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The end of power utilities? Maybe not just yet…

By Dave Elliott

Local generation is challenging the power utilities in the US and elsewhere. Some of the implications of that trend are reviewed in a useful series of studies by the US Lawrence Berkeley National Labs on Future Electric Utility Regulation which look at Regulation in a High Distributed Energy Resources Future i.e. in the context of a potential future with a high reliance on energy efficiency, peak load management, distributed generation and storage.

One of  Berkeley Lab’s  studies (No.1 in the series) focuses on regulation of Distributed Energy Resources in terms of  advantages and disadvantages from the perspectives of utilities and customers and the potential role (if any) of the big power utilities in the future. The report says that the emergence of distributed energy resources (DERs) that can generate, manage and store energy on the customer side of the electric meter is widely recognized as a transformative force in the power sector’. It suggests that, as DERs become competitive in price and performance for many customers, ‘utilities will face reduced sales volume, more elastic customer demand, and greater opportunities to substitute DER optimization for traditional utility assets and services. It expects that ‘dramatic reductions in the cost of regulated distribution networks will be sought by all stakeholders’, and, although that could be good for all concerned, it raises the question of whether utilities will or should bother trying to enter DER markets, given what might be diminishing returns.

Certainly it says that it is not a straightforward decision, quoting Gregory Aliff, Beyond the math: Preparing for disruption and innovation in the US electric power industry, (Deloitte 2013): ‘A decision to transition to a higher overall risk profile will likely involve significant internal debate and high probability of negative reactions from the financial markets and shareholders. This barrier may ultimately be deemed insurmountable – and as a consequence, new business alternatives may be severely constrained.’

That has evidently already been judged to be the case in Germany, where companies like RWE and E.ON have in effect lost monopoly control of the consumer electricity market as prosumer self-generation  and local energy co-ops have spread, with PV solar especially challenging the utilities’ gas-fired plants in the lucrative peak demand market. The big utilities have had to retreat to servicing this new decentralised market (which accounts for around 40% of Germany’s renewable capacity) and managing the grid. The Berkeley report seems to suggest something similar may happen in the US – but with the added issue of trying to ensure that consumers stay on the grid. There’s evidently concern about ‘grid defection’. That would make managing the system (e.g. balancing variable renewables and variable demand) much harder, potentially undermining the role of DERs and making life hard for the utilities.

Instead, the Berkeley Lab report says that ‘by facilitating DERs, utilities can both lower their costs and increase the benefits they can offer customers who deploy DERs, providing an incentive to remain connected to the distribution system rather than defect from it’.  It adds ‘the fundamental role of the utility will evolve to support this lower cost, higher value service that can be provided when customer-facing DERs are coordinated to not only provide customer services, but to create value for the distribution utility and grid as well. However, that evolution may occur in different directions. One points towards a major utility presence in sourcing, financing and optimizing DERs for customers. The other points towards a major role for competitive firms in not only providing DERs through competitive channels, but also in competing to tailor DERs’ performance and optimize the total value they can create in this emerging, three-sided market comprised of customers, distribution utilities and the grid itself.’

The report also suggests that, in the US context, regulators may in any case not let utilities enter DER markets, quoting a comment in a recent New York Public Service Commission Order: ‘Markets will thrive best where there is both the perception and the reality of a level  playing field, and that is best accomplished by restricting the ability of utilities to participate’. Before the New York Public Service Commission, Order Adopting Regulatory Policy Framework and Implementation Plan, Case 14-M-101, Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision, Feb. 26, 2015, p. 67.

The Berkeley Lab report seeks to steer in between rival views. One says that, having lost their market monopoly, the utilities will fade away, the other that their supply system will always be cheaper than DERs, or if not, that utilities would be best suited to deploying DERs. Instead, the report says that the utilities will not disappear, but they will have to change their role, from monopoly suppliers to energy service companies and new decentral market enablers, with only limited involvement in generation themselves, as opposed to supporting local distributed generation by others.

Maybe so. They do after all have the expertise, even if they may have lost the trust of consumers. And their traditional markets. Though the exact balance between the various possible elements of the new role that utilities might play is unclear, with the report suggesting that in one, utilities successfully evolve to play the major role in using DERs to provide services to customers, while in the other, ‘these functions are increasingly performed by competitive firms using advanced and largely decentralized digital technologies, and the utility “sticks to its knitting” in terms of providing and maintaining infrastructure needed to deliver basic energy and capacity services, while depending on DERs to entice its customers to remain connected to the system and help the utility maintain sustainable cost levels’.

 Either way, though, their role will be very different from now – and that’s a conclusion that has emerged after just an initial wave of successfully grass-roots decentralized power initiatives. Who knows what may come next, with, for example, pressure for municipal-level energy projects beginning to emerge and some US prosumers banding together in local shared ‘community solar’ micro-grid schemes and peer-to-pear trading: www.renewableenergyworld.com/articles/2016/05/municipal-solar-and-microgrids-a-pv-market-outlook.html  and www.smartgridtoday.com/public/Solar-CEO-sees-clout-growing-for-energy-prosumers.cfm. It does seem that we are moving away from centralised monopoly power. Though against some opposition, as this report from the US indicates: https://ecowatch.com/2016/01/29/rooftop-solar-wars/

Battles over net metering, with utilities trying to limit their losses, may lead more consumers to consider going off-grid. A recent Wired article claimed that, with domestic self-generation, smart meters and local storage  ‘the national grid itself may become less important’, in that ‘we could be living in a world where consumers have super-efficient homes and are mainly generating on site’. http://www.wired.co.uk/news/archive/2016-01/25/smart-grids-empower-users  Certainly some say off-grid systems can be viable in some locations: www.academia.edu/25363058/Emerging_Economic_Viability_of_Grid_Defection_in_a_Northern_Climate_Using_Solar_Hybrid_Systems.

That may happen to some degree in some countries and locations but, overall, the reality seems to be that grids, linking to larger geographically-spread generation projects, will remain vital for balancing local variations in supply and demand, although utilities will have to adapt to a new pattern of energy generation and use.

*The Berkeley Lab reports: Report No 1: Corneli/Kihm, Electric Industry Structure and Regulatory Responses in a High Distributed Energy Resources Future.’ Report No 2 in this ongoing series looks at market design and distribution issues, including local peer-to-peer exchanges between projects and consumers.

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Capacity market mess

By Dave Elliott

The UK’s new Capacity Market auction process aims to ensure that there is enough capacity to meet demand by contracting with suppliers to be available when needed. However, it has failed to deliver any new gas projects, as well as failing to back much in the way of demand-side balancing – just 456MW. As with the first round, which gave contracts for 2018-19, it’s ended up mainly just backing old gas, coal and nuclear plants – with £1bn in contracts for 46GW overall for 2019-20. Most only get 1 year contracts, but the 650MW of new small diesel sets have 15 year contracts, and in all £155m. The 220MW of existing diesel get £93m. So much for clean energy!

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Renewable growth continues

By Dave Elliott

While most future projections show global renewable energy expanding rapidly, some are more cautious and also present optimistic views on oil futures. For example, BP’s Energy Outlook 2016 sees oil still booming up to 2035, although it does see the use of coal falling and renewables expanding: ‘Renewables are expected to account for more than a third of EU power generation by 2035’. However, welcome though that view is, Carbon Brief said, ‘this sits awkwardly against the fact that renewables already supplied a third of EU power in 2014 and continue to expand rapidly’.  

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China accelerates renewables

By Dave Elliott

The Chinese National Renewable Energy Centre (CNREC) says China could get 85% of its electricity and 60% of all its primary energy from renewables by 2050, with wind and solar PV both exceeding 2TW of installed capacity by 2040.

The nation certainly seems to be trying to head that way. Under its new 5 year plan it aims to more than double its wind energy capacity (to 250GW), and nearly treble solar capacity (to 160GW), accelerating well ahead of the EU.

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Balancing green power

By Dave Elliott

If the use of renewables is to expand further, ways have to be found of compensating for their variability. Fortunately there are many, as I have outlined in a new book ‘Balancing green power’, produced for the Institute of Physics. It sets out to show how, taken together, they can help balance grid systems as increasing amounts of renewable capacity is added, helping to avoid wasteful curtailment of excess output and minimising the cost of grid balancing. The options include flexible generation plants, energy storage systems, smart grid demand management and supergrid imports and exports.

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EGU Debate: can we have global economic growth and a habitable climate?

by Liz Kalaugher

At the EGU General Assembly debate on “Is global economic growth compatible with a habitable climate?” there was discussion whether the session was even titled with the right question. Not to mention the pre-debate issue of whether the speakers should stand up or sit down.

To Clive Spash of WU Vienna University of Economics and Business, the title was too tightly focused on climate and should have widened out to a habitable planet. Spash, who believes that the economic view of the world is unrealistic, said he disagrees that economic growth is vital and thinks it’s politically naïve to try and shut down the debate on whether we need growth. In his view a carbon tax won’t work and decoupling of growth and carbon emissions won’t save us.

Narasimha Rao of IIASA, Austria, also wanted the question to be broader. Rao called for consideration of dimensions of wellbeing beyond economic growth, since the economy doesn’t reflect phenomena such as air pollution and oil spills.

Kevin Anderson of the University of Manchester, UK, reckons the answer depends on whom we’re referring to – rich people, people in poorer nations, or other species. Some in the rich parts of the world believe we can cope with 2, 3 or even 4 degrees of temperature rise, he said, whilst many developing countries believe that the maximum habitable temperature change for them is 1 or 1.5 degrees, given that many are already feeling the effects of climate change. And significant numbers of animal species are already struggling with temperature rise today, particularly as they’re under other environmental stresses too.

Given the rates of emissions reductions we’d need, Anderson said that a 1-1.5 degree threshold is no longer viable and we’re stuck with 2 or 2.5 degrees at best. “Economic growth is not compatible with a habitable climate for people like us,” he said, arguing that since the relatively poor need economic growth to have a habitable climate, it means big emissions cuts for the rich. And for non-human species, economic growth is again not compatible with a habitable climate.

Finally, Jorgen Randers confessed that having worked in sustainable development since 1972, he has failed as the world is less sustainable now. Randers argued that economic growth is compatible with a habitable climate but human society has not been willing to implement the solutions. To him, the question is “is humanity going to be able to reduce greenhouse gas emissions per unit GDP fast enough to get greenhouse gas emissions to decrease?” Whilst technically “it’s a piece of cake”, and shifting from dirty to clean production is cheap at a cost of just 1% of GDP, it has not been done and will not be done because people think too short-term. “That’s the sad story,” Randers added.

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EGU audience votes that Anthropocene began with industrial revolution

by Liz Kalaugher

Most audience members at the European Geosciences Union General Assembly session on the Anthropocene thought that we are already in this epoch. Session chair Owen Gaffney of the Stockholm Resilience Centre in Sweden conducted a quick straw poll mimicking a show of hands conducted at the American Geophysical Union Fall Meeting last December. Around five people reckoned we can’t ever say as we’re too close, and one person voted that we didn’t have enough information to make a call.

As to when the epoch started (if it has), the majority of the audience thought at the time of the industrial revolution, with substantial numbers voting for the 1950s, around 15 for the onset of agriculture and just one for 1610.

It wasn’t a very scientific poll – apart from in terms of the participants’ backgrounds – but as Gaffney detailed in his introduction, the concept of the Anthropocene is politically, economically, culturally and legally loaded, as well as being of scientific significance.

Even the name has been argued over, with suggestions such as the Capitalocene, Misanthropocene, the Obscene or even the Machine Age. Speaker Andrew Revkin of Pace University and the New York Times, US, who is a member of the International Stratigraphy Commission’s Anthropocene working group, detailed how he presciently came up with the term Anthrocene in his 1992 book on Global Warming. When he wrote that sentence, however, he was thinking that the idea was hundreds of years away, rather than just 8.

The Anthropocene working group will meet in Oslo at the end of this week.

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Keeping 60 million Romans fed as climate changed

by Liz Kalaugher

Think of Romans and the first things that come to mind are probably straight roads, gladiators and togas. But the Romans had to deal with climate change too, as Brian Dermody of Utrecht University in the Netherlands detailed to a press conference at the European Geosciences Union General Assembly in Vienna.

During the time of the Romans, the climate moved from the Roman Warm Period (250 BC-250 AD) to the cooler Late Roman period, accompanied by precipitation changes too. By using a hydrological model and reconstructions of temperature and rainfall change, as well as population distribution and cropland estimates from nearly 15,000 archaeological sites and crop suitability maps, Dermody looked at the effects on the yield of four major crops for the Romans – millet, wheat, olives and grapes.

Overall, crop yields decreased as the climate cooled, Dermody’s models showed, particularly in the west of the Roman Empire. Surprisingly, yields of grapes, wheat and millet around the Mediterranean increased

To keep 60 million people fed, the highly civilised Romans relied on trade and irrigation. Dermody, who believes models give more of a subtle picture, will now look at trading routes and food supply using a network of routes developed by classicists.

Dermody said he responds to people questioning why he’s investigating history by replying that “as environmental scientists, we’re interested in the interactions between humans and the environment and how they played out long term”. The study could even tell us about water resource management and food redistribution today.

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Must vineyard managers choose between bees or worms?

By Liz Kalaugher

Given the option, would you help bees or worms? That’s the choice indicated by initial results presented at the European Geosciences Union General Assembly in Vienna this week by Sophie Kratschmer of the University of Natural Research and Life Sciences in Vienna.

As part of the VineDivers project, Kratschmer found that, contrary to expectations, solitary bees in vineyards in eastern Austria thrived when there was less management of the vegetation between rows of vines. This higher diversity was a surprise as disturbed ground tends to contain more flowers, a food source for bees. Since solitary bees nest underground, however, they may not appreciate tillage. The team did find a link between flower coverage and the number of wild bee species.

Earthworms, in contrast, were more diverse when there was ploughing of the earth between the vines, probably, according to Kratschmer, because it boosts the carbon content and makes the soil less compact. Plant diversity and biomass weren’t affected by the management intensity.

Both bees and worms are useful for viniculture, with bees providing pollination while earthworms help form soil and cycle nutrients.

Fortunately, when it comes to selecting management regimes for vineyards, the findings may not boil down to a difficult choice between bees and worms. Next Kratschmer will investigate a “medium” management intensity, intermediate between the low and high regimes in this study, which may work for both types of animal.

The wider VineDivers project will pool results from France, Romania and Spain and also use GIS analysis to find out the role of landscape diversity.

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Renewable Integration – a view from Germany

By Dave Elliott

High shares of wind and solar power transform the entire power system and can lead to additional system integration and back-up costs aside from building the power plants themselves. A new background paper from Agora Energiewende examines these dynamics and concludes that, not only are the direct integration/balancing costs low, but so are the controversial indirect costs associated with the variable utilization, in balancing mode, of conventional plant – as long as the power system becomes considerably more flexible.

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