Why Solar Plus Storage is Ready for Prime Time
Solar plus storage, particularly in California is primed for significant growth. Here’s why:
Distributed Energy Resources (“DERs”, e.g. solar, storage, energy efficiency, demand response, microgrids, electric vehicles, biofuels, combined heat and power) are increasingly providing greater value, while centralized fossil fuel plants are declining in value. There are several reasons that DERs are more valuable, including reducing greenhouse gases (GHGs), reducing risk of cascading outages, decreasing risks of outages from natural disasters (e.g. earthquakes) and terrorist acts, decreasing magnitude of risk from cyber-attacks, and reducing costs of maintaining and building distribution and transmission grids. DERs also distribute power to local homes and businesses, both literally and figuratively—this is in large part a social revolution as much as grid evolution.
The extraordinary growth of Community Choice Energy (CCE) in California is enabling this remarkable growth in local clean energy development, while committing to aggressive GHG reductions, substantially exceeding GHG reductions targeted by the investor-owned energy utilities. CCEs throughout California, such as Peninsula Clean Energy in San Mateo County, are building the financial reserves to ensure long term financial sustainability, while gradually developing local clean energy programs. The accompanying benefits of local jobs and local economic development are substantial.
CCE public rally at California Public Utilities Commission, February 8, 2018
While CCEs are leading California towards achieving the state-wide goals for GHG reductions set at 1990 levels by 2020, 40% below 1990 levels by 2030, and 80% below 1990 levels by 2050, they are actually on track to achieve those goals much earlier. The CCEs are also targeting much more aggressive renewable energy goals than the California state goals of 33% renewable energy by 2020, 50% renewable energy by 2030, and 100% renewable energy by 2045.
These statewide goals in California will require massive amounts of DERs, including solar plus storage. Much concern and many studies have focused on California’s need to align this massive shift to intermittent renewable resources (e.g. solar and wind) so that supply can meet demand. The Duck Curve illustrates that this great shift to intermittent resources could result in major grid reliability challenges, unless DERs such as storage are deployed rapidly over the next few years. DER aggregation (e.g. solar plus storage plus demand response), along with DER Management Systems, will be relied upon to match load in real time.
Catherine Wolfram, “Is the Duck Sinking?’, https://energyathaas.wordpress.com/2017/04/24/is-the-duck-sinking/, 4/24/17.
Federal Government Policies Favorably Impacting Solar Plus Storage
There are various Federal government policies which can impact solar plus storage, and one of the most impactful is the Investment Tax Credit (ITC). The ITC allows a 30% deduction from federal taxes for costs of purchasing and installing residential and commercial PV systems. The deduction will decrease to 26% as of 2020, 22 percent in 2021, and disappears forresidentialin2022, while reducing (permanently) to 10 percent for commercial systems in 2022.
Storage coupled with solar has not qualified for the ITC, but this could change soon. The Internal Revenue Service (IRS) issued a private letter ruling, in response to an inquiry from a taxpayer, determining that the residential solar PV system of that taxpayer could qualify for the ITC if their storage system is charged entirely by onsite solar generation. While this private letter ruling applied only to the particular taxpayer making the inquiry, the storage industry is optimistic that the ruling could ultimately apply to all residential (and possibly commercial) storage systems charged entirely by onsite solar. If a storage system is charged less than 100 percent by onsite solar, then the percentage by which it is charged by onsite solar would be applied. For example, an onsite storage system charged 50 percent by onsite solar, would only receive 50% of the prevailing ITC.
The Federal Energy Regulatory Commission (FERC) is updating policies which previously did not take into account the true value of DERs, including storage. FERC Order 841 is a step in the right direction, requiring electricity markets to allow storage to participate in wholesale markets. Other DERs could also benefit from this policy.
Another policy change which will certainly accelerate storage development is FERC’s Order 845, which revises large generator (greater than 20 MW) interconnection requirements. Storage is much more than just a generation source. The Order not only recognizes storage as a generating facility for the firsttime, but also allows storage owners to avoid expensive transmission system upgrades by interconnecting below the rated capacity of their storage systems. Since the actual output of intermittent resources such as solar and wind is frequently below nameplate capacity, storage should be tailored to the actual level of service required.
The Order also creates a new surplus interconnection agreement, which expedites the process for interconnecting new facilities with existing generators not using all their capacity all the time. But the Order did not adopt other policies under consideration as listed in the Notice of Proposed Rulemaking (NOPR), such as posting of congestion and curtailment information, and modeling of energy storage.
FERC still has areas for improving policies impacting storage (and other DERs), including computer-controlled energy resources utilizing smart algorithms, and allowing aggregations of storage with other DERs. FERC, the California Independent System Operator (CAISO), and other Independent System Operators (ISOs), are considering and implementing policies which will facilitate a plug and play grid, with DER management systems (DERMs) optimizing deployment of DERs seamlessly.
California Government Policies Favorably Impacting Solar Plus Storage
There are numerous state government policies which currently, or prospectively, will encourage the development of solar plus storage in California.
Let’s start by acknowledging a CPUC Decision which indirectly benefits solar plus storage.
Beginning September 8, 2017, all new solar PV systems must be equipped with a smart inverter. Furthermore, they must be capable of offering support for certain ancillary services for the distribution grid, if excess electricity is generated on-site. The current phase of the proceeding is deliberating whether and how much to compensate prosumers supplying excess electricity for ancillary services, as well as considering the proper communication protocols.
California was the first state to order substantive storage mandates for investor-owned utilities (IOUs), with the California Public Utilities Commission (CPUC) setting a goal of 1.325 GW of storage procured by 2020 for PG&E, SCE, and SDG&E. The state subsequently added an additional target of 500 MW behind-the-meter storage for those three IOUs. CCEs (and other load serving entities) are required to procure storage amounting to at least one percent of forecasted peak load by 2020.
Also as of January 1st, 2020, all new homes under three stories (deemed suitable for rooftop solar) must install solar panels, as ordered by the California Energy Commission in their 2019 update of Title 24, Part 6, Building Energy Efficiency Standards. Homebuilders will be allowed to reduce the amount of solar PV at a particular site by up to 25 percent if they deploy storage onsite. Similarly, there are compliance credits for meeting certain energy efficiency standards, installing heat pumps for space and water heating, utilizing an electric vehicle, or deploying community solar projects.
As the CPUC seeks to determine by 2019 the locational- and time-differentiated values of DERs, while also planning to shift to Time of Use (TOU) pricing in 2019, Net Energy Metering (NEM) will become more valuable for prosumers producing solar energy in excess of their consumption. Solar plus storage enables prosumers to defer electricity consumption during peak TOU periods, and reduce exposure to any applicable demand charges (i.e. for industrial and commercial customers). The value of solar plus storage resultingly increases, while the value of stand-alone solar decreases.
The CPUC has revised NEM, as a half-way step towards transitioning away from NEM entirely, in the process of adopting locational- and time differentiated rates for DERs. However, during this transition period during which NEM 2.0 prevails, NEM billing credits for storage are being addressed by the CPUC, in which DC-coupled solar plus storage systems would receive NEM credit only forNEM-eligible generation.
This “Battery Net Metering” would reduce the mismatch between load and supply of electricity, lessening the Duck Curve effect, allowing solar plus storage customers to charge their storage system during off-peak periods, and discharge during more expensive peak periods. The CPUC proceeding is currently addressing alternatives, essentially technical and regulatory, for ensuring that only onsite solar (or other renewable) energy is being used to charge the onsite storage system, and thereby qualify for NEM credits, and for ITC credit as well.
The CPUC is re-assessing and calculating the values of time- and location-differentiated DERs such as solar and storage, including the resulting benefits from GHG reductions. For customer-site (behind-the-meter) storage, the CPUC Self Generation Incentive Program (SGIP) is the most advantageous program. The CPUC is currently modifying the SGIP program, including adding short-term price signals to incentivize behind-the-meter (BTM) storage to optimize GHG emissions reductions, by rewarding BTM storage to charge during periods of renewable over-generation. This would reduce much of the current curtailment of renewable energy during peak periods, particularly when there is excess solar. Up to 10GWH of renewable energy is curtailed in California on a daily basis due to over-generation.
Most recently, the California legislature (both Senate and Assembly) have proposed extending the SGIP program to 2026, and adding nearly 3 GW to the allowed total ceiling. The Bill (SB 700) is now on the Governor’s desk for approval. Currently, California has about 176 MW of BTM grid-interactive storage, but the U.S. Energy Storage Monitor, prior to this modification to SGIP, had already projected that California will add almost 3 GW of BTM storage from 2019 to 2023.
Energy storage can provide multiple value streams via various applications, particularly frequency regulation, avoided generation capacity, and energy price arbitrage, but also other ancillary services, reduced costs for transmission and distribution (T&D) upgrades, reduced T&D congestion, backup generation, flexible resource adequacy value, avoided demand charges, and avoided Time of Use peak charges. The CPUC, recognizing these and other benefits provided by storage, has adopted eleven rules to govern evaluation of the multiple value streams. This is the first step in developing market values for the various storage applications, which will greatly increase the economics of storage deployments over the next several years.
California state and local policies to encourage the use of electric vehicles (“EVs”) and EV infrastructure, including a state mandate to have 1.5 million zero emissions vehicles on the road by 2025, are steadily increasing the financial viability of energy storage from EVs. While vehicle-to-grid (V2G) charging is still at an early stage, controlled charging (V1G) already has high potential for energy storage. Somewhat ironically, the CPUC energy storage policies currently allow for V2G energy storage applications, but omit V1G. Lawrence Berkeley National Laboratory (LBNL) recently issued a study which estimates that the CPUC energy storage mandate could be met by V1G alone, and at a savings of several billion dollars versus having the mandate met by stationary storage.
The Economics of Solar Plus Storage
Solar costs continue to decline, as do storage costs. Levelized costs of all DERs, including storage, have fallen precipitously. More fundamentally, the levelized costs of solar plus storage are expected to fall below standalone PV solar by 2020, according to the National Renewable Energy Laboratory (NREL). However, levelized costs (the net present value of the cost of electricity over the lifetime of the generating asset) are only half the picture. Equally important is the value of the generating asset, and NREL’s study seeks to quantify the value of solar plus storage as well. A critical aspect of this value is the multiple value streams possible from various applications of a single storage system. With California proceeding towards creating a market for the various value streams, the economics for solar plus storage increase significantly.
As DER aggregation becomes a reality in California, the economics of solar plus storage increases even more. CAISO’s Distributed Energy Resource Provider (DERP) policy allows a third party to aggregate DERs and bid them into the CAISO wholesale market. Further, CAISO’s Energy Storage and Distributed Energy Resources (ESDER) proceeding is facilitating greater participation by storage and other DERs in California’s wholesale markets. This includes allowing storage to provide services and receive revenue from more than one entity contemporaneously.
Once DER management systems (DERMS) evolve beyond the concept stage to become a real-time arbiter of all types of grid data, which is expected over the next couple years, solar plus storage should see yet another boost in demand. The new DERMS software platforms will enable solar plus storage, and other DERs, to be aggregated instantaneously as bulk power resources. And some DERMS pilots are currently demonstrating that customer-sited DERs can interact in real time with utility control systems, which could enable peer-to-peer transactive electricity exchanges between any prosumers having their own DERs, with any other customers connected to the grid. Microgrids could then become a widespread reality. Solar plus storage is the next step towards this ultimate goal.
Peninsula Clean Energy, a leading California CCE, is developing local programs which utilize Distributed Energy Resources within their service territory, creating local jobs and stimulating local economic development.
 Assembly Bill AB 32, Global Warming Solutions Act (2006), http://www.leginfo.ca.gov/pub/05-06/bill/asm/ab_0001-0050/ab_32_bill_20060927_chaptered.pdf.
 Senate Bill SB 32 (2016), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB32
 SB 1078 (2002), Chapter 516, https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=200120020SB1078.
 SB 350, the Clean Energy and Pollution Reduction Act of 2015, Chapter 547, https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB350.
 Besides the ITC, two other important federal policies are the Public Utilities Regulatory Policies Act (PURPA), which requires renewable energy to be chosen when its avoided cost is lower than the cost for fossil fuel, and interest rates set by the Federal Reserve Bank, which can be a significant cost for renewable projects financed for 20 years or longer.
 Gavin Bade, “IRS: Residential storage eligible for ITC when charged by onsite solar”, https://www.utilitydive.com/news/irs-residential-storage-eligible-for-itc-when-charged-by-onsite-solar/518377/, 3/5/18.
 William M. Keyser, Buck B. Endemann, Benjamin L. Tejblum, Kristen A. Berry, “Balancing the Interconnect”, http://www.klgateshub.com/details/?pub=Balancing-the-Interconnect-06-12-2018
 CPUC, INTERIM DECISION ADOPTING REVISIONS TO ELECTRIC TARIFF RULE 21 FOR PACIFIC GAS AND ELECTRIC COMPANY, SOUTHERN CALIFORNIA EDISON COMPANY, AND SAN DIEGO GAS & ELECTRIC COMPANY TO REQUIRE “SMART” INVERTERS, http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M143/K827/143827879.PDF, 12/22/14.
 CPUC, DECISION ADOPTING ENERGY STORAGE PROCUREMENT FRAMEWORK AND DESIGN PROGRAM,
http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M078/K912/78912194.PDF, Appendix A, p. 2, 10/17/13.
 How California’s Time-of-Use Changes Will Affect Commercial Solar Economics, Mike Munsell, https://www.greentechmedia.com/articles/read/how-california-time-of-use-changes-impact-commercial-solar#gs.Z0g3030, 12/5/17.
 DECISION ADOPTING SUCCESSOR TO NET ENERGY METERING TARIFF
http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M158/K181/158181678.pdf , 2/5/16
 ADMINISTRATIVE LAW JUDGE’S RULING REQUIRING SUPPLEMENTAL INFORMATION REGARDING PETITION OF CALIFORNIA SOLAR AND STORAGE ASSOCIATION TO MODIFY DECISION 14-05-033 & Rulemaking 14-07-002,
 Ted Ko, Polly Shaw, & Jim Baak, “How Customer-Sited Energy Storage Can Reduce California’s Greenhouse Gas Emissions”, https://www.greentechmedia.com/articles/read/how-customer-sited-energy-storage-can-reduce-california-greenhouse-gas-emis, 9/5/17.
 Peter Maloney, “Energy storage gets a boost as California legislature extends SGIP”, https://www.utilitydive.com/news/energy-storage-gets-a-boost-as-california-legislature-extends-sgip/531350/, 8/31/18.
 Jeff St. John, “California Passes Bill to Extend $800M in Incentives for Behind-the-Meter Batteries”, https://www.greentechmedia.com/articles/read/california-passes-bill-to-extend-incentives-for-behind-the-meter-batteries, 8/3/18.
 The Brattle Group, “Stacked Benefits: Comprehensively Valuing Battery Storage in California”, http://www.brattle.com/system/publications/pdfs/000/005/494/original/Stacked_Benefits_-_Final_Report.pdf?1505226490, 9/17.
 CPUC, Decision 18-01-003, DECISION ON MULTIPLE-USE APPLICATION ISSUES, http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M206/K462/206462341.PDF, 1/17/18.
 Jonathan Coignard et al. Clean vehicles as an enabler for a clean electricity grid, Environmental Research Letters (2018). DOI: 10.1088/1748-9326/aabe97, 5/16/18.
 Emma Foehringer Merchant, “The Floor for Ultra-Low Solar Bids? $14 per Megawatt-Hour”, https://www.greentechmedia.com/articles/read/the-floor-for-ultra-low-solar-bids-14-per-megawatt-hour, 8/2/18; Julian Spector, “Nevada’s 2.3-Cent Bid Beats Arizona’s Record-Low Solar PPA Price”, https://www.greentechmedia.com/articles/read/nevada-beat-arizona-record-low-solar-ppa-price#gs.cyiyTms, 6/12/18.
 Andy Extance, “Energy storage [prices forecast to tumble”, https://www.chemistryworld.com/news/energy-storage-prices-forecast-to-tumble/3007717.article, 7/17/17; Oliver Schmidt, “Future cost of electricity storage and impact on competitiveness”, https://www.iea.org/media/workshops/2018/eu4energypolicyforum/Day3_Session2a_OliverSchmidt.pdf, 6/28/18.
 Herman Trabish, “End of the ‘gas rush? ’Renewables, storage reaching cost parity, report finds”, https://www.utilitydive.com/news/end-of-the-gas-rush-renewables-storage-reaching-cost-parity-report-fin/524840/, 6/11/18.
 Julian Spector, “Solar-Plus-Storage Poised to Beat Standalone PV Economics by 2020”, https://www.greentechmedia.com/articles/read/solar-plus-storage-can-beat-standalone-pv-economics-by-2020, 8/22/17.
 Peter Maloney, “Competitive solar-plus-storage moves closer to reality”, https://www.utilitydive.com/news/competitive-solar-plus-storage-moves-closer-to-reality/523519/, 5/14/18.
 Cristin Lyons and Vazken Kassakhian, “Distributed Energy Resources Integration: Policy, Technical, and Regulatory Perspectives from New York and California”, https://fonteva-customer-media.s3.amazonaws.com/00Do0000000Yi66EAC/YLwhKhIb_SEPA075%2051st%20State%20Report_DER%20Integration.pdf, 12/16. Aggregated resources must be at least a half MW in capacity, and DERs aggregated across multiple pricing nodes can be no greater than 20 MW.
 Gavin Bade, “’Year of the Grid’: DER management takes center stage at DistribuTECH”, https://www.utilitydive.com/news/year-of-the-grid-der-management-takes-center-stage-at-distributech/515779/, 1/29/18.
Integrating Renewable Energy: Vital for Climate Change Mitigation
As the critical UN Climate Conference in Paris, COP21, is less than 2 months away, countries around the world are setting their targets for greenhouse gas emissions reductions. There is serious concern that the global effort to limit the temperature increase at two degrees Celsius is uncertain at best.
With that challenge in mind, experts from leading energy industry companies and organizations gathered in San Francisco for the 5th annual CaFFEET (California France Forum on Energy Efficient Technologies: http://caffeet.com/) conference on September 29th and 30th to seek solutions. The focus was the “Utility Response to Climate Change”, and specifically “Innovative Solutions to Integrate Renewable Energy”. To reach the ambitious greenhouse gas emissions reduction targets, current levels of renewable energy will need to increase manifold.
This is no easy task. Integrating intermittent renewable energy onto the grid presents many reliability challenges with small margin for error, and risks of extensive brownouts.
CaFFEET began with a framing of the critical challenges and opportunities by EDF Director of US R&D, Jan Van Der Lee, and the General Consul of France in San Francisco, Pauline Carmona. Next, PRIME and French Tech Hub assembled a variety of startup companies presenting their innovative solutions for renewable energy integration. These solutions included Primus Power (energy storage), Enertime (converting waste heat to carbon-free electricity), Simularity (real time predictive analytics), Dronotec (drones for surveying and inspection), and UtilityAPI (automation of customer-to-solar data connection).
A second group of startups pitched their solutions: Helios Exchange (building energy analytics), BoostHeat (thermodynamic natural gas boilers), PVComplete (solar project design automation), IRTFS (in-roof PV mounting system), and GELI (Internet of Energy platform).
These cutting-edge companies offered unique solutions, and although they all have able competitors, each is offering a solution which addresses a critical problem for renewable integration. Clearly, fast-ramping storage with at least a couple hours duration will be vital for renewable integration. Primus Power and GELI have evolved their storage solutions over the past few years to the point that both are poised to be among the leaders. Less variable energy sources, such as those offered by Enertime (Organic Rankine Cycle machines & heat pumps) and BoostHeat (combining natural gas boilers with heat pumps), certainly can fulfill a niche area (although some would like to see them replace natural gas ultimately withan even cleaner resource). Predictive analytics from Simularity and Helios Exchange using sophisticated algorithms offer profitable techniques for reducing greenhouse gas emissions. Automating the often time-consuming and labor-intensive processes for deploying solar can be greatly simplified, and UtilityAPI, PVComplete, and IRTFS offer viable solutions. Finally, Dronotec’s drones greatly simplify utility inspection in hard-to-access areas.
As impressive as these startups were, the difficulty in raising venture capital funding is a significant barrier, particularly at the risky early stages of development. Venture capitalists have been generally wary of large investments in clean energy startups, after several unsuccessful forays. Consequently, the low turnout by VCs at this CaFFEET conference was not much different from many clean energy conferences. Fortunately, most of the startups making their pitches appeared reasonably well-funded.
The next day began with several insightful speeches framing the issues for renewable integration.
A panel of experts analyzed the science of renewable energy forecasts. The speakers described their modeling assumptions and techniques, and highlighted the complexities of modeling which are being addressed in increasingly sophisticated mathematical models.
One of the primary conundrums of intermittent energy forecasting is the continuous variability of solar and wind energy at the local level, especially when forecasting for a single solar array. The predictive analytics examined by the panel, using a variety of data sources, shows great promise for increasingly accurate forecasts. But even at the state-wide level, particularly for California, energy forecasting on a near real time basis, is formidable. The fabled California Independent System Operator “Duck Curve”, in which large amounts of solar being deployed in California provide grid management problems throughout the day and when the sun goes down, calls for more accurate forecasting, with effective demand response and storage. The ideal is to shed one megawatt of load for one megawatt of predicted behind-the-meter (BTM) generation, and this is still very difficult, particularly in the morning (when demand may be more variable).
Maintaining demand-supply balance is the expertise of Ana Busic, INRIA Research Scientist, who followed the panel with insights from her research. She proposed a randomized control architecture for utilities with decentralized decision making to enable automated demand response. While California electric utilities will be piloting demand response auction mechanisms, her model seeks to maintain a balance between the market-focused approach of auctions, with the utility’s need to maintain control over demand response deployment.
The next panel discussion, moderated by Damien Buie, EDF RE Director of Innovation & Commercialization, focused on utility utilization of data for advanced control. Microgrids were a common theme for this panel, as they were throughout the conference, and certainly they will become commonplace in the coming years. This poses more challenges and opportunities for utilities in the real-time effort to balance demand and supply.
Two startups on this panel, namely Douglass Campbell, CEO of DC System and Leon Wu, CEO of Grid Symphony, described their solutions for seamlessly integrating microgrids and distributed energy resources onto the grid. DC System’s software enables distributed intelligence at substations, control centers, and power generation sites, along with centralized data management. Grid Symphony offers power-supply forecasting software using machine learning, which can save utilities and their ratepayers substantially by allocating electricity where it is most needed on a near real time basis.
Also on the panel, Sean Kiernan, SunEdison’s VP of Energy Storage Deployments, emphasized the importance of offering a complete package of solar (or wind) along with storage. SunEdison has taken a leadership role in offering behind-the-meter solar to reduce energy costs and behind-the-meter storage to reduce demand charges. Behind-the-meter solar and storage can provide grid services such as additional system capacity, demand response, and ancillary services.
Ernst Camm, S&C Manager, Consulting & Analytical Services, contributed his expertise to the panel discussion, highlighting the deeper situational awareness being enabled by sensors and other monitoring devices so as to maximize availability and reliability of the grid.
Amal de Silva, IBM Decision Optimization, Client Solutions Professional, next presented his research and results with forecasting wind resources to optimize grid integration and performance with a utility case study.
The final panel, on Innovation for O&M, provided unique perspectives on O&M efficiencies, with resulting cost minimization. A common theme was reducing “Soft Costs” (AKA Balance of System Costs), as these costs account for more than half the costs of a PV solar system in the USA. The moderator, Craig Connelly, US D.O.E, Sunshot Initiative Program Manager, reviewed the Sunshot program, which aims to lower the total installed cost of solar energy systems to $.06/kWh by 2020.
To wrap up, Dalen Copeland, EDF RE, VP of Business Development, summarized previous UN Climate Change Conferences, which have had limited success, and she proposed her thoughts on how the Paris COP 21 Conference could aim for greater success. She expressed a hopeful view that limiting the increase in global temperatures to 2 degrees Celsius is indeed achievable, although a report released one day after the conference (http://phys.org/news/2015-10-world-celsius-analysis.html) projects that the world is currently on a trajectory to hit 2.7 degrees Celsius.
Overall, this conference provided many interesting cutting-edge companies, and experts engaged in interactive discussions, all of which will clearly result in improved integration of renewables onto the grid, while maintaining grid availability and reliability. There were differing opinions on what percent of total grid energy can be provided seamlessly by renewables, but most would agree that the efforts to achieve increasingly higher proportions of total energy from renewable sources must be encouraged and accelerated in order to improve upon the current trajectory for greenhouse gas reductions.
For a glimpse of the future, when Zero Net Energy buildings, and even Net Positive Buildings, are commonplace, see the First Passive House Certified 100% renewable net positive energy Nanogrid Condominium complex in the USA. Here's an overview.
Climate Change at the Inflection Point
"You want Crazy? I'll show you Crazy!" It's as if climate change is teasing us with a peek behind the thin veil, doing a Jack Nicholson impression: "You want the Truth? You can't handle the Truth!". In this age of Truthiness, many of us stand in misbelief that anthropogenically-caused greenhouse gas emissions could already be turning-up the intensity of climate change to a much higher level than we have experienced.
The warmest year since 1880 (first year of recorded observations) was 2014, and the ten warmest years since 1880 (with the exception of 1998) have occurred since 2000. Even the record-breaking snow befalling much of the northeastern USA is at least in part due to above-normal sea surface temperatures. The National Oceanic and Atmospheric Administration (NOAA) reveals that sea surface temperatures over the past three decades have been higher than previously recorded since 1880. The warmer atmosphere holds more moisture, and also causes more evaporation from soil and water. The Atlantic ocean surface is warming, providing much more moisture, and intensifying precipitation. NOAA also reports that precipitation, including snowfall, has increased at a rate of 0.5 percent per decade.
But in California (and the southwest) the weather is becoming even drier than normal. Climate change is actually intensifying the California drought. In an extensive research report posted recently by the Proceedings of the National Academy of Sciences, the worst droughts in California have historically occurred when conditions were both dry and warm, and higher temperatures are increasing the probability that dry and warm years will coincide. The researchers found that years which were both warm and dry were about twice as likely as cool and dry years to produce a severe drought.
What can we do? The most effective solution is to put a price on carbon dioxide emissions (and ultimately other GHGs). Carbon prices currently in effect range from just over $5/ton for the Regional Greenhouse Gas Initiative (RGGI), about $7.50/ton for the European Union Emissions Trading System, $12/ton for the Environmental Protection Agency (EPA) Social Cost of Carbon, $12.21/ton for the California Air Resources Board February Auction, $3/ton-$13/ton under China's various cap and trade programs, $36/ton from the Department of Energy's Social Cost of Carbon calculation, to $168/ton from Sweden's carbon tax.
There are several reasons why the lower carbon prices typically understate the costs of carbon emissions, not to mention political pressure to keep the estimates low.
Even corporations estimate an "internal cost of carbon", generally ranging from $6/ton to $60/ton, so as to encourage the efficiencies they'll need to achieve once carbon pricing is widespread. Clearly carbon market prices are currently too low to significantly influence industry behavior and evoke significant reductions in emissions.
The costs of climate change include higher temperatures, more extreme weather events, melting icecaps, rising sea levels, more fires, more frequent and intense droughts, lower crop yields, and significant health impacts on humans, animals, and plants...including endangering many species and plants.
And let's not underestimate the impact of climate change as a significant contributor leading to war. The war in Syria has been linked in part to climate change, with higher temperatures pushing the country into civil war by destroying agriculture and forcing an exodus to cities already overwhelmed by poverty. Other parts of the Middle East, and elsewhere globally, are facing similar stressors.
As the oil filter commercial used to say with ironic undertone: "You can pay me now, or you can pay me later". The future price for not paying now will be far higher than most of us can imagine.
We identify technology, training, and processes to take your service team to the next level.
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Hydropower has many negative impacts on the environment, and overall is not as clean as solar and wind. Besides the significant methane emissions (from decaying plants), Hydro also results in significant environmental damage, including disruption of river flows, habitat loss, blocking animal migration, and fragmentation caused by impoundment reservoirs and roads needed for dam construction and maintenance. Click HERE.
This brief article identifies several uses of blockchain technology which can contribute towards mitigating climate change. Click HERE.
The overwhelming scientific evidence confirms a clear causative effect between anthropogenic sources of greenhouse gas emissions and climate change. The Intergovernmental Panel on Climate Change (IPCC) estimates that there is at least a 95% likelihood that humans are the primary cause of climate change.
The United Nations Framework Convention on Climate Change (UNFCCC) issued a report, reflecting 3 scientific reports published in the past year. The draft report concludes that greenhouse gas emissions need to be cut by 40 to 70% (versus 2010 levels) by mid-century to avoid the 2 degrees Celsius (3.6 degrees Fahrenheit) increase widely considered to be the limit the earth can withstand without losing control of climate change.
However, retired NASA scientist Jim Hansen and other highly-regarded climate change scientists argue that even 2 degrees Celsius could initiate natural feedback to the climate system, such as further melting of the polar ice caps, which could initiate global warming beyond the control of human intervention.
Just some of the impacts of climate change include: extreme temperatures, extreme rainfall, melting ice caps, rising sea levels, acidification of the ocean, reduced crop yields, damaged human/animal/plant health, and curtailment of the economy.
Regardless of which climate change scenario occurs, there are numerous "no-regrets" actions which both the public and private sector can implement in order to minimize the increasingly dangerous impacts on humans, animals, the atmosphere, and the environment.
Collaborative Goals to Sustain Our Future
Anthropogenic causes of climate change implicated in these five severe global warming events. See the article HERE.
We focus on public-private collaboration, because there are synergies which enable achievements unreachable by either sector alone. Despite these powerful synergies, public and private sector collaboration is too often neglected, for a variety of reasons (e.g. public sector silos and inadequate budgets; private sector lack of leadership and lack of incentives). With our several decades of combined experience in bringing about public-private collaborative solutions, we bring together the expertise and financial resources to catalyze win-win outcomes for all stakeholders.
To learn more about how we can help you with private sector strategies, and public sector policies, to achieve climate change mitigation benefiting your organization, all other living creatures, and the environment, please review our "About" and "Services" pages. Let us know the challenges you need to overcome in achieving your climate change mitigation objectives. We'd be pleased to sit down with you and discuss your climate change mitigation objectives, and develop a summary action plan for achieving those objectives economically,
efficiently, and equitably....for free. If you then choose to partner with us, we can develop an economic but effective plan customized to your climate change mitigation objectives.
Scientists are concerned that the Gulf Stream is slowing down, which would mean less warm air absorbed by the Atlantic ocean. In turn, this could increase air temperatures on both sides of the Atlantic for the next two decades. See this article.
Geo-engineering the environment to slow down climate change is very risky, but we are so far behind on the necessary GHG reductions, we might become desperate enough to try it.
Click HERE for an analysis of the alternatives.
Climate Change: Temporal Disconnect and Cognitive Dissonance
Sure, we'd all like Climate Change to just go away. And the direct cause and effect between anthropogenic emissions of greenhouse gases, and rising temperatures, melting ice caps, increased severity and frequency of storms (including snow storms), reduced water supplies, increased forest fires, die-off and severe reduction of many animal and plant species, AND other possible impacts of our GHG emissions, are often difficult to verify with just personal observation. Our cognitive dissonance makes it easy to shrug off the new global paradigm, and continue to believe that climate change is just a nightmare from which we need be awakened.
Comprehensive robust and innumerable scientific studies of cause and effect have overwhelmingly identified human-caused GHGs as culpable for climate change. But the benefits from reducing GHG emissions (i.e. less climate change) are years, even decades, in the future, while the costs of mitigating climate change are largely in the present. "We humans...", as one of my former environmental economics professors in the late 1970's plainly stated (before most environmentalists even were aware of climate change), "...would hang ourselves if it were far enough in the future".
Alas, we humans really do have what economists call "high discount rates": instead of the single digit discount rates that public projects use to discount future benefits and costs so that future generations are not totally ignored, as individuals and corporations, we self-servingly use much higher discount rates (sometimes as high as 30+%). The result is such a heavy discounting of future benefits and costs (and with climate change, the beneficial impacts of mitigation efforts are all so many years away), that we, by the tyranny of small decisions, collectively decide that climate change mitigation can be left for, and dealt with, by future generations.
So it is no surprise that the recent National Academy of Sciences report concedes that we may be at the point where "GeoEngineering" (e.g. carbon dioxide removal & sequestration; albedo modification) must be not only considered, but actually deployed, if we are to avoid the many tragic ultimate climatic outcomes of our human folly. In the same report, the NAS strongly cautions that it is far, far preferable to mitigate GHG emissions. The media coverage of the report mostly skims over the report's strongly recommended path of GHG mitigation over GeoEngineering, because the headlines which indicate "GeoEngineering may be our last hope", not only pique the interest of readers, but probably are far truer than we dare admit.
Sustaenable uses research, surveys, interviews, and observation to conduct a comprehensive overview.
Will California Be A Leader in the Distributed Energy Economy?
Whether you’re ready to lead or not, the distributed energy economy is inevitable. Vested interests in the centralized fossil-fueled electric and transportation grids are gradually being left behind, albeit not without a fight. In California, they delayed the inexorable shift towards sustainable transportation by blocking Governor Brown’s call for reducing petroleum use 50 percent by 2030. They also held-off Senator Fran Pavley’s overarching climate change goal of reducing carbon emissions 80 percent by 2050 (versus 1990 baseline). But other aspects of Governor Brown’s climate change policy are still on track.
Particularly, the state is now officially aiming to generate half of electricity supply with renewable energy, and to double the energy efficiency of buildings, by 2030. This maintains California as a global leader in the massive shift to clean distributed sustainable energy generation, whether for buildings or vehicles.
Yet each step down that path requires leadership from those with the vision and willpower to push for more rapid progress. Anyone reviewing the extraordinary number of climate change studies knows that humans are the predominant source of greenhouse gas emissions, and that we are currently on a trajectory which will exceed the maximum temperature (2 degrees Celsius; 3.6 degrees Fahrenheit) at which the world might be able to avoid catastrophic climate change.
In California, there are several current proceedings at the California Public Utilities Commission (CPUC) which will have direct consequences regarding whether California’s distributed energy leadership will succeed or fail. One of those proceedings, mandated by AB 327, calls for the investor-owned electric utilities (i.e. PG&E, SCE, and SDG&E) to develop Distributed Resource Plans (DRP), and a Net Energy Metering (NEM) Successor Tariff. The recently proposed utility DRP’s were (inter alia) required to identify optimal locations for the deployment of distributed resources. The NEM Successor Tariff is intended to further incentivize sustainable distributed generation via fair compensation for the many benefits of clean self-generation.
AB 327 calls for a NEM Successor Tariff which “…ensures that customer-sited renewable distributed generation continues to grow sustainably.”
This is stimulating a vigorous debate amongst stakeholders on how to define “sustainably”. Broadly speaking, “sustainability” can be defined as utilizing non-finite clean resources (e.g. solar, wind) in a manner that both serves the needs of the current generation, while preserving the ability of future generations to meet their needs. Given the clear evidence of the accelerating damage to humans, animals, plants, and the environment from combusting finite fossil fuels, it’s paramount that we accurately reflect all benefits of sustainable resources, including intangible benefits (see Footnote #2 below).
Most economists will agree that the closest-to-optimal allocation of resources occurs when customers encounter market prices which most closely reflect the net benefits (including both tangible and intangible benefits and costs) of their consumption of that resource at that point in time.
With optimal resource allocation in mind, various stakeholders in the CPUC NEM proceeding argue against utility proposals to include fixed demand charges, which are fixed fees based upon a customer’s peak demand during a billing period. The problem with these fixed demand charges is they often will not coincide with the utility’s overall peak demand, and charging customers this fixed fee during periods other than the utility’s peak violates cost-of-service principles and often leads to sub-optimal allocation of resources. Furthermore, the fixed demand charges also function as a dis-incentive for self-generation.
Instead, demand charges should be included in Time-of-Use rates to provide a clearer signal to customers of the best times to cut-back on use, and thereby reduce deployment of the higher-cost and higher-polluting fossil fuel plants often relied upon during peak energy demand periods.
The debate gets into many other complexities of optimal NEM tariff structures. One of the fundamental issues is how to measure the relative benefits and costs. The California Public Utilities Commission (CPUC) has several cost effectiveness models which have been deployed for many years, including the Total Resource Cost Test (TRC), Program Administrator Cost Test (PAC), Ratepayer Impact Measure Test (RIM), and Participant Cost Test (PCT). The CPUC will use the cost test(s) which most closely aligns with the purpose of the given proceeding,
In the case of the NEM Successor Tariff, the legislation requires a tariff which provides “total benefits to all customers”. This should lead to the CPUC utilizing the TRC and a newer cost test, the Societal Cost Test (SCT). The SCT broadens the TRC by including many of the intangible benefits (and costs) previously not quantified (e.g. mitigation of greenhouse gases). Clearly, AB 327 requires the inclusion of these societal benefits. However, some stakeholders are erroneously calling for the narrower RIM test, which looks just at avoided costs of the utilities from a ratepayer-only perspective.
Yet another point of debate is how much to compensate self-generators. Currently, on a month-to-month basis, bill credits for a customer’s excess generation exported to the grid are applied to the customer’s bill at the same retail rate (including generation, distribution, and transmission components) that the customer would have paid for energy consumption. At the end of the customer’s 12-month billing period, any balance of surplus electricity is trued-up at a separate fair market value, known as net surplus compensation (NSC), which amounts to around $.04/kWh.
With their new NEM rate proposals, the utilities are seeking to lower the month-to-month compensation rates from average retail electricity rates between $.15/kWh to $.23/kWh, to just $.08/kWh to $.11/kWh.This seems to again understate the benefits of self-generation, and several stakeholders are opposing this NEM compensation reduction.
If California is to maintain a leadership role in evolving towards the distributed energy economy, California energy policies must reflect the new climate reality our world is facing. The often intangible benefits of reducing greenhouse gases and mitigating climate change will become much more tangible and real, as the many costs of emitting greenhouse gases become increasingly tangible and real, with very negative consequences for all.
 Distributed energy resources include behind-the-meter renewable energy, energy storage, energy efficiency, demand response, and electric vehicles.
 AB 327 requires Section 2827 of the Public Utilities Code to establish a program to provide NEM with net surplus compensation to “…encourage substantial private investment in renewable energy resources, stimulate in-state economic growth, reduce demand for electricity during peak consumption periods, help stabilize California’s energy supply infrastructure, enhance the continued diversification of California’s energy resource mix, reduce interconnection and administrative costs for electricity suppliers, and encourage conservation and efficiency.”
 “CA utilities call for solar remuneration cuts, fixed and demand charges”, http://www.utilitydive.com/news/ca-utilities-call-for-solar-remuneration-cuts-fixed-and-demand-charges/403453/, 8/5/15.
Appealing to Self-Interest and Vanity in Mitigating Climate Change
We live in a world where the self is exalted, community is disregarded, and views which don’t fit our preferred worldview are dismissed without thought (e.g. “haters gonna hate”). We even have TV “News” stations which endlessly cater to our preferred politics, and endlessly bash those who would have differing views. Self-centered navel-gazing is encouraged and enhanced by reality TV shows, countless digital self-improvement apps, media-trolling, and a cloak of religious sanctimony which proclaims that "We were put on this Earth as creatures of God to have dominion over the Earth … for our benefit not for the Earth's benefit." (Rick Santorum, during his 2012 Republic Presidential Candidacy).
This incessant social trend is explored in “The Road to Character” (Author: David Brooks), in which we’re compelled to ask ourselves: "Am I living for my résumé or my eulogy?". Starting at a very young age, children are conditioned in a cult of self-esteem. Brooks points to a Gallup organization survey in 1950 revealing that 12 percent of high school students perceived themselves as “Very Important”, whereas by 2005 the number had grown over six-fold to 80 percent.
In contrast, studies have shown a broad decline in self-interest during times requiring self-sacrifice and commitment to a greater cause, such as World War II and the Civil Rights Movement.
What if we could meld and guide “self-interest” to broadly coincide with the global necessity of bringing climate change under control, reaching the goal of limiting carbon dioxide in our atmosphere to 450 parts per million, and preferably the more challenging carbon dioxide limit of 350 parts per million?
Well, we are seeing some effective examples of how this could be done. The Nest smart “learning thermostat” made energy conservation fun and cool, while Tesla has deftly made EVs and energy storage viable and popular tools for utilizing clean energy and reducing greenhouse gas (GHG) emissions. Furthermore, solar rooftop energy prices have declined enough, along with innovative financing (e.g. PACE), so that the middle class can increasingly share in the distributed energy economy, further reducing GHGs, and coming out ahead on their electric bills. Zero Net Energy buildings and homes are becoming relatively affordable and desirable.
Transportation, responsible for about 27 percent of total US GHG emissions according to the EPA (in a virtual tie with “Industry” as the leading GHG source), is also undergoing a “sharing” revolution. Younger generations are showing the way with “ride-sharing”, “car-sharing”, and “bike-sharing”. Fewer cars on the road, more bikes, more EVs, and a variety of clean alternative modes of transportation (e.g., see www.litmotors.com) are paving the way to a less auto-centric society. Urban planners are improving public transit options and encouraging land use development which will minimize GHG emissions.
There appears to be a strong likelihood that the private sector can provide clean lifestyle options which not only save money but reduce GHG emissions. All very exciting, unless you’re inclined to believe that government shouldn’t interfere with individuality and freedom of choice, in which case you may oppose any government involvement. Nonetheless, government plays a vital role in enabling the private sector to achieve the distributed energy economy.
The tremendous opposition (in many parts of the US) to government intervention misses a critical point: GHG emissions have extraordinary costs for all living beings on this planet, and the market can achieve the optimal solution by placing a price on GHG emissions. The government merely establishes the market for pricing GHGs, and the private sector does the rest.
The EU Emissions Trading System, California’s Cap and Trade program, and China’s Cap and Trade pilots (with a nationwide system planned for 2016), are all “learning-by-doing” examples for achieving effective GHG reductions. Many economists would argue that a carbon tax would be more effective, but partisan politics seem to favor cap and trade as a more politically palatable solution. And cap and trade programs which are flexible enough to adapt to market conditions can be reasonably effective.
Previous UN Climate Change Conferences have illustrated how difficult it is to get international consensus on GHG reduction targets, but recent sub-global (e.g. USA and China agreeing to GHG targets) and sub-national efforts reveal the relative feasibility of grassroots efforts as a way to gradually build-up a consensus towards global GHG reductions.
But the real progress must come from the individual, facing the true cost of GHG emissions reflected in all market prices: individuals following self-interest when purchasing economical but environmentally benign goods and services meeting their individual needs and preferences, and simultaneously mitigating climate change.
* Why "Sustaenable" and not "Sustainable"? Frankly, we feel the word "Sustainable" has been over-used and mis-used. The letters "ae" have a rich history, dating back to Old English and Middle English usage, as well as signifying the word "one; a single" in Scottish. For example, "there is but one earth" could be expressed as "ae earth". We believe that this one earth is already in the depths of the climate change crisis...let's work together to avert even further damage.
Sustaenable monitors Key Performance Indicators at scheduled intervals, adjusting strategies as needed.
Incentivizing Distributed Energy to Mitigate Climate Change
Any hope for coming close to the UN Framework Convention on Climate Change goal of limiting the average global temperature increase to 2 degrees Celsius is quickly diminishing. Recently, the global average concentration of carbon dioxide has exceeded 400 parts per million (ppm), an average level not reached for about 2 million years. The National Oceanic and Atmospheric Administration (NOAA) confirms that the carbon dioxide level is increasing 100 times faster than ever before in the history of the planet. The high degree of anthropogenic impact on carbon dioxide (and other greenhouse gases) is simply undeniable.
Limiting carbon dioxide levels to 450 ppm has been widely assumed to have about a 50% probability of keeping the average global temperature increase to 2 degrees Celsius. But many climate scientists believe that a level closer to 350 ppm is necessary to avoid the more extreme outcomes (e.g. 1 to 3 meters rise in sea level by 2100).
In other words, either some of the countries currently emitting the greatest amounts of greenhouse gases heroically lead the way, or extraordinarily negative climate events will accelerate beyond our most dire expectations.
Given the proclivity of humans to wait for a disaster to motivate us to reactively make the changes we knew we needed to make proactively, the prognosis is not good.
Superstorm Sandy (2012) has stimulated New York and other states in the northeast to promote distributed energy and microgrids much more aggressively than previously. The rest of the country did not feel the urgency…. and still largely does not.
Whether fueled by politics, religion, lack of trust in science, or outright denial, we humans often need to feel as though our lives depend on it before reacting to a serious, but nebulous, even mortal, threat.
Consequently, many of us who believe in the ultimate goal of a distributed energy economy have been heartened by a proposed federal legislation: The Free Market Energy Act of 2015. Senator Angus King (Independent—Maine) is the protagonist for this disruptive proposal to require all states to determine and implement just and reasonable fees for distributed energy.
Currently, most states are very slowly, if at all, recognizing and addressing the many barriers to distributed energy. For example: expensive fees and delays in interconnecting to the grid, while offering inadequate compensation for distributed generation, and shifting costs to those who do not generate electricity. The Free Market Energy Act would require states to consider the many local and global benefits of distributed energy, including reducing GHGs, not to mention energy independence and more jobs.
The Bill avoids the politics which so often block climate change mitigation efforts, instead calling for each state to set guidelines for a free market solution using unbundled rates (i.e. charging for associated costs only) to incentivize rational behavior. Appealing to Americans’ deeply held preferences for freedom of choice and limited government is a wise strategy. At a time when Texas is pre-occupied with conspiracy theories about the federal government imposing martial law in their state (Jade Helm 15), a savvy policy avoids stoking the more irrational anti-government undertones of our culture.
In those states which refuse to establish unbundled rates for distributed energy, the Bill calls for distributed energy resources to be considered as Qualifying Facilities (QF) under the PURPA Act. This would force the electric utilities in the state to purchase the distributed energy at that utility’s avoided cost. The compensation would be at the full retail rate with net energy metering, which is a rate most utilities and many economists argue is excessive, and unfairly transferring costs to the remaining ratepayers.
This QF treatment should induce the otherwise reluctant states to go ahead and implement market-based unbundled rates. Clearly, this is the most efficient way forward. Although this proposed legislation will be modified in the weeks to come, we can only hope the federal government keeps the essential elements of The Free Market Energy Act intact, and somehow overcomes partisan politics to pass the Bill.
The USA needs to show the way to effective climate change mitigation and the distributed energy economy via strong but fair government guidelines, and free market incentives.
As California moves toward more ambitious goals of GHG reductions (including proposed legislation, AB 1745, to require all new vehicles to emit zero emissions by 2040), the Trump MAGA idiocy seeks to drive the USA backwards into the last century. Not to mention ceding global leadership on GHG reductions, clean vehicles, and clean energy. California will not back down. This article explains.
Trump is serving the world up to China on a silver platter, and the failure to continue USA climate change commitments is one of the biggest reasons why...Click HERE.
Despite Trump's continued denial of climate change, the US delegation to COP 24 Climate Change Conference in Katowice, Poland, sought and found agreement on rules for implementing the Paris Agreement.There are flaws in the agreement (e.g. developing countries did not achieve progress on climate aid from developed countries), but at least now countries are expected to target deeper emissions cuts before the 2020 conference.
Photo courtesy of Technology Review
California shows how to effectively decouple GHG emissions from economic growth, but much more progress towards transportation electrification is critical to mitigating climate change. See the Study HERE.
With the recent California Public Utilities Commission (CPUC) Green Report, “California Customer Choice: An Evaluation of Regulatory Framework Options for an Evolving Electricity Market”, the CPUC might first step back and consider: the increasing cost effectiveness and profitability of distributed energy resources (DER) is inevitable. The trend is clear, and the implications for investor owner utilities (IOUs) are profound. DERs are reducing the profitability of IOUs, thereby reducing the natural monopoly of those IOUs.
DERs can be deployed relatively quickly in congested areas where demand for electricity exceeds supply, thereby increasing reliability, reducing the costs for investment and maintenance of distribution and transmission networks, while reducing greenhouse gas emissions.
As just one example, with the increasing use of electric vehicles (EVs) connected to the grid and powered by distributed solar, controlled charging (V1G) and vehicle-to-grid (V2G) can be utilized to stabilize, and provide power for, the grid. Lawrence Berkeley National Labs (LBNL) recently published a report that concluded V1G could be more cost effective as a source of storage, than the current sources of storage identified in the CPUC energy storage mandate (Storage Mandate) requiring 1.3 GW by 2020. By charging vehicles in the middle of the day when there is often excess solar generation, EVs can help stabilize the grid by storing surpluses of electricity and avoiding curtailment. Including V2G for two way charging/discharging provides even greater benefits to the grid for mitigation of renewable energy intermittency, at a fraction of the cost of the Storage Mandate.
Simultaneously, solar plus storage is becoming increasingly cost effective. The National Renewable Energy Laboratory (NREL) released a study which estimates the net benefits of PV rooftop solar plus storage will exceed the net benefits of stand-alone PV rooftop solar by around 2020.
The increasing cost effectiveness of other DERs, including energy efficiency, demand response, and aggregation of DERs, will also provide customers with lower cost alternatives for energy and capacity. Demand elasticity will increase, as customers are offered an increasing variety of DER options, which decreases demand for IOU centralized generation. This will accelerate the inevitable shift to DERs. Note that this shift would occur with, or without, Community Choice Energy providers (CCEs).
The deployment of smart meters and the smart grid is enabling real-time pay-for-performance services, which also undermines IOUs’ natural monopolies, by distributing intelligence and power (both figuratively and literally) to customers at the grid’s edge. Furthermore, with smart inverters required for all new rooftop PV solar systems in California, the viability of peer-to-peer transactive energy, possibly enabled by blockchain technology, will evolve in the coming years as a fundamental alternative to centralized generation. Again, this transition would occur with, or without, CCEs.
As IOUs are increasingly unable to charge prices to cover costs, due to the above factors favoring DERs over centralized generalization, the services they provide begin to take on an inescapable feature of Public Goods: costs exceeding revenues, making profitability impossible. Public Goods are goods (or services) which can be consumed by one individual without reducing the product’s availability to another individual, and no-one can be excluded from consuming the product, even when not paying for consuming the product. Examples of Public Goods include clean air and other environmental benefits.
Public Goods are provided by government, or non-profit organizations, because of the inability to exclude those who do not pay for the good. There is “market failure” because the private sector does not provide the Public Goods, even when the total societal benefits from the Public Goods exceed the costs. Stated another way, private sector companies will not offer Public Goods due to the inability to make a profit, and the Public Goods would therefore not be provided, unless the government or a non-profit organization does so. For example, this “market failure” of the private sector to offer the Public Good which results from climate change mitigation requires that government and/or non-profit organizations achieve climate change mitigation.
And if DERs reduce IOU revenues more than they reduce IOU costs, the IOUs could find themselves offering de facto Public Goods (e.g. cleaner air from clean energy) for which costs exceed revenues.
Consequently, as DERs become more widespread, IOUs will continuously encounter declining economies of scale. As IOUs gradually lose their natural monopolies, the CPUC needs to adapt regulatory policies which reflect this transition.
A major part of the solution is CCEs. CCEs provide many benefits, including cleaner energy, lower rates, empowerment of local consumers (both figuratively and literally), local economic development, consumer protection, stimulation of prosumers (rather than just consumers), reduced costs for investing and maintaining transmission and distribution grids, and greater grid reliability.
If the CPUC remains concerned about the ability of some CCEs to ensure grid reliability via adequate and reliable electricity service, there is also the option of CCEs taking over the distribution grid within the municipalities in their service territories, becoming publicly owned utilities. The IOUs would then transition into Distribution System Operators (DSOs), responsible for the remaining distribution grid as neutral gatekeepers between buyers and sellers of energy, coordinating grid-wide DER activities as a market administrator.
This Public Service would utilize the strengths and capabilities of the IOUs in maintaining the reliability of the gridmostcost effectively and most efficiently. CCEs and other energy service providers can most cost effectively and efficiently offer DERs at the local level, while achieving the state’s critical climate change goals.
 DERs can be generally defined to include non-centralized clean energy sources such as distributed generation, energy storage, electric vehicles, energy efficiency, demand response, microgrids, and combined heat and power.
 Jonathan Coignard, Samveg Saxena, Jeffery Greenblatt, and Dai Wang; “Clean Vehicles as an Enabler for a Clean Electricity Grid”; Environmental Research Letters, Volume 13, Number 5; http://iopscience.iop.org/article/10.1088/1748-9326/aabe97/meta; May 16, 2018.
 Paul Denholm, Josh Eichman, and Robert Margolis; “Evaluating the Technical and Economic Performance of PV Plus Storage Power Plants’; NREL Technical Report; https://www.nrel.gov/docs/fy17osti/68737.pdf; August, 2017.
 The 2019 Title 24, Part 6 requirement for rooftop PV solar on new homes will further accelerate the shift from centralized generation to distributed solar.
 Steve Corneli and Steve Kihm, “Will Distributed Energy End the Utility Natural Monopoly?”; Electricity Policy; https://emp.lbl.gov/sites/default/files/corneli_29june2016.pdf; June, 2016.
 The New York Public Service Commission’s “Reforming the Energy Vision” recognizes the advantages of this strategy: “…aligning markets and the regulatory landscape with the overarching state policy objectives of giving all customers new opportunities for energy savings, local power generation, and enhanced reliability to provide safe, clean, and affordable electric service.” See http://www3.dps.ny.gov/W/PSCWeb.nsf/All/CC4F2EFA3A23551585257DEA007DCFE2?OpenDocument
Climate Change from anthropogenic aerosol forcing (i.e. primarily from fossil fuel and biomass burning) has altered the jet stream patterns (westerly air currents encircling the globe) such that extreme weather events (e.g. wildfires, floods, heat waves) are becoming much more prevalent. This trend will only accelerate, according to a recent study published in Science Advances on the phenomenon of quasi-resonant amplification (QRA).
Carbon Dioxide levels must be reduced 25% more than previously thought to reach global temperature goals. The oceans around the globe are absorbing 25% more heat than previously thought, requiring 25% greater reductions in CO2. See this article for details.
Here's a quick overview of the limited progress made at the UN Climate Conference last week in Bonn, and some predictions for global climate change policies in 2018 (despite the idiocy of the Trump administration's continued climate change denial): Click HERE.
The scientific evidence regarding anthropogenic causes of climate change has always been clear, with about 97% of climate scientists concurring. Now a study reveals that the remaining 3% with contrary conclusions were based on flawed studies. See the evidence HERE.
California's 2019 Building Energy Efficiency Standards (effective 1/1/20) have several progressive changes planned. For example, all new (solar-capable) buildings may be required to have solar panels, which would be the first such requirement in the USA. Also, changes are proposed to facilitate all-electric buildings. For an overview, Click HERE.
Climate Change Denial, whether from Trump or others, is exposed yet again as sheer ignorance. The Polar Vortex in the USA does not disprove climate change one iota. See this article for more evidence.
The Green New Deal ambitiously calls for 100% carbon-free energy throughout the USA by 2030. The proposal also seeks to eliminate social injustice. The politics are intense, and modifications are likely. And what about other GHG's besides Carbon Dioxide? While controversial, certainly a step in the right direction.
California's Community Solar program, developed by the CPUC for PG&E, SCE, and SDG&E, is incredibly unsuccessful.Even Minnesota and Massachusetts, with a fraction of the potential solar power, have much more community solar in place. This article explains why.
If you care about Climate Change, and want to learn ways to be part of the solution, instead of part of the problem, see this documentary from Leonardo DiCaprio and National Geographic.
With all the bad news about the Trump administration's continuing climate change denial, it's encouraging to know he will fail to stop the underlying trend towards clean energy.But grassroots efforts to reduce GHGs have to accelerate, because we're far behind where we need to be. Click HERE.
The largest living thing on earth, Australia's coral reef, is gradually dying. Corals (tiny animals) build-up reefs, which become habitats for countless sea creatures. But climate change has bleached the Great Australia reef 3 times in the last 20 years, killing off massive amounts of corals. Another severe bleaching may be underway. Click HERE.
Here's an effective strategy for overcoming the self-serving who still deny Climate Change despite overwhelming evidence of anthropogenic causes. See Thomas Friedman's article on the Green New Deal.
Burning wood is considered "carbon neutral" by the EU and USA. EPA Chief Scott Pruitt announced in April that wood burning is now considered carbon neutral. But here's why burning wood actually adds carbon to the atmosphere.
Distributed energy resources (DER) can be matched to the needs of the distribution grid at points of greatest congestion, at optimal times and locations. A new study shows how the costs of electricity from this customized deployment of DER could cut electricity costs in half. Here's the Study.
Transportation is a leading cause of GHG emissions throughout the world. Housing built in urban areas, near transit, jobs, and services can reduce GHG emissions significantly. In California, part of the solution could be proposed legislation to have 100% electrified transportation by 2040 (Ting's Assembly Bill 40).
Recent research suggests extreme weather events can often be precipitated by climate change. The increasing frequency and intensity of floods, droughts, extreme heat, and fires can be directly impacted by greenhouse gases causing temperature gradients that lock the jet stream in place for extended periods of time. Click HERE.
Scientists have now estimated the global-warming impact (per ton of emissions) of Methane to be as much as 32 times greater than Carbon Dioxide. While Methane still has an overall lesser warming effect than Carbon Dioxide, it also has a critical influence on climate change. Click HERE.
Atmospheric carbon dioxide levels have increased at a high rate over the past several years, even while emissions of carbon dioxide have flattened and even decreased.Does this mean the capacity for retention of carbon dioxide by the oceans and plants is decreasing? If yes, climate change will accelerate even more than projected. See this article.
Carbon taxes have repeatedly failed, but may be publicly acceptable if the revenues are used to make clean energy technologies, including EVs, more affordable. France is just the latest example of how difficult it is to find the right balance. This article elaborates...
EVs could be price-competitive with internal combustion engines within a couple years, if this study is correct in projecting cost reductions for producing lithium ion batteries. Click HERE.
California’s Community Choice Energy: Sunny Days Ahead
Competition in California’s electricity market met an unseemly end after the last effort to open markets resulted in the energy crisis over 15 years ago. Cautious state regulators have been “once bitten, thrice shy” about enabling widespread competition ever since. But gradually, Community Choice Energy (aka Community Choice Aggregation) has been taking hold, with Marin Clean Energy (2010), Sonoma Clean Power (2014), and Lancaster Choice Energy (2015) currently offering service. CleanPowerSF (San Francisco county) will commence service soon (4/1/16) and Peninsula Clean Energy (San Mateo county, targeting 10/1/16) are among several new Community Choice Energy options coming soon.
(Source: Existing & Potential CCAs in California, from LEAN Energy)
These non-profit electricity providers utilize the distribution grid of the local investor-owned utility, but offer a substantially higher proportion of clean energy, typically with at least two options: between 33-50% for the lower-priced option, and 100% at a slightly higher price. These clean energy providers are leading California and the rest of the USA towards a paradigm of distributed local clean energy with sharply lower greenhouse gas emissions.
The recent “Business of Local Energy Symposium” in San Jose, organized by the Center for Climate Protection, featured leaders and activists in California’s local clean energy social movement. The transition to distributed clean energy is as much about distributing power literally (the grid) as figuratively (politics). The communications grid went through a similar evolution a couple decades ago when the Internet arrived, and the grid intelligence moved from a centralized hierarchical model to a distributed local model, enabling individuals and businesses instant communications across the globe. Now, the excitement and vision from protagonists accelerating the distributed energy economy is clearly evident and gaining statewide momentum.
Indeed, with the urgent need to sharply reduce greenhouse gas emissions, coupled with a realization that distributed local power can engage prosumers in peer-to-peer energy utilizing transactive power, the distributed grid is evolving steadily. In California this year, it is expected the California Public Utilities Commission (CPUC) will determine that smart inverters should be required for all new solar rooftop installations. The smart inverters will enhance grid stability and allow anyone with solar on their roof to sell electricity back to their utility to support ancillary services (e.g. volt/var control; ride-through of low/high voltage and frequency). Smart inverters will also facilitate grid-tied storage integration, further enhancing grid stability. The smart inverter trial underway involving the SunSpec Alliance, University of California at San Diego, and Solar City iscurrently testing the emerging standard for advanced inverter functionality.
Also in California, Net Energy Metering (NEM) remains a positive means for rewarding renewable energy prosumers for reducing greenhouse gas emissions, despite the failure of some other states to recognize the value of Net Energy Metering. The California electric utilities are requesting the CPUC to modify its recent decision which maintained (instead of reducing, as the utilities had proposed) the retail electric rate as appropriate compensation to prosumers producing their own renewable (primarily solar) energy to the grid. In sharp contrast, the Community Choice Energy providers are offering even greater compensation to NEM Prosumers.
(Source: San Diego Energy District)
In a related proceeding, the CPUC recently allowed a 90%+ increase in the fee PG&E charges customers departing PG&E (e.g. for Community Choice Energy). The fee, known as the Power Charge Indifference Adjustment (PCIA), is meant to offset the unrecovered costs which result when PG&E customers depart for Community Choice Energy. The PCIA fee is intended to recover the costs of stranded grid expenditures which PG&E undertook in the expectation that the customers would not choose Community Choice Energy. But over 80% of PG&E customers in the service territories of Marin Clean Energy and Sonoma Clean Power have opted for Community Choice Energy, and the California state legislature authorized Community Choice Energy in 2002, giving PG&E (and SCE and SDG&E) ample time to adjust their forecasts.
Additionally, by confining the cost recovery to departing Community Choice Energy customers, the CPUC is missing the essence of competitive markets. A private sector company which over-optimistically forecasts demand for its product, and incurs the costs for the demand which never transpires, must ultimately deduct those costs from Net Income, and take the loss. The costs are not pushed onto past or current customers. Investors will respond by reducing the price they pay for the utility’s stock, but that’s the proper means for achieving an efficient and fair allocation of resources in the private sector, keeping the utility focused on accurate forecasts for demand, rather than rewarding them for inaccurate forecasts.
Furthermore, while the CPUC authorizes PG&E, via the PCIA, to charge Customer Choice Energy customers for electricity they will never consume, the CPUC’s progressive energy efficiency and demand response proceedings arepaying customers for not consuming electricity. Clearly, these completely contradictory policies send mixed signals to customers. A unified policy should consistently reward customers for reducing consumption of electricity which emits greenhouse gases, and incentivize customers to consume and produce electricity which does not emit greenhouse gases.
(Source: Photo (from Richmond Mayor Tom Butt) of Shawn Marshall, Executive Director, LEAN Energy, addressing CCE advocates on CPUC steps prior to CPUC PCIA rate hike, 12/15).
The CPUC’s energy efficiency and demand response policies are leading the nation by empowering prosumers, and rewarding electric utilities for avoiding more fossil-fuel power plants. Trials for energy efficiency and automated demand response which include data analytics of meter data are continuously determining the most cost effective means for reducing energy use. Community Choice Energy is perfectly positioned to engage prosumers in optimal energy efficiency and demand response at the grassroots level.
And the CPUC’s leadership in setting aggressive energy storage targets for the electric utilities (2.5 to 3% of peak load, or 1.325 GW by 2020, with higher targets under consideration) is vital to integrating renewable energy sources onto the grid and achieving 50% renewable energy by 2030. Community Choice Energy providers are currently only required to deploy storage equal to 1% of peak load by 2020, but the CPUC is considering raising their targets to 2.5 to 3% as well. Currently, utilities and storage companies are seeking to accurately monetize the multiple value streams offered by energy storage.
Another source of distributed energy and reduced GHGs is electric vehicles (EVs), and California plans to have 1.5 million zero emission vehicles on the road by 2025.
Recent auctions for aggregated demand response include batteries and EVs, and electric utilities are partnering with energy management companies to shift electric loads off-peak. Community Choice Energy has an important role to play here as well, including investing in sufficient EV-charging station infrastructure.
The CPUC is gradually realizing that the future is distributed clean energy, and the out-dated cost of service approach to regulating utilities must be replaced by performance-based incentives which enable the greater efficiencies and lower GHG emissions achievable via Community Choice Energy. The CPUC’s order for electric utilities to provide Distributed Resource Plans, and Integrated Resource Plans, is a positive step in the right direction.
These and the other related CPUC policies are evolving towards valuing each kWh of energy in real-time at each customer’s location, fully reflecting all benefits and costs of producing and consuming each kWh of energy. Ultimately, peer-to-peer transactive energy will enable spontaneous cost-effective two-way transmission of GHG-free clean energy between prosumers. We may have a long way to go, but Community Choice Energy is the vital next step. The future is bright.
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CLEAN ENERGY POLICIES & STRATEGIES
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