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.
The UN Climate Change Conference in Paris: Time to Try A New Approach
The UN Framework Convention on Climate Change (UNFCC) has sought internationally binding emission reduction targets, dating back to 1994 when the UNFCC took effect, and the Kyoto Protocol in 1997. The UNFCC is seeking to maintain greenhouse gas concentrations "at a level that would prevent dangerous anthropogenic (human induced) interference with the climate system."
However, the results of the ongoing UNFCC agreements have been mediocre by most standards. While each UNFCC conference has been very ambitious, each UNFCC conference has failed to achieve broad consensus on effective and binding goals for limiting greenhouse gases.
The generally agreed upon target of limiting the average levels of Carbon Dioxide in the atmosphere to about 450 parts per million (PPM) would result in an average global temperature increase of 2 degrees Celsius. Many experts argue that the target should be 350 PPM, requiring correspondingly stronger measures, to avoid dangerous tipping points and irreversible climate change. The current average global level of carbon dioxide is around 400 PPM, and rising by about 2 PPM annually.
The challenges of reaching a multinational agreement among the (approximately 195) participating parties which ratified the UNFCC are many, such that the agreed-upon treaties since 1994 have been diluted substantially in order to induce even a majority of the potential signatories to actually sign the agreement. The resulting treaties have consequently been ineffective at achieving the required reductions in emissions.
At the upcoming UNFCC conference in Paris this coming December, the parties will seek to agree upon actions which will limit the average global temperature increase to 2 degrees Celsius. This could require reductions in greenhouse gases to between 40 to 70 percent below 2010 levels by 2050, and we’re not even close. The Negotiating Text for the Paris conference (http://unfccc.int/resource/docs/2015/adp2/eng/01.pdf) demonstrates an extremely diverse range of competing clauses, reflecting the extraordinary complexity of reaching a global agreement which is measurable, effective, and actually able to achieve the 2 degree Celsius target.
One of the primary factors undermining such an unprecedented global agreement is the Free Rider problem encountered with public goods: countries not participating in the agreement would still benefit from the greenhouse gas reductions of those countries which do reduce their greenhouse gas emissions, and consequently have no incentive themselves to make the sacrifice required by the agreement.
A compelling alternative to the failed voluntary UNFCC agreements is proposed by internationally-recognized economist William Nordhaus (“Climate Clubs: Overcoming Free-riding in International Climate Policy”, American Economic Review, https://economics.stanford.edu/files/NordhausApril28.pdf). Mr. Nordhaus develops a structure which he calls a Climate Club, in which penalties or sanctions are imposed on non-participants, providing a resolution to the Free Rider problem. He acknowledges the principles of international law are premised upon the 1648 Treaty of Westphalia, which necessitates that countries willingly and voluntarily consent to international agreements. Getting around this “Westphalian dilemma” involves creating a “club” in which the benefits of joining are greater than the costs of joining…otherwise many countries will not voluntarily join in the agreement.
The Climate Club is essentially a voluntary agreement by participating countries to achieve mutually agreed upon emissions reductions. Mr. Nordhaus explores the many challenges encountered in creating such a club, including the question of whether to target a specific level of emissions reductions, or to instead establish a specific target carbon price. He chooses the carbon price (equal to the global social cost of carbon) over specifying levels of emissions reductions, citing the many opportunities for “gaming the system” when quantities of emissions reductions are targeted.
Mr. Nordhaus also examines the relative advantages and disadvantages of “top-down” versus “bottom-up” coalitions in international treaties. He argues against a “bottom-up” coalition, citing examples of cartels and climate coalitions which have only succeeded with a small number of participants (e.g. just 2 or 3), because the incentives to be a Free Rider increase proportionally as the number of participants (e.g. and in this case, the quantity of emissions reduced) increases.
With a “top-down” coalition under a club structure with external sanctions (i.e. tariffs) imposed on non-members, he argues the Free Rider problem is avoided. An optimal result is achieved with a “coalition Nash equilibrium”, meaning no sub-coalition group can improve its welfare by changing its status. The “coalition Nash equilibrium” is most readily reached with the “top-down” coalition, because it does not have the Free Rider incentives characterized by the “bottom-up” approach.
His analysis next investigates which types of sanctions a Climate Club could apply in order to reach a stable coalition of countries willing to participate and significantly reduce emissions. He compares two approaches:
1) carbon duties which place tariffs on imports of nonparticipating countries, in proportion to the carbon content of imports from those nonparticipants; and
2) uniform penalty tariffs which apply uniform percentage tariffs to all imports from nonparticipants.
Arguing against carbon duties due to their complexity and ineffectiveness at encouraging participation, the uniform penalty tariffs are favored for their simplicity and transparency. The uniform penalty tariffs are applied as a uniform percentage (e.g. 2 percent) against all imports from nonparticipants, and consequently are more onerous and thereby more effective than the carbon duties applied only against the carbon content of those imports.
A significant challenge to the uniform penalty tariffs on all imports is that there is little precedent for such a penalty against the processes and production methods utilized by countries. It also has no proportionality: a country is either “in” or “out” of the club, and therefore either fully penalized with the tariffs, or not at all, with none of the gradations between those extremes, which tariffs typically allow.
Nonetheless, Mr. Nordhaus cites the exceptional global importance of mitigating climate change, and he calls for “climate amendments” to international trade laws, due to this truly unique, complex, and troublesome global conundrum.
With concern growing internationally that a “business as usual” approach to the upcoming climate conference in Paris will again fail to achieve the necessary greenhouse gas reductions, it is time to try a different approach. As Einstein’s popular quote reminds us: “Insanity: doing the same thing over and over again and expecting different results”. The climate clock is clicking, and it can’t be turned back.
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.
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.
* 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.
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.
Once we have executive buy-in, we oversee the implementation process from start to finish.
Sustaenable monitors Key Performance Indicators at scheduled intervals, adjusting strategies as needed.
While the Trump administration seeks to cancel federal climate change mitigation laws and regulations, including automaker standards for fuel efficiency and the EPA's Clean Power Plan, Trump is also beginning hearings to terminate California's Low Carbon Fuel Standard. California's leadership, and community-based grass roots efforts (such as community choice energy) around the country, are essential for the Resistance to Trump and climate change denial to ultimately prevail. For more on Trump's effort to insert climate change deniers in the EPA, click HERE.
The Paris Climate Change Accord (COP21) is getting close to being ratified. There are a few notable "leaders" who would not abide by COP21, including Trump and Putin. It is hoped that COP22, being held in Marrakesh, Morocco, this November, will agree to an independent body to monitor compliance. Click HERE.
This review of many studies concludes that rooftop solar provides net benefits to the grid and all ratepayers. It will take several years, but state regulatory agencies are going to update regulations to reflect this growing recognition of solar's net benefits to everyone, and the need to fully compensate solar rooftop owners for these net benefits. Click HERE.
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.
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.
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.
Southwestern USA is 99% certain to have a megadrought lasting decades, according to NASA. They modeled various future warming trends, and the most likely, an increase of 4 degrees celsius, results in the virtually certain megadrought. If the rate of temperature increase cna be reduced to 2 degrees celsius, as called for in the Paris COP21 Treaty, the likelihood of a megadrought drops to 30-60%. Click HERE.
Trump is doing everything he can to reverse critical laws and regulations reducing greenhouse gas emissions. Every effort must be made to stop him. See this Article.
As expected, the trend continued, and 2016 became the hottest year on record. To see how much warmer your city was in 2016, go to this webpage.
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.
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As the grid evolves toward two-way electricity distribution, electricity providers will increasingly utilize distributed energy resources (DER). DERs include Distributed Generation (DG), Energy Efficiency (EE), Demand Response (DR), Energy Storage (ES), and Electric Vehicle-to-Grid (V2G).
Community Choice Energy (CCE) in California is accelerating the development of clean DERs and reducing GHG emissions. Marin Clean Energy (MCE) and Peninsula Clean Energy (PCE) are two community choice energy providers in California.
DG, (such as rooftop solar, wind, microgrids, fuel cells, Combined Heat & Power), is critical to fulfilling a priority of CCE: developing new local clean energy sources.
EE is also critical. For example, MCE has a 10-year plan, seeking to replace PG&E as the primary EE provider in their service area. PCE will consider this too.
DR is vital, with MCE and PCE targeting 5% of annual peak load from DR by 2020.
MCE and PCE must also use ES to serve at least 1% of annual peak by 2020, and CPUC is wisely considering raising that requirement. ES is important for integrating intermittent solar & wind, and for grid reliability.
V2G is still at an early stage, but should become widespread ultimately.
DERs are essential to achieving 100% GHG-free goals!
The shockwaves from the technological Big Bang in 2007 were forgotten in the wake of the global meltdown in 2008. Fast forward, and one decade later, grassroots community efforts focused on resiliency, sustainability, and clean energy can survive the accelerating hurricane of reactionary fear. See Thomas Friedman's insightful analysis HERE.
Trump has outdone himself with the appointment of a fossil fuel industry lackey and climate change denier as Head of the EPA. It can not be overstated how tragic this will be for the entire planet. Click HERE for more...
CLEAN ENERGY POLICIES
Collaborative Goals to Sustain Our Future
Are conservative politicians in the US finally ready to agree to a carbon tax(something some conservatives originally proposed themselves about a decade ago, but for political reasons switched to denying climate change, and began opposing a carbon tax). See this perspective HERE.
Obviously, Trump is very bad news for clean energy & efforts to mitigate climate change. But he lost the popular vote, and grassroots efforts can gradually re-take the momentum over the next several years.Click HERE for some of the big problems caused by Trump's failure to understand the climate change crisis.
Here's one more reason why the Paris COP 21 UN Climate Change Treaty, with only an aspirational goal to limit global warming to 1.5 degrees celsius, just isn't keeping up with the science. We've already reached the point where COP 21 needs to be replaced with more aggressive GHG reductions. Click HERE.
Amid recent news that countries are not implementing GHG reduction plans sufficient to achieve no more than a 2 degrees Celsius increase, this scientific report indicates that the 2 degrees Celsius target is insufficient, confirming that 1.5 degrees Celsius should be the target. 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.
California proactively continues to be a leader nationally with new proposed renewable energy targets. If approved, California would move up the 50% renewable goal five years to 2025 (from 2030), and would reach 100% renewables by 2045. Click here for an overview.
Most biofuels are not clean energy. A group of US Senators is trying to have US energy policy include trees as a carbon-free energy source, when they actually emit more carbon dioxide than coal. Click HERE. And other biofuels, such as ethanol and biodiesel, are net emitters of greenhouse gases, and even worse than gas. Click HERE.
For the visually inclined, this 3D visualization of carbon dioxide engulfing the world is simultaneously mesmerizing and ominous. Click HERE.
Is Washington state's proposed revenue-neutral carbon tax (first in the USA), designed to win support of moderate conservatives, going to pass?Or will opposition from many environmental and social justice groups, due to insufficient allocation of the carbon tax revenues to disadvantaged communities, prevent approval? This article looks at this intensive debate, which could have national ramifications.
Our global carbon budget in order to limit the increase in global average temperatures to 1.5 degrees Celsius is about half what we thought....the new estimates indicate we only have about a decade before the carbon budget is exhausted, and the global average carbon emissions need to be net zero. Click HERE.
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.
Another attempt at putting a price on carbon at the Federal level in the USA, but this time from the Republicans. The initial proposed price ($40/ton) may not be high enough to achieve required reductions in GHGs, and clean energy development remains paramount. But certainly a step in the right direction. Click here for an overview.
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.
Appealing to the need for collective action, rather than personal action, more effective for inspiring personal efforts to mitigate climate change. Click HERE.
California has much more natural gas capacity than it needs, and ratepayers are paying for it. Some of these plants need to be retired, and ultimately replaced by clean energy. See this article for details.
Here's an insightful summary of the primary relationships between climate change and drought. This is a far-reaching global disaster which is going to get much worse in the next few years and decades. Click HERE.
Real time peer-to-peer transactive energy using Blockchain bringing the distributed energy economy one step closer:
Another ramification of climate change: warm winters in the western USA, cold winters in the eastern USA. A ridge-trough climate pattern is correlated with high atmospheric pressure in the western USA, and low atmospheric pressure in the eastern USA, leading to the extreme weather. See the study 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.
If you live along the coast, any coast, be ready for significantly worse flooding, according to a recent study, and yes, anthropogenic GHG emissions are the primary cause: Click HERE.
Greater than 90% of the excess heat retained by the earth from greenhouse gas emissions has been absorbed by the oceans since 1955. There are a variety of negative impacts on the health of the oceans and their inhabitants, while the rest of the planet has been largely spared the more severe impacts of higher temperatures. That could be about to change, because the oceans may not be able to absorb much more heat. Click HERE.
Amid ongoing reports of continued record increases in global temperatures, here's news that we've been significantly underestimating historical temperature increases. Click HERE.
The Senate has approved the Energy Policy Modernization Act of 2015, which now must be reconciled with the House of Representatives version. One glaring flaw is to encourage a shift to forest biofuels (i.e. wood chips and pellets). Forest biomass is indeed renewable in the long run, but is not a low-carbon source of electricity such as solar and wind. Burning forest biomass releases more CO2 than coal, which can only be offset if the trees grow for many decades. Under the Act, Forest biomass could receive the same subsidy as solar. See Article HERE.
Trump's EPA Chief, Scott Pruitt, has already slashed the budget 25%, and is laying off 20% of the employees. Now, he has rescinded a key component of US plans to meet COP21 Paris Treaty climate change goals: oil and gas companies will not be required to report methane emissions. Methane is 84 times more potent than carbon dioxide in the first two decades, according to the EDF. And Pruitt has only just begun to dismantle all the critical progress towards climate change mitigation. Click HERE.
More accurate modeling of "ice-sheet instability" in Antarctica reveals that the Paris COP21 agreement won't reduce GHGs nearly enough to avoid much worse than previously anticipated consequences from increasing temperatures.
Wishful thinking that Negative Emissions Technologies (NET) will bail us out from needing to reduce greenhouse gas emissions is dangerous. These NET, such as carbon capture and sequestration, are still far from proven or reliable. And yet many countries are counting on NET to achieve GHG reduction objectives. Click HERE.
Trump continues to silence all acknowledgement of climate change science.
The "permafrost" which lies below the surface of the Arctic, apparently is no longer "permanent". The increasing temperatures from climate change melt the permafrost, which initiates a biochemical chain reaction, resulting in more carbon dioxide released to the atmosphere. Click HERE.
Trump's efforts to reverse Obama's progressive clean energy and climate change policies will be slowed by lack of Federal power, and a strong headwind in favor of clean energy. Click HERE for more...