notice the changes in rain. They feel it getting hotter. Because we are directly exposed to this, there’s no denying it.” The state’s political leaders, he says, are “unified in acknowledging that climate change is real and that we do need to do something about it.” Read More

Why Solar Power Needs to Get Better:

Elon Musk

9 Experts on the Improvements Solar Technology Needs Today - Interesting Engineering

Solar is just one of many sustainable energies that could lead the way to a green power revolution. Though solar power is becoming more and more viable every day, there are still issues to overcome before entire countries can depend on the sun as a source of energy.
If we're to finally phase out fossil fuels for good, solar power needs to get better. Here are just some of the issues that experts are trying to address in the fight to make the world a greener place.

1. Elon Musk: Solar Power Needs to be Integrated
Elon Musk's vision of a solar-powered future doesn't stop at solar panels on roofs - he wants entire integrated systems to dominate homes and businesses all over the world. He imagines a future where solar roofing tiles feed into power walls, which in turn power electric cars.
Speaking in 2016, Musk said, "The key is it needs to be beautiful, affordable and seamlessly integrated." His point is clear - if solar power is to become a dominant power source, there has to be integrated infrastructure both privately and publicly to support that generation of energy. Read More

Distributed Solar Is Less Expensive Than Delivered Coal Power

On March 22, 2017, Rocky Mountain Institute’s Shine Program released a request for proposals (RFP) for community-scale solar on behalf of a group of rural electric cooperatives in eastern and northern Colorado. The RFP was part of RMI’s ongoing work to develop the community-scale market nationwide.

Nearly 30 developers responded to the RFP, providing highly competitive bids. Prices for solar power purchase agreements were lower than the value of solar to the co-ops, and so solar is expected to result in economic savings for participating co-ops.

RFP results confirm that we have crossed a significant tipping point where distributed solar is not only a means to supply green energy and to promote regional economic development, but also an opportunity to decrease energy costs and to drive down bills for price-sensitive energy consumers. The Colorado RFP outcomes are informative to utilities nationwide, but particularly to co-ops and municipal utilities in Colorado and neighboring states that are contemplating solar development and are interested in joining a regional procurement opportunity. More

Could the entire American economy run on renewable energy alone?

Fisticuffs Over the Route to a Clean-Energy Future - The New York Times

This may seem like an irrelevant question, given that both the White House and Congress are controlled by a party that rejects the scientific consensus about human-driven climate change. But the proposition that it could, long a dream of an environmental movement as wary of nuclear energy as it is of fossil fuels, has been gaining ground among policy makers committed to reducing the nation’s carbon footprint. Democrats in both the United States Senate and in the California Assembly have proposed legislation this year calling for a full transition to renewable energy sources.

They are relying on what looks like a watertight scholarly analysis to support their call: the work of a prominent energy systems engineer from Stanford University, Mark Z. Jacobson. With three co-authors, he published a widely heralded article two years ago asserting that it would be eminently feasible to power the American economy by midcentury almost entirely with energy from the wind, the sun and water. What’s more, it would be cheaper than running it on fossil fuels.

(https://www.nytimes.com/2017/06/20/business/energy-environment/renewable-energy-national-academy-matt-jacobson.html

CTEC 2017 Smart Energy Conference

Be part of Cayman’s low carbon future by joining an event which seeks to set out our vision, renewable road-map and opportunities.

The event will bring together delegates from public, private and non-profit sectors, underlining our collaborative approach to a sustainable future- government officials, project developers, manufacturers, investors and key players across the non-profit landscape.

Join government official and industry leads and participate in interactive panel discussions that seek to establish what the journey ahead looks like and how we address the challenges and maximise the opportunities.

Make the most of key networking opportunities, bringing together local, regional and global participation.

To Register and for more Information

The Caribbean Transitional Energy Conference (CTEC)

Caribbean economies suffer from some of the highest electricity prices in the world.

Despite their abundance of renewable energy sources, Cayman has a relatively low level of renewable energy penetration; the economy continues to spend a large proportion of its GDP on imported fossil fuels and residents and businesses continue to pay some of the highest electricity bills in the region. This is a common situation among island nations.

There is a clear opportunity for Cayman to emerge as a regional leader in developing solutions to address climate change through the adoption of renewable energy which will reduce the dependency on fossil fuels and provide key environmental, social and economic benefits.

With the Cayman Islands National Energy Policy now in place, a framework for transition is complete and seizing upon that vision will be critical to affecting positive change for the Cayman Islands and all those who follow.

The recent achievements for islands at COP21 provide a strong driver for action focused on carbon reduction goals. Given that Cayman ranks highly among islands as carbon emitters, it is critical that we position ourselves as leaders in carbon reduction and meet the goals set out in the National Energy Policy and the Paris agreement.

Cayman seeks to stand with other islands in the region and across the world to embrace a low carbon future and to stand on the front line of demonstrating solutions to climate change while delivering cheaper, secure, reliable and economically feasible energy solutions.
Who should attend?

Be part of Cayman’s low carbon future by joining an event which seeks to set out our vision, renewable road-map and opportunities.

The event will bring together delegates from public, private and non-profit sectors, underlining our collaborative approach to a sustainable future- government officials, project developers, manufacturers, investors and key players across the non-profit landscape.

Join government official and industry leads and participate in interactive panel discussions that seek to establish what the journey ahead looks like and how we address the challenges and maximise the opportunities.

Make the most of key networking opportunities, bringing together local, regional and global participation.
For More Information and Register

SE4All Highlights Plans for Implementing SDG 7

25 March 2016: The Special Representative of the UN Secretary-General (SRSG) for Sustainable Energy for All (SE4All), Rachel Kyte, highlighted challenges to achieving Sustainable Development Goal (SDG) 7 (Ensure access to affordable, reliable, sustainable and modern energy for all).

Briefing UN Member States and civil society, she also provided an update on the SE4All initiative's plans for supporting implementation of the Goal.

Kyte emphasized that Goal 7 has three “pillars,” addressing energy poverty, technological advancement, and investment in energy efficiency. Stressing the interlinked nature of the Goal, she said the first pillar, addressing energy poverty, is essential to leaving no one behind, noting that the electricity access gap undermines education, productivity and economic growth, while the gap in access to clean cooking fuels is detrimental to health and gender inequality. On technological advancement, Kyte noted the past decade's reductions in the cost and complexity of renewable energy, which makes on-shore wind, solar photo voltaic, and other technologies more competitive with fossil-based energy sources. On energy efficiency, she said greater investment has made it possible to provide basic electricity services using much less power.

Despite this positive progress, Kyte warned that global economic trends have slowed the momentum for electrification, renewables, efficiency and clean cooking. She said the global energy transition is not taking place at a sufficient pace to meet the temperature goal set out in the Paris Agreement on climate change, or the broader development goals expressed in the 2030 Agenda.

Kyte also stressed that the financial needs to achieve SDG 7, which are estimated at over US$1 trillion annually, will need to come from both private and public sectors. She highlighted the importance of small-scale, private investments to develop renewable energy in many African countries.

On the role of the SE4All initiative in supporting the achievement of SDG 7, Kyte said the Forum's 2017 meeting will assess progress and provide substance for the High-level Political Forum on sustainable development (HLPF) and the UN system as a whole in its review of progress towards the SDGs. In the meantime, SE4All is developing a framework for addressing challenges faced by Member States in achieving SDG 7. Member States will have opportunities to provide input on this framework throughout May 2016, Kyte said, and the SE4All Advisory Board will consider the framework at its meeting, on 15-16 June 2016. [Event Webcast] [SE4All Website]

 

© Climate War Room

3 Ways Wind and Solar Can Continue To Grow In a 21st-Century Grid

Earlier this year, MIT researchers were the latest in a series of analysts to raise alarm about the perceived limitations of solar PV’s continued growth. In short, these analysts propose that variable renewables will depress wholesale prices when they run, thereby limiting their own economic success.

These concerns have garnered coverage in other venues (including Vox, Greentech Media, and The Financial Times), leading observers to suggest that the future prospects for renewables may be dim.

But are these concerns really justified, or do they rely on outdated assumptions about the grid and about electricity markets? We argue that these critiques, assuming a static grid and unchanging market mechanisms, can be used to make any innovation look bad. However, more integrative assessments of a least-cost, clean, and reliable power system of the future will factor in high fractions of variable renewables, along with more-efficient markets (and usage) and new technologies to integrate these resources seamlessly and resiliently.

In this article, we argue that falling wholesale prices is a good problem to have, and that concerns about economic limitations ignore remedies available from supply-side evolution, demand-side resources, and updated market mechanisms. As the world gathers in Paris for COP21, these messages are as important as ever for charting and pursuing a low-carbon clean-energy pathway.

Understanding the "Problems"

There has been increasing concern that variable renewables such as wind and solar may face an upper limit to adoption in the U.S. grid. The argument is that large amounts of variable renewables will create excess supply concentrated at the particular times of day when they produce. The notorious "duck curve" is an example of this—the duck-like shape of a particular, daily demand curve modeled for California’s grid when the production of large amounts of solar photovoltaics (PV) is netted out.

Critics argue that this technical characteristic of variable renewables, specifically PV—a daily generation pattern that is not perfectly matched with load—can have economic consequences for all forms of generators, especially the renewable resources themselves. Large amounts of renewable resources can sell a glut of power when it’s available, offsetting production from higher-marginal-cost resources (like gas-fired power plants). Since power prices are generally set by the resources with the highest marginal cost that clear in the market, additional generation from renewables tends to lower market prices.

This "merit order effect" often decreases revenues for fossil generators. This impact has been particularly dramatic in Europe, where generation from costly-to-run thermal plants during the daily solar peak was formerly very profitable for fossil generation owners. PV has decreased energy prices so much there that the top 10 EU utilities lost half their market capitalization. However, the merit order effect also means that variable renewables themselves may also earn lower profits as their adoption rises. A common conclusion is that variable renewables can play only a modest role in power production, marginalized by declining wholesale value at higher adoption levels.

The Other Half of the Thought Experiment: Three Factors That Can Accelerate Renewable Energy Adoption

Analysts who have put forth these arguments have elaborated only the first half of a microeconomics thought experiment. The problems they hypothesize hinge upon the laws of supply and demand, but omit important aspects of both, drastically overstating the perceived "problems." Let’s see how.

1) Supply is changing holistically, not incrementally

Many of these thought experiments consider adding just a single supply resource (often solar PV) without considering many of the other supply-side changes happening at the same time. In reality, solar PV, wind, and natural gas are all joining the supply mix in a big way at the same time; the first two are often complementary and the third is dispatchable, so together, they can do a lot to mitigate the "duck curve" often portrayed.

At the same time, retirements of uneconomic assets will provide a countervailing buoyancy to wholesale prices. For example, even though old, dirty plants often have low production costs, they may exit the market anyway due to high costs of compliance upgrades or other fixed costs that erode their profits. The resulting less-abundant supply can cause the marginal supply curve to contract in quantity, leading to higher prices and higher profits for renewables and remaining fossil generators—unless demand drops too, as it’s doing in the industrialized world.

2) Demand is increasingly flexible, not fixed

Analysts arguing that renewables’ variability will limit their growth often assume perfectly efficient wholesale markets, but unchanged retail markets and fixed demand profiles. This incomplete and asymmetrical treatment ignores the emerging capability to harness the demand side of the equation. For example, people like and respond to time-varying pricing programs, and these programs are starting to roll out at scale. The electricity demand of many appliances including electric water heaters and electric vehicles is inherently flexible without disrupting the service provided. Furthermore, new business models (from both utilities and third parties) are driving this convenient flexibility by providing seamless solutions, unobtrusively, conveniently, and without requiring customers to become part-time energy traders.

These factors together increase flexibility of demand, an important low-cost resource, and enable what is the most natural response to changing prices in an efficient market where consumers find ways to use and benefit from cheap electricity from wind and solar. In other words, as renewables reduce energy prices during certain times of day, demand flexibility allows customers to shift demand to those times, which will both reduce energy prices at other (peak) times and raise the price paid to renewables during times when they produce the most.

3) Storage makes renewables dispatchable, not variable

Diverse supply and flexible demand will play a big role in easing renewable integration concerns but, to the extent that issues remain, the continuing decline in battery prices and the range of values available from batteries means that remaining variability issues can probably be addressed at modest incremental costs. At the retail level, this can lead to increasing self-balancing of distributed generation (we’ve already seen this in Germany and Australia, and it may affect utility business models in the U.S.). At the wholesale level, as variable resources begin to saturate the market, high-priced hours will incentivize developers to begin to look at storage. Already, storage is seen as a near-term replacement for peaking generation, and batteries installed for peaking capacity can also be used to smooth the economic impact of renewables on power prices.

Storage is already a common feature of concentrating solar power (via molten salt), and becoming an increasingly common feature of solar PV. For example, the all-renewable winning bids in the latest Chilean auction for unsubsidized electricity included not just solar power as low as $65/MWh in the daytime, but also nighttime solar power—via thermal or electrical storage—for $97/MWh at night. With storage, variable renewables become dispatchable, and dispatchable renewables do not have nearly the same merit order effect as variable ones. To be sure, our recent demonstration that 13 kinds of benefits of behind-the-meter distributed storage can make batteries cost-effective does not necessarily make them competitive with the many other ways to achieve grid flexibility, but similar reasoning suggests an abundant range of options for averting the problems that narrowly constrained models imply.

Whole-System Thinking Illuminates a Path Towards Least-Cost Outcomes

Analysts arguing that renewables will economically limit their own continuing adoption generally leave out the considerations listed above—and more importantly, these arguments are built on incremental thinking, assuming that today’s grid and markets are fixed and only one thing changes (e.g., PV or wind-energy market share). A more holistic, integrative, and accurate analysis would start with the ultimate objectives (reliable, resilient, and least-cost energy services), and promote a whole-system design to get there promptly.

With this perspective in mind, the characteristics of renewable energy that have caused so much hand-wringing—variable output and near-zero marginal costs of production—simply add to the list of design considerations for a market design that rewards efficient investment. Given supply diversity, demand flexibility, and emerging technologies like storage, variable renewables are unlikely to face any practical limit to growth even under current grid paradigms and market structures.

Nothing Sacred About Existing Markets

But even if renewables do face adoption limits in current markets, there is no reason we have to keep these markets the way they are. Wholesale power markets are largely a product of historical coincidence, formed out of the paradigms of the last century in which thermal power plants competed only with each other. Modern market design that reflects the realities and changing resource mix of the 21st century grid, being pioneered in Germany already, can go a long way towards aligning incentives for least-cost resource mixes. Particularly, incorporating behind-the-meter distributed energy resources and flexible loads into energy markets—as is being done in California and New York—can bring new capabilities and a refined level of control to the grid.

An Integration Challenge?

Evolving supply, flexible demand, storage, and updated markets can remove the limits to increasing renewable energy on the grid. In a later post, we will highlight how these same levers can address the common concerns—and misunderstandings—about "integration costs" of renewable energy. For example, a much-hyped recent paper claims that high-penetration renewables must incur steeply rising integration costs. But that turns out to be an artifact of extremely restrictive assumptions in the models used, combined with an assertion that competitive harm to thermal-plant incumbents is an economic cost of the renewables that beat them.

Renewables Are Here To Stay

The "problems" with renewables often brought up by analysts may be real in isolation, but are overstated when the full range of options is considered. Indeed, these are good problems to have: they’re the natural forces of supply and demand acting to send signals to market participants to diversify resource choice, incentivize demand flexibility, and invest in storage and other emerging technologies. Arguments against wind and solar PV conclude that these resources will need greater subsidies to survive in the "duck curve" era. But instead, we can tap the latent power of supply diversity, demand flexibility, storage, and market design to level the playing field for all resources, rather than clinging to the premises of the 20th century grid. Protecting the old system is far inferior to enabling the new one so that innovation can flourish, entrepreneurs can thrive, and all options can compete fully and fairly. Source

 

 

© Climate War Room

Fortis anti-green position reopens other issues

A recent press release from Canadian-owned utility Fortis TCI, contradicting an earlier pronouncement by the Rufus Ewing-led government that the company was considering a change in part from inefficient diesel generation to renewable or green energy, has reopened debate on a number of related issues, including the cost of electricity in the TCI and the relationship between successive TCI governments and Canadian firms.

Fortis TCI headquarters in Providenciales

Fortis Inc. is the largest investor-owned gas and electric distribution utility in Canada. Its regulated utilities account for 90 percent of total assets and serve more than 2.4 million customers across Canada and in New York State and the Caribbean – Belize, Cayman Islands and the TCI.

In 2011, the government of Belize expropriated the approximately 70% ownership interest of Fortis Inc. in Belize Electricity Ltd (BEL) an integrated electric utility and the principal distributor in Belize.

Fortis still owns Belize Electric Company Limited (BECOL), a non-regulated hydroelectric generation business that operates three hydroelectric generating facilities in Belize. There is an ongoing controversy over a secret and possibly unenforceable agreement between the then government of Belize and Fortis over alleged pre-emption rights in relation to national waterways.

In 2013, in opposing a proposed $1.5 billion acquisition of CH Energy Group in New York, a local grassroots group pointed to what they say is Fortis’ poor record in dealing with projects in Belize and British Columbia and citing "misinformation and a lack of trust" on the part of Fortis.

Meanwhile, Fortis TCI has possibly the highest cost of electricity in the western hemisphere and five times higher than those charged by the closest mainland utility Florida Power and Light (FPL). Further, the company returns to its Canadian parent a profit averaging $1,000 per year per household from a customer base numbering only 9,000 consumers, which equates to more than $80 per month per household in pure profit.

Notwithstanding the extraordinarily high profit margins enjoyed by Fortis, the company is permitted to import supplies and equipment duty free and constantly upgrades its distribution system in order to lower its long term costs.

While the internal operating statements of Fortis TCI have yet to be made public, it has long been suspected that the utility uses accelerated depreciation to write off capital expenditures quickly and therefore reduce their publicly reported profits. US accounting practices require that capital equipment and assets be depreciated more closely in line with the life expectancy of the asset, reducing the annual write off and therefore showing a more accurate, and possibly higher net profit.

The latest Fortis policy on renewable energy sources puts a halt to the hope of generating power from wind energy from the prevailing trade winds or from solar panels.

Fortis defended its new position on a reported failure of German green power efforts. However, Germany is a northern European country with far less solar energy available, which in spite of huge labour costs and social benefits is now expected to raise its electricity rates to less than $0.09 per Kwh or just 1/6th the cost of Fortis power.

Fortis purchased the former assets of Provo Power Company (PPC) in 2006, three years after the PNP came to power in a 2003 by-election. At the time of the purchase, then premier Michael Misick denied any knowledge of the buyout saying he had nothing to do with the buyout and could not forecast the fate of the employees. However, the stamp duty on the purchase would have yielded the country upwards of $9 million and was subject to negotiation with the Misick government and undoubtedly Misick himself.

At the time of the buyout, PPC was charging $0.26 per Kwh and now Fortis charges an additional surcharge that almost doubles the old rate to $0.51 per Kwh.

Last year, during the first year of the newly elected Progressive National Party (PNP) government, Fortis purchased the Grand Turk power company, Turks and Caicos Utilities from an American firm.

Following the initial Fortis buyout in 2006, the Misick government, which then included current premier Dr Rufus Ewing as director of medical services, proceeded to enter into a hugely expensive and controversial healthcare contract with another Canadian company, Interhealth Canada.

Interest in the Misick connection with Canada has also been revived by some so far unconfirmed but informed reports that he may be a person of interest so far as the Canadian authorities are concerned.

Speculation that the Canadians may have had a hand in Misick’s travel back to the TCI following his recent extradition from Brazil has led to questions as to whether this was designed to protect or pursue significant political and other figures in Canada.

In fact, Canadian interest in the TCI has been around since 1917, when then Canadian prime minister Robert Borden suggested that Canada annex the islands. In 2004, Nova Scotia’s three parties voted unanimously to let the TCI join their province if they ever became part of Canada.

Similar discussions were held by former premier Misick.

As recently as last year, Canadian MP Peter Goldring wanted to revive the proposal for the TCI to join Canada, following the return of elected self-government in the territory in November 2012.

Goldring has been a consistent advocate of increased cultural and economic ties between the TCI and Canada for more than ten years but the idea was dropped when Britain imposed direct rule in 2009, following a commission of inquiry that uncovered widespread and systemic government corruption in the territory.

Goldring, who has visited the islands several times, said they would fit in nicely with the rest of Canada.

But Canada stands to gain more than simply a vacation destination from such a union, he said: "From my perspective, certainly it goes far behind sun and sand. South Caicos Island, for example, is on a deep water channel. It could be readily developed into a deep-water port, which would give Canada tremendous advantage for trans-shipment throughout the entire region."

He added the islands would be a strategic location from which to increase engagement with Haiti and Cuba.

 

 

©

Why Morgan Stanley Is Betting That Tesla Will Kill Your Power Company

There’s a reason that power companies are attacking rooftop solar across the nation: They see those silicon panels as nothing short of an existential threat.

As the cost of solar continues to fall, and more people opt for the distributed power offered by solar, there will be less demand for big power plants and the utilities that operate them. And one major investment giant has now released three separate reports arguing that Tesla Motors is going to help kill power companies off altogether.

Earlier this year, Morgan Stanley stirred up controversy when it released a report that suggested that the increasing viability of consumer solar, paired with better battery technology—that allows people to generate, and store, their own electricity—could send the decades-old utility industry into a death spiral. Then, the firm released another one, further emphasizing the points made in the first. Now, it’s tripling down on the idea with yet another report that spells out how Tesla and home solar will “disrupt” utilities.

“There may be a ‘tipping point’ that causes customers to seek an off-grid approach,” the March report argued. ”The more customers move to solar, the [more the] remaining utility customers’ bills will rise, creating even further ‘headroom’ for Tesla’s off-grid approach.”

Yes, Tesla Motors, everyone’s favorite electric car company. And that’s where the controversy comes in. Morgan Stanley breathlessly pegged Tesla as “the most important auto company in the world” in part because its electric car business was pushing it to develop better energy storage technology, and then mass manufacture said batteries. That’s exactly what Tesla CEO Elon Musk and company will be doing at its forthcoming Gigafactory, which it is building in the Southwest with Panasonic.

With the new manufacturing facility, Morgan Stanley reasons, Tesla stands to double its business (adding another $2 billion in revenue) by selling the lithium ion batteries it typically ships under the hood of a Model S to homeowners with solar panels, too. If consumers can store energy the panels generate during the day for use at night, it would ostensibly render the need for utilities to pipe in faraway power—and their electric bills—obsolete.

Energy storage, when combined with solar power, could disrupt utilities in the US and Europe to the extent customers move to an off-grid approach

Musk is also the chairman of Solar City, a company that leases rooftop solar setups to homeowners, and one that would benefit from the battery tech. Now, the shadiness here is that Morgan Stanley released the report trumpeting Tesla’s crossover energy storage potential—causing Tesla’s stock to rise—right before it underwrote a fundraising round for… Tesla.

So the whole thing is very incestuous, and it does render some of the projections a little suspect, but the bottom line here is that private solar and battery companies are viable enough that they’ve attracted the backing of one of the world’s biggest financial services companies—over the multi-trillion dollar utility industry.

“Energy storage, when combined with solar power, could disrupt utilities in the US and Europe to the extent customers move to an off-grid approach,” Morgan Stanley writes in its third report this year emphasizing the prospect. ”We believe Tesla’s energy storage product will be economically viable in parts of the US and Europe, and at a fraction of the cost of current storage alternatives.”

In other words, Morgan Stanley has Tesla’s back, big time. It’s betting that Musk is going to make the best solar energy batteries money can buy.

Ironically enough, however, even staunch clean energy advocates are wary about Morgan Stanley’s finding that utilities are going the way of the buffalo. “Barring extraordinary circumstances, the economic case for grid defection is still very weak for US consumers,” Stephen Lacey, the senior editor of Greentech Media, wrote of the Morgan Stanley report. ”The electricity system offers valuable backup in case a customer over- or under-invests in an on-site system.”

It’s more likely, then, that people will still buy home solar—by the tens of millions, Greentech suggests—but not unplug from the grid entirely. Utilities will be diminished, but not broken. This process is underway in Europe already, where countries like Germany have powerful incentives for consumers to switch to solar.

Last year, the Economist called the sharp decline of European utilities “startling,” noting that together, they lost half their value—$600 billion—in just five years. Here in the states, utilities and conservative politicians are fighting solar tax credits to prevent the same thing from happening. For the most part, the utilities are losing.

All of this is, ideally, what needs to happen. Climate change is accelerating, and we need to transition away from those massive, fossil fuel-slurping power plants. Distributed solar is an increasingly powerful force behind that weaning process.

And even if some of Morgan Stanley’s calculations are shaky, the trends that Tesla is helping to amplify are anything but—clean, personalized (or community-wide) power will play a major role in shaping our energy future.

The fact that a greed-driven titan of finance like Morgan Stanley recognizes as much, and is willing to triple down on its bets on battery storage and distributed power, is a promising sign that the energy revolution is underway. More

 

© 2014

Renewable Sources Provide Over 20% Of Global Power Production

Global renewable electricity energy capacity rose to a new record level last year — more than 1,560 gigawatts (GW), up 8% from 2012. More than 22 % of the world’s power production now comes from renewable sources. Renewables currently meet almost one-fifth of world final energy consumption.

That is one of the conclusion of the new Renewables Global Status Report published by REN21, “the global renewable energy policy multi-stakeholder network.”

The Renewables Global Status Report relies on up-to-date renewable energy data , provided by an international network of more than 500 contributors, researchers, and authors.

With developing world’spolicy support, global renewable energy generation capacity jumped to a record level; 95 emerging economies now nurture renewable energy growth through supportive policies, up six-fold from just 15 countries in 2005.

These 95 developing nations make up the vast majority of the 144 countries with renewable energy support policies and targets in place. The rise of developing world support contrasts with declining support and renewables policy uncertainty and even retroactive support reductions in some European countries and the United States.

In 2013, an estimated 6.5 million people worldwide worked directly or indirectly in the renewable energy sector. O ther important developments include:

• Renewable energy provided 19% of global final energy consumption in 2012, and continued to grow in 2013. Of this total share in 2012, modern renewables accounted for 10% with the remaining 9% coming from traditional biomass the share of which is declining.

• Heating and cooling from modern biomass, solar, and geothermal sources account for a small but gradually rising share of final global heat demand, amounting to an estimated 10%.

• Liquid biofuels provide about 2.3% of global transport fuel demand.

• Hydropower rose by 4% to approximately 1,000 GW in 2013, accounting for about one-third of renewable power capacity added during the year. Other renewables collectively grew nearly 17% to an estimated 560 GW.

• The solar PV market had a record year, adding about 39 GW in 2013 for a total of approximately 139 GW. For the first time, more solar PV than wind power capacity was added worldwide, accounting for about one-third of renewable power capacity added during the year. Even as global investment in solar PV declined nearly 22% relative to 2012, new capacity installations increased by more than 32%. China saw spectacular growth, accounting for nearly one third of global capacity added, followed by Japan and the United States.

• More than 35 GW of wind power capacity was added in 2013, totalling just more than 318 GW. However, despite several record years, the market was down nearly 10 GW compared to 2012, reflecting primarily a steep drop in the U.S. market. Offshore wind had a record year, with 1.6 GW added, almost all of it in the EU.

• China, the United States, Brazil, Canada, and Germany remained the top countries for total installed renewable power capacity. China’s new renewable power capacity surpassed new fossil fuel and nuclear capacity for the first time.

• Growing numbers of cities, states, and regions seek to transition to 100% renewable energy in either individual sectors or economy-wide. For example, Djibouti, Scotland, and the small-island state of Tuvalu aim to derive 100% of their electricity from renewable sources by 2020.

• Uruguay, Mauritius, and Costa Rica were among the top countries for investment in new renewable power and fuels relative to annual GDP.

• Global new investment in renewable power and fuels was at least USD 249.4 billion in 2013 down from its record level in 2011. More

 

© 2014

Building the Electricity System of the Future: Thinking Disruption, Doing Solutions

The speed of disruptive innovation in the electricity sector has been outpacing regulatory and utility business model reform, which is why they now sometimes feel in conflict.

That disruptive innovation is only accelerating. RMI’s recent report,The Economics of Grid Defection: When and where distributed solar generation plus storage competes with traditional utility service, sets a timeline for utilities, regulators, and others to get ahead of the curve and shift from reactive to proactive approaches. Becoming proactive and deliberate about the electricity system's transformation, and doing so ahead of any fundamental shifts in customer economics, would enable us to optimize the grid and make distributed technologies the integral and valuable piece we believe they can and should be.

When RMI issued The Economics of Grid Defection three weeks ago, our intent was to stretch the conversation among electricity system stakeholders by looking out far enough in the future to discern a point where the rules of the system change in a fundamental way. We used the best available facts to explore when and where fully off-grid solar-plus-battery systems could become cheaper than grid-purchased electricity in the U.S., thus challenging the way the current electricity system operates. Those systems, in fact, don’t even need to go fully off grid. The much less extreme but perhaps far more likely scenario would be grid-connected systems, which could be just as or even more challenging for electricity system operation and utility business models.

The takeaway is this: even under the fully off-grid scenarios we modeled, we have about 10 years—give or take a few—to really solve our electricity business model issues here in the continental U.S. before they begin compounding dramatically. The analysis also suggests we should carefully read the “postcards from the future” being sent from Hawaii today, and take much more interest in how that situation plays out as a harbinger of things to come.

As an institute with a mission to think ahead in the interest of society, consider this a public service message that these issues will crescendo to a point of consequence requiring dramatic and widespread changes well within current planning horizons. For those who are serious about finding solutions, this is also a call to action and a commitment to partnership.

At RMI, much as we pioneered the concepts of the “negawatt,” the “deep retrofit,” and the “hypercar,” we have also defined what it means to be a “think-and-do tank.” It is not enough to do smart analysis. The solutions we champion must be practically tested, broken, fixed, refined, iterated, and ultimately adopted at scale for us to feel satisfied with our work. Partnering with leading companies and institutions is how we prove an alternative path is possible to a world that is clean, prosperous, and secure.

The highly distributed electricity system of the future

The Transform scenario of our Reinventing Fire analysis, the most preferable outcome of the electricity futures we have examined, described a future for the U.S. electricity system in which 80 percent of electricity is supplied from renewable sources by 2050, with about half of that renewable supply coming from distributed resources. Given the current grid is only a few percent distributed and less than 13 percent renewable (counting a generous allotment of hydropower), we have quite a ways to go.

Achieving that end state requires many changes. Some of those changes already have momentum and likely won’t require intervention, but others will need a kick start or some other form of “strategic acupuncture” encouragement. At RMI, we would certainly prefer that a transition of this scale be orderly and proactive, because having disruption rock the boat of the current system unprepared would undoubtedly leave some combination of shareholders, ratepayers, and taxpayers smarting.

As we look at the future electricity system—the one we need to be building today—we see five critical differences from the present system. Redesigning our regulatory and market models should reflect these emergent needs.

• The future electricity system will be highly transactive. Increasingly, the grid will become a market for making many-to-many connections between suppliers and consumers, with those roles being redefined on a daily basis as self-balancing systems decide whether to take from or supply to the grid at any given time.
• Correspondingly, asset and service value will be differentiated by location and timing of availability, and perhaps even by carbon intensity or other socially demanded attributes. In a system that requires instantaneous load matching at the distribution level, and where virtual and real storage are distributed throughout the system, resource coordination will require transparent markets (with increasing automation) that provide the ability to balance autonomously using value signals. A system historically governed by averages will instead migrate to specific, dynamically varying values.
• Innovative energy solutions will proliferate. As a consequence of market forces already unlocked, we are assured to see a regular stream of distributed resource innovations that better meet customer needs at costs comparable to existing utility retail prices. These could be market-based aggregation plays (e.g., demand response) or personal technologies (e.g., a home “power plant” such as solar plus storage or a gas microturbine).
• A consequence of these first three points is that the rules governing the network must be adaptive to constantly shifting asset configurations, operations, and other factors. For example, charging EVs may make more sense at night or during the day, depending on the penetration of renewables relative to base needs. There will be lots of inflection points on how and when to encourage the development of different types of assets to reach efficient and stable outcomes.
• Finally, the customer will be increasingly empowered. The services of the grid must de-commoditize to deliver against exact customer needs for reliability, “green-ness,” and other attributes. Failure to do so will result in customers finding higher-value alternatives.

This future still prominently features a robust wires network; defection from the grid would be suboptimal for a number of reasons. We would assert that everyone is better off if we create a future network that is easier to opt in to, rather than opt out of via the risk of defection.

Moreover, distributed resources—the same ones that could but needn’t threaten defection—have the potential to become a primary tool in the planning and management of grid-based distribution systems. Already, we are working with utilities and regulators in several parts of the country in exploring new ways to incentivize electricity distribution companies to take full advantage of distributed resources to reduce distribution system costs, increase resilience, and meet specialized customer needs. Good regulation will reveal value and facilitate transactions that tap that value, thereby increasing the benefit of distributed resources for all.

Forging solutions: our work on the emerging system

Our programs at RMI are designed to honor and accelerate progress toward an electricity system that harnesses these distributed investments. Hence, we have parallel and interactive efforts to accelerate the progress of economic, distributed, and low-carbon disruptive technologies (because we believe they have an important and positive role to play in the electricity system of the future), even as we work with utilities, regulators, and other key stakeholders to migrate to new business models that deploy and integrate these resources in ways that maximize the benefits to society as a whole. We think these dual efforts place “creative tension” in the system from which progress manifests.

Our work on disruptive technologies is focused on driving down the economic costs of deploying these systems by stimulating direct cost reductions, improving risk management and access to capital, and building new business models that are either behind the meter or aggregations across meters. To do this, we work specifically to help drive down solar “balance of system costs” through understanding cost reduction opportunities and then working to implement them, through identifying pathways to more market capital and then working with consortia like truSolar and Solar Access to Public Capital to unlock, and through working on issues like microgrids or researching the prospects for alternative asset models with a wide range of partners.

These insights into disruptive models directly inform our dialogue with utilities, regulators, technology providers, and other stakeholders around ways to migrate existing business models. Our most ambitious effort at transformation is the Electricity Innovation Lab (e-Lab), a multi-year, multi-stakeholder initiative focused on rapid prototyping and fast feedback on solutions for the future energy system. This network has issued seminal thought pieces on future business models, surveys of the costs and benefits of solar, and worked directly with stakeholders like the City of Fort Collins and the U.S. Navy to develop perspectives on pieces of future solutions for all. Beyond that, we work directly with utilities such as PG&E and states like Minnesota on one-off engagements to test different ideas together in a way that provides important experience for the “think-and-do” cycle that epitomizes our approach.

We at RMI are committed to expanding and accelerating the capacity to transform the electricity industry to one epitomized by innovation and customer service above all else, in a way that meets environmental, social, and economic demands. Toward this end, we are convening 13 cross-disciplinary teams from across the country in two weeks for our first-ever e-Lab Accelerator, designed specifically to workshop some of the toughest issues facing the industry in the transition to the next electricity system. This is just one of the broader set of commitments that we have made to not just thinking about solutions, but putting them immediately to the test. Therein lies the key to our change model: think and do. Then repeat. More

 

© 2014

The energy transition tipping point is here

In late February, Bloomberg finally addressed the most problematic issue in shale gas and tight oil wells: their incredible decline rates and diminishing prospects for drilling in the most-profitable "sweet spots" of the shale plays. I have documented that issue at length (for example, "Oil and gas price forecast for 2014," "Energy independence, or impending oil shocks?," "The murky future of U.S. shale gas," and my Financial Times critique of Leonardo Maugeri's widely heralded 2012 report).

The sources for the Bloomberg article are shockingly candid about the difficulties facing the shale sector, considering that their firms have been at the forefront of shale hype.

The vice president of integration at oil services giant Schlumberger notes that four out of every 10 frack clusters are duds. Geologist Pete Stark, a vice president of industry relations at IHS—yes, that IHS, where famous peak oil pooh-pooher Daniel Yergin is the spokesman for its CERA unit—actually said what we in the peak oil camp have been saying for years: "The decline rate is a potential show stopper after a while…You just can’t keep up with it."

The CEO of Superior Energy Services was particularly pithy: "We've drilled all the good stuff…These are very poor quality formations that I don't believe God intended for us to produce from the source rock." Source rocks, as I wrote last month, are an oil and gas "retirement party," not a revolution.

The toxic combination of rising production costs, the rapid decline rates of the wells, diminishing prospects for drilling new wells, and a drilling program so out of control that it caused a glut and destroyed profitability, have finally taken their toll.

Numerous operators are taking major write-downs against reserves. WPX Energy, an operator in the Marcellus shale gas play, and Pioneer Natural Resources, an operator in the Barnett shale gas play, each have announced balance sheet “impairments” of more than $1 billion due to low gas prices. Chesapeake Energy, Encana, Apache, Anadarko Petroleum, BP, and BHP Billiton have disclosed similar substantial reserves reductions. Occidental Petroleum, which has made the most significant attempts to frack California’s Monterey Shale, announced that it will spin off that unit to focus on its core operations—something it would not do if the Monterey prospects were good. EOG Resources, one of the top tight oil operators in the United States, recently said that it no longer expects U.S. production to rise by 1 million barrels per day (mb/d) each year, in accordance with my 2014 oil and gas price forecast.

Coal and nuclear

When I wrote “Why baseload power is doomed” and "Regulation and the decline of coal power" in 2012, the suggestion that renewables might displace baseload power sources like coal and nuclear plants was generally received with ridicule. How could "intermittent" power sources with just a few percentage points of market share possibly hurt the deeply entrenched, reliable, fully amortized infrastructure of power generation?

But look where we are today. Coal plants are being retired much faster than most observers expected. The latest projection from the U.S. Energy Information Administration (EIA) is for 60 gigawatts (GW) of coal-fired power capacity to be taken offline by 2016, more than double the retirements the agency predicted in 2012. The vast majority of the coal plants that were planned for the United States in 2007 have since been cancelled, abandoned, or put on hold, according to SourceWatch.

Nuclear power plants were also given the kibosh at an unprecedented rate last year. More nuclear plant retirements appear to be on the way. Earlier this month, utility giant Exelon, the nation’s largest owner of nuclear plants, warned that it will shut down nuclear plants if the prospects for their profitable operation don’t improve this year.

Japan has just announced a draft plan that would restart its nuclear reactors, but the plan is "vague" and, to my expert nose, stinks of political machinations. What we do know is that the country has abandoned its plans to build a next-generation "fast breeder" reactor due to mounting technical challenges and skyrocketing costs.

Grid competition

Nuclear and coal plant retirements are being driven primarily by competition from lower-cost wind, solar, and natural gas generators, and by rising operational and maintenance costs. As more renewable power is added to the grid, the economics continue to worsen for utilities clinging to old fossil-fuel generating assets (a topic I have covered at length; for example, "Designing the grid for renewables," "The next big utility transformation," "Can the utility industry survive the energy transition?" "Adapt or die - private utilities and the distributed energy juggernaut" and "The unstoppable renewable grid").

Nowhere is this more evident than in Germany, which now obtains about 25 percent of its grid power from renewables and which has the most solar power per capita in the world. I have long viewed Germany’s transition to renewables (see "Myth-busting Germany's energy transition") as a harbinger of what is to come for the rest of the developed world as we progress down the path of energy transition.

And what's to come for the utilities isn't good. Earlier this month, Reuters reported that Germany’s three largest utilities, E.ON, RWE, and EnBW are struggling with what the CEO of RWE called “the worst structural crisis in the history of energy supply.” Falling consumption and growing renewable power have cut the wholesale price of electricity by 60 percent since 2008, making it unprofitable to continue operating coal, gas and oil-fired plants. E.ON and RWE have announced intentions to close or mothball 15 GW of gas and coal-fired plants. Additionally, the three major utilities still have a combined 12 GW of nuclear plants scheduled to retire by 2020 under Germany’s nuclear phase-out program.

RWE said it will write down nearly $4 billion on those assets, but the pain doesn’t end there. Returns on invested capital at the three utilities are expected to fall from an average of 7.7 percent in 2013 to 6.5 percent in 2015, which will only increase the likelihood that pension funds and other fixed-income investors will look to exchange traditional utility company holdings for “green bonds” invested in renewable energy. The green bond sector is growing rapidly, and there's no reason to think it will slow down. Bond issuance jumped from $2 billion in 2012 to $11 billion in 2013, and the now-$15 billion market is expected to nearly double again this year.

A new report from the Rocky Mountain Institute and CohnReznick about consumers "defecting" from the grid using solar and storage systems concludes that the combination is a "real, near and present" threat to utilities. By 2025, according to the authors, millions of residential users could find it economically advantageous to give up the grid. In his excellent article on the report, Stephen Lacey notes that lithium-ion battery costs have fallen by half since 2008. With technology wunderkind Elon Musk's new announcement that his car company Tesla will raise up to $5 billion to build the world's biggest "Gigafactory" for the batteries, their costs fall even farther. At the same time, the average price of an installed solar system has fallen by 61 percent since the first quarter of 2010.

At least some people in the utility sector agree that the threat is real. Speaking in late February at the ARPA-E Energy Summit, CEO David Crane of NRG Energy suggested that the grid will be obsolete and used only for backup within a generation, calling the current system "shockingly stupid."

Non-hydro renewables are outpacing nuclear and fossil fuel capacity additions in much of the world, wreaking havoc with the incumbent utilities' business models. The value of Europe's top 20 utilities has been halved since 2008, and their credit ratings have been downgraded. According to The Economist, utilities have been the worst-performing sector in the Morgan Stanley index of global share prices. Only utilities nimble enough to adopt new revenue models providing a range of services and service levels, including efficiency and self-generation, will survive.

In addition to distributed solar systems, utility-scale renewable power plants are popping up around the world like spring daisies. Ivanpah, the world's largest solar "power tower" at 392 megawatts (MW), just went online in Nevada. Aura Solar I, the largest solar farm in Latin America at 30 MW, is under construction in Mexico and will replace an old oil-fired power plant. India just opened its largest solar power plant to date, the 130 MW Welspun Solar MP project. Solar is increasingly seen as the best way to provide electricity to power-impoverished parts of the world, and growth is expected to be stunning in Latin America, India and Africa.

Renewable energy now supplies 23 percent of global electricity generation, according to the National Renewable Energy Laboratory, with capacity having doubled from 2000 to 2012. If that growth rate continues, it could become the dominant source of electricity by the next decade.

Environmental disasters

Faltering productivity, falling profits, poor economics and increasing competition from power plants running on free fuel aren't the only problems facing the fossil-fuels complex. It has also been the locus of increasingly frequent environmental disasters.

On Feb. 22, a barge hauling oil collided with a towboat and spilled an estimated31,500 gallons of light crude into the Mississippi River, closing 65 miles of the waterway for two days.

More waterborne spills are to be expected along with more exploding trains as crude oil from sources like the Bakken shale seeks alternative routes to market while the Keystone XL pipeline continues to fight an uphill political battle. According to the Association of American Railroads, the number of tank cars shipping oil jumped from about 10,000 in 2009 to more than 230,000 in 2012, and more oil spilled from trains in 2013 than in the previous four decades combined.

Federal regulators issued emergency rules on Feb. 25 requiring Bakken crude to undergo testing to see if it is too flammable to be moved safely by rail, but I am not confident this measure will eliminate the risk. Light, tight oil from U.S. shales tends to contain more light molecules such as natural gas liquids than conventional U.S. crude grades, and is more volatile.

Feb. 11 will go down in history as a marquee bad day for fossil fuels, on which 100,000 gallons of coal slurry spilled into a creek in West Virginia; a natural gas well in Dilliner, Pa., exploded (and burned for two weeks before it was put out); and a natural gas pipeline ruptured and exploded in Tioga, ND. Two days later, another natural gas line exploded in the town of Knifely, Ky., igniting multiple fires and destroying several homes, barns, and cars. The same day, another train carrying crude oil derailed near Pittsburgh, spilling between 3,000 and 7,500 gallons of crude oil.

And don't forget the spill of 10,000 gallons of toxic chemicals used in coal processing from a leaking tank in West Virginia in early January, which sickened residents of Charleston and rendered its water supply unusable.

No return

At this point you may think, "Well, this is all very interesting, Chris, but why should we believe we've reached some sort of tipping point in energy transition?"

To which I would say, ask yourself: Is any of this reversible?

Is there any reason to think the world will turn its back on plummeting costs for solar systems, batteries, and wind turbines, and revert back to nuclear and coal?

Is there any reason to think we won't see more ruptures and spills from oil and gas pipelines?

What about the more than 1,300 coal-ash waste sites scattered across the United States, of which about half are no longer used and some are lacking adequate liners? How confident are we that authorities will suddenly find the will, after decades of neglect, to ensure that they'll not cause further contamination after damaging drinking water supplies in at least 67 instances so far, such that we feel confident about continuing to rely on coal power?

Like the disastrous natural gas pipeline that exploded in 2010 and turned an entire neighborhood in San Bruno, Calif., into a raging inferno, coal-ash waste sites are but one part of a deep and growing problem shot through the entire fabric of America: aging infrastructure and deferred maintenance. President Obama just outlined his vision for a $302 billion, four-year program of investment in transportation, but that's just a drop in the bucket, and it's only for transportation.

Is there any reason to think citizens will brush off the death, destruction, environmental contamination of these disasters—many of them happening in the backyards of rural, red-state voters—and not take a second look at clean power?

Is there any reason to believe utilities will swallow several trillion dollars worth of stranded assets and embrace new business models en masse? Or is it more likely that those that can will simply adopt solar, storage systems, and other measures that ultimately give them cheaper and more reliable power, particularly in the face of increasingly frequent climate-related disasters that take out their grid power for days or weeks?

Is there any reason to think the billions of people in the world who still lack reliable electric power will continue to rely on filthy diesel generators and kerosene lanterns as the price of oil continues to rise? Or are they more likely to adopt alternatives like the SolarAid solar lanterns, of which half a million have been sold across Africa in the past six months alone? (Here's a hint: Nobody who has one wants to go back to their kerosene lantern.) Founder Jeremy Leggett of SunnyMoney, who created the SolarAid lanterns, intends to sell 50 million of them across Africa by 2020.

Is there any reason to believe solar and wind will not continue to be the preferred way to bring power to the developing world, when their fuel is free and conventional alternatives are getting scarcer and more expensive?

Is there any reason a homeowner might not think about putting a solar system on his or her roof, without taking a single dollar out of his or her pocket, and using it to charge up an electric vehicle instead of buying gasoline?

Is there any reason to think that drilling for shale gas and tight oil in the United States will suddenly resume its former rapid growth rates, when new well locations are getting harder to find, investment by the oil and gas companies is being slashed, share prices are falling, reserves are getting taken off balance sheets and investors are getting nervous?

I don't think so. All of these trends have been developing for decades, and new data surfacing daily only reinforces them. More

 

© 2014