Lots of people complain that the odd workings of electricity rates in the world of regulated monopolies would never happen in a real market. But UC Berkeley colleague Severin Borenstein makes the case that you see features of electricity pricing in all sorts of competitive markets, from Amazon to cell phones to the local plumber.
But one electricity rate program stumped him for a real-world analogy, and it just so happens to be the most important distributed renewable policy in the state:
Net metering – (a customer delivering electricity to the grid is credited at the same rate they are charged when they take electricity from the grid):
OK, on this one, I’m pretty stumped. Some colleagues and I spent part of a long car ride last week trying to think of a market in which a seller of a good buys units of that same good from small retail customers and pays them the retail price. The closest we could come up with is a customer buying items from store A and then returning them to store B for full retail price by claiming they were bought at store B. Hmmm…not a great model.
The best I could come up with is a quasi-barter system, like if (hypothetically) I grew some tomatoes at home and then went to my local farmers market to give them to a vendor. Then that vendor in turn let me pick out other fruits or vegetables she was selling that day for an equivalent amount of what I had given her.
In other words, I made or grew something at home and then exchanged it for in-store credit somewhere. Just like I generate energy on my roof, use some on-site and then exchange the rest with the utility for free electricity at another time.
Either way, it’s an interesting intellectual exercise and potentially an indication of why that particular policy is so controversial.
As California and other states zoom toward getting 50% of their energy from renewable resources like solar and wind, there’s no question that we’ll need a bigger geographic grid footprint to balance these sources. We can’t rely solely on these in-state, intermittent resources without driving up rates and firing up backup fossil plants to compensate for their variable production.
An expanded grid addresses that problem (along with energy storage and demand response) and provides economic benefits to boot. It means, for example, that California can sell its excess surplus power in the spring and fall to other states, while we can import solar from Arizona in the morning or wind from Wyoming at other times.
The dark orange over Wyoming means great wind resources to import to California
That’s why California’s grid operator — the Independent System Operator (CAISO) — is so gung ho on purchasing the neighboring PacifiCorp, which operates in six western states. As Utility Dive reports, CAISO’s CEO is bullish about the opportunities, both to save ratepayers money and to clean the grid.
But the politics are messy. Here in California, as E&E reports [subscription required] the Sierra Club in particular is concerned that the merger of these two grid operators will give a bunch of coal plants in the PacifiCorp portfolio a new market to access and therefore a longer lease on life. NRDC counters that any bump in emissions will be short-term and that the merger will ultimately greatly reduce emissions.
Meanwhile, in the states subject to the merger, the opposition is not from environmental groups but from the in-state generators that risk being displaced by cheap out-of-state renewables. After all, it’s hard for them to compete with surplus solar power from California that is coming to the state for cheap, displacing coal and gas-fired power in the process. These states also fear a loss of control over the grid operators, as the governing boards are likely to be dominated by California appointees.
All in all, it’s a tough political situation but one that shouldn’t be insurmountable, with the right compromises — particularly given how much ratepayers can benefit from the merger and how crucial an expanded grid footprint is to deep decarbonization of the electricity supply.
Grid operators on the island of Maui are now routinely “curtailing” wind energy, due to daytime surpluses with so much rooftop solar humming along at the same time that wind peaks. As Utility Dive reports:
For the Kaheawa Wind Project, a 51 MW wind installation on island of Maui, curtailment is a fact of daily life. The facility is actually two separate projects — one installed in 2006 and the other in 2012. For KWP II, the latter 21 MW installation, the amount of power not accepted by Maui’s utility can equal amore than a quarter of its annual potential output.
“Last year’s curtailment was on the order of approaching 30% for KWP II,” Steven Rymsha, the plant manager, told Utility Dive during a visit to Maui in March. “That statistic is probably slightly high. It’s in a 25-30% range on a yearly basis.”
30% curtailment is a huge number, and it once again shows why Hawaii is our clean energy “postcard from the future.” Here in California, we will be facing the same problem in the coming years, but we can sell surplus renewables across the west (and import their renewables surplus for our needs).
But Hawaii doesn’t have that option, given its island geography. So why aren’t developers in Hawaii installing energy storage, such as big batteries, to capture surplus energy for later dispatch?
Even as storage prices continue to decline, the MECO grid manager said it remains cheaper for many developers to simply not sell a portion of their power than to invest in a battery and store it.
“To a certain extent, depending on the percentage, curtailment is the cheapest option,” he said. “It’s kind of like if you have a mango tree, you can get all the bottom mangoes sitting under it, and buy a ladder for the middle ones, but you need a bucket truck for the top 10%. It’s probably not worth it.”
I wonder if better rate design or incentives could change this equation significantly enough to encourage more storage deployment. Otherwise, renewable developers will be left needing major price decreases in storage technologies to go that route.
In the meantime, Hawaii should be focusing on the other way to manage this daytime surplus: design rates to encourage energy usage during those peak renewable times and away from non-peak times.
Nevada and Hawaii are two states that have taken different, though both scaled-back, approaches to rooftop solar. But the good news for solar advocates is that both states appear to be making progress, for different reasons.
First, Hawaii. The Aloha State retrenched from the generous net metering retail rate compensation last year. Instead, state regulators pushed a hybrid option that allows customers to either take a wholesale rate for all power they export or get a retail credit for all the power they use on-site (but not for any exports, which are not credited).
And in a positive development, the new rates are actually leading to enough customer demand that the state may soon reach its cap on new enrollees. As Utility Dive reports, the cap may be met as soon as next month. What that means is that the economics of the reduced incentives are still working for many customers, and it also gives them an incentive to buy a battery, if they go with the retail rate (in order to maximize their on-site usage).
Granted, Hawaii uniquely has ridiculously high electricity rates and tremendous solar exposure, making it not exactly representative. Still, it shows that the economics of reduced incentives can still work, once the price of the panels comes down (or the price of electricity increases).
Meanwhile, over in Nevada, the state gutted its solar incentives, even going back on its deal with existing customers, leading to stranded assets and betrayed buyers. But now an electoral push may reverse this decision by voter initiative. The utility is fighting back, per the Las Vegas Review-Journal, but so are solar companies. And there are murmurs that the governor is willing to hash out a deal with the solar companies.
My guess is that Nevada will end up with a compromise, perhaps along the lines of the Hawaii path. And in the long run, we know the current generous net metering incentives won’t last forever. So a future that still encourages deployment and also on-site storage in the form of batteries would be a good one.
In the very long term, rooftop generation may not be the best way forward anyway, particularly given that many people don’t have a rooftop with sun exposure or lack sole access to theirs. So we should be simultaneously encouraging more community solar and microgrids as the best way to decarbonize and localize our electricity systems, leading to greater reliability and cheaper prices in the process.
Capitol Weekly in Sacramento yesterday ran an op-ed from me and Jim Strittholt of Conservation Biology Institute on our recent solar PV mapping effort. Highlight passage:
When we combined the separate maps, the result was pretty remarkable: Out of the 9.5 million acres in the stakeholder study area, the groups identified 470,000 acres of ideal, non-controversial land for solar PV development, or roughly 5 percent of the Valley study area. At a generic calculation of 1 megawatt of solar PV production from 5 acres of panels, that means the lands identified could provide 94,000 megawatts of renewable power – greater than all combined in-state generation capacity and enough to power as many as 23 million homes in California with low-cost, clean electricity. And that’s just from the San Joaquin Valley.
You can read more about (and access) the report here, and see the joint Berkeley Law and various environmental groups’ press release here. My blog on it from last week is here.
To achieve California and the post-Paris world’s climate goals, we’re going to need a whole lot more renewable energy. Given current market trends, much of it will come from solar photovoltaic (PV), which has gotten incredibly cheap in the last few years. But deploying these solar panels at utility scale will mean major changes to our landscapes. And that means conflicts with traditional environmental and agricultural values.
Here in California, these conflicts could slow the state’s effort to achieve 50 percent of our electricity from renewable sources by 2030. A significant deployment of large-scale solar PV will occur in places like the San Joaquin Valley, an agriculturally rich region with lots of solar exposure (insolation) but tremendous poverty and air pollution. To date, many proposed solar PV projects in the region have engendered conflict with agricultural and conservation groups, who fear a resulting loss of valuable lands and the species and farming and ranching that depend on them (a subject of a 2011 joint UC Berkeley/UCLA Law report, funded by Bank of America, called Harvesting Clean Energy).
To address the challenge, Berkeley Law’s Center for Law, Energy and the Environment (CLEE) partnered with Conservation Biology Institute (CBI) and Terrell Watt Associates to develop a new, stakeholder-based process to find “least-conflict” lands in the eight-county San Joaquin Valley region. The project team convened leaders from the agricultural, conservation, and solar PV development communities, and included tribes and key agencies.
We asked the groups one question: from your perspective, where are the least-conflict lands for solar PV development in the Valley?
And here is where technology came into play. To answer this question, the group worked with CBI’s cutting-edge but straightforward on-line mapping platform, called Data Basin Gateway. This new mapping software allowed for real-time, group-supported mapping as the stakeholders were free to input their own data and share the results, privately at first among their group, and then with the larger stakeholder groups.
Once we overlaid the various stakeholder groups’ final maps, the result was pretty remarkable:
- Out of the 9.5 million acres in the stakeholder study area, the groups identified 470,000 acres of ideal, non-controversial land for solar PV development.
- The amount of land is roughly equal to 5 percent of the entire Valley study area.
- At a generic calculation of 1 megawatt of solar PV production from 5 acres of panels, the lands identified could provide 94,000 megawatts of renewable power – greater than all combined current in-state generation capacity and enough to power as many as 23 million homes in California — just from the San Joaquin Valley.
To be sure, not all of this land, on further inspection, may be practical or feasible for solar PV development. But if even a fraction works, it will accelerate the state’s renewable efforts and reduce the impact of air pollution on Valley communities. Perhaps even more encouraging, this entire process took less than six months, and the resulting maps remain on-line on the San Joaquin Valley Gateway, where stakeholders can update the maps as new data become available and conditions change over time.
You can learn more about the results in the new CLEE/Conservation Biology Institute report released today called “A Path Forward: Identifying Least-Conflict Solar PV Development in California’s San Joaquin Valley,” available on the report page here.
Based on the results, CLEE urges policy makers to encourage solar expansion on these optimal lands and streamline the planning processes to steer more solar PV development there. Such efforts could include:
- Siting and fast-tracking appropriate transmission capacity to these lands;
- Developing permitting incentives for projects proposed in these areas, such as reforms to the Williamson Act and advance mitigation procedures under the California Environmental Quality Act; and
- Further study on the potential compatibility of solar PV with agricultural practices.
CLEE also encourages policy makers to support similar mapping processes throughout the state and eventually for a multi-state effort across the United States. There’s no reason this same process can’t work for a statewide mapping effort and more, or even for technologies beyond solar PV. After all, we’ll need other clean technologies in addition to renewables to meet our climate goals, from energy storage to low-carbon transportation.
To learn more, tune in to a webex briefing from the Governor’s Office today at 4pm (no password required). You can also dial in at 1-650-429-3300, access code 926 702 170. The webex will feature remarks on the report findings from Ken Alex, senior advisor to Governor Brown and director of the Governor’s Office of Planning and Research (and CLEE advisory board member and guest Legal Planeteer), and California Energy Commissioner Karen Douglas (both of whom were instrumental in getting the project launched and implemented).
Finally, I encourage readers to review the full report and note the list of stakeholders and others involved to bring this project to fruition, including generous contributions from the Energy Foundation, The Nature Conservancy, and others.
Let’s hope this work not only helps resolve conflicts in the San Joaquin Valley to bring more renewable energy on-line but also inspires similar smart planning efforts for clean technology throughout California and beyond.
A campaign to sue the oil giant for deceiving the public on climate change is gaining steam (no pun intended), as Politico reports:
Interviews with advocates on both sides of the feud reveal how quickly the anti-Exxon movement has sprouted, to the point that it’s now consuming op-ed pages, airwaves and courtrooms across the country. Once merely intent on shaming the oil giant into better behavior, environmentalists are pursuing a strategy to discredit the company, weaken it politically and perhaps make it pay the kinds of multibillion-dollar legal settlements that began hitting the tobacco industry in the 1990s.
The campaign — led by some of the same climate activists who defied Beltway wisdom by killing the Keystone XL oil pipeline — has mushroomed into far more than a greens-versus-Exxon feud.
Just last week, a leaked subpoena from the attorney general in the U.S. Virgin Islands revealed a vast probe that demanded Exxon’s communications with more than 100 free-market think tanks, conservative consulting firms and climate-skeptic scientists — proof, the company’s supporters say, that environmentalists are using the legal system to launch a broad attack on their political opponents. The subpoena targets Exxon’s dealings with parties including the Competitive Enterprise Institute, the U.S. Chamber of Commerce Foundation, the Hoover Institution, George Mason University and scientists at the Massachusetts Institute of Technology, the University of Alabama and the University of Delaware.
Perhaps that’s why the company is now investing in some pretty interesting clean technologies, including one that could help our zero-emission transportation future, as Green Car Reports describes:
ExxonMobil is backing a new process that would capture carbon dioxide from power plants, and use it to feed fuel cells.
The oil giant announced Thursday that it is expanding a partnership with Connecticut-based FuelCell Energy to develop the smaller company’s fuel-cell technology.
FuelCell hopes to combine carbon capture and sequestration (CCS), which captures carbon-dioxide emissions from power plants, with carbonate fuel cells.
So maybe in the end, the climate punishment will be that ExxonMobil transitions to technologies that boost zero emission vehicles. While it shouldn’t be the only remedy for this kind of corporate malfeasance, assuming they lose in court, it would be a just one.
There’s been a low-grade battle for the future of zero-emission vehicles in California. On one side are the well-known battery electric models, with companies like Tesla capturing the global imagination and state residents buying hundreds of thousands of vehicles to date.
Toyota Mirai fuel cell vehicle.
On the other side are hydrogen fuel cell vehicles, capturing the imagination of…well, maybe a hundred buyers and a few state officials.
The problem is that the state is spending millions of dollars to subsidize both technologies, when many experts feel that hydrogen fuel cell vehicles will have very little role in the state’s transportation future.
Now Fred Lambert at Electrek observes that even the fuel-cell automakers are changing their tune:
I think we are witnessing the start of a new (but long overdue) trend this year. The few established automakers still pushing fuel cell hydrogen vehicles appear to be warming up to battery-powered electric vehicles instead. Honda, Toyota and Hyundai, arguably the automakers most stuck on hydrogen, all announced new electric vehicle programs in the past few weeks.
Toyota is working on a plug-in version of the Corolla. Hyundai is bringing its Ioniq electric platform to market by the end of the year and this morning, we reported on the Korea-based automaker developing a next generation battery-powered electric SUV.
Those two automakers are arguably the most entrenched in fuel cell technology with the Toyota Mirai, the Hyundai Tuscon Fuel Cell, and billions spent in investments between the two of them, but the most telling news is that Honda, another fuel cell believer, is planning to launch a battery-powered version of the Clarity, a car it actually developed for its fuel cell program.
Lambert notes the gaping inefficiencies of fuel-cell vehicles compared to battery electrics (which are almost three times more efficient, when accounting for the energy in versus the energy out), plus the greater complexity of the manufacturing/fuel supply process with fuel cells.
The only advantage hydrogen offers over battery electrics is refueling time. But as batteries eventually move to up to the 600-mile range in the coming decades, and as fast-charging technology improves, this benefit will diminish. Meanwhile, battery electrics have the contrary advantage of being able to fuel in your home and anywhere with an outlet, versus the need for the gas station model of hydrogen fueling.
To my mind, the only true benefit of hydrogen is for long-haul trucking (although biodiesel and other biofuels may be just as well-suited), and possibly as a form of energy storage, assuming the hydrogen is made from surplus renewables.
But I’m skeptical that automakers will truly abandon their fuel cell plans so quickly. My guess is it will be another five years or more before they truly get the message from the market.
Last night we had a spirited discussion on KALW’s “City Visions” on the prospects of turning the mountains of trash we’d otherwise send to landfills into energy. You can listen to the audio here.
My takeaway is that despite all our efforts to reduce, reuse and recycle, there will always be some (hopefully small) percentage of garbage that we simply cannot avoid sending to landfills. Some of that waste may be too complicated or expensive to reuse, from pizza boxes with glue to “urine-stained carpets,” as Rob White from Sierra Energy pointed out.
San Francisco is one of the national leaders in waste reduction policies, as Jack Macy described, and is able to address about 80-90% of its waste. But there’s a remaining 10 percent that may dwindle further but will still be shipped to landfills somewhere. At this point, hundreds of tons of garbage a day exit San Francisco for landfills.
I understand the concern from environmental advocates that waste-to-energy facilities have polluted local communities and that the promised results haven’t been delivered.
But as we argue in “Wasting Opportunities,” technologies have improved, and the state has an overriding interest in trying to figure out how to reduce landfilling and meet renewable energy goals. It would benefit all stakeholders to engage in a process to determine under what standards it might make sense to deploy some of these higher-performing technologies.
Not all waste-to-energy technologies will make the cut, but with proper, evidence-based analysis, some may shake out and provide environmental benefits. At that point, we can address the siting concerns to ensure low-income communities of color are not overburdened by deployment.
But if we don’t take action soon, the status quo on trash is simply not sustainable.
Every year, Californians send about 30 million tons of trash to landfills. While the state’s residents do their part to reduce, reuse and recycle, that’s still a whole lot of garbage. It’s not only a land use issue, it’s a climate change issue: as landfill waste decays, it emits methane, a powerful greenhouse gas.
Many other countries and states are using energy recovery technologies to turn that trash into power. Mostly it’s done by heating and gasifying the material, now using more advanced and cleaner technologies to recover energy from this solid waste. California has three such facilities in operation. But since the 1980s we’ve essentially not allowed any new ones to be built, out of concern for local pollution impacts, particularly on low-income communities of color.
But as the energy recovery technology improves and the state grapples with its needs both to reduce greenhouse gas emissions and find non-fossil fuel-based sources of energy, waste-to-energy has emerged as an important issue in the Capitol recently.
To that end, Berkeley Law’s Center for Law, Energy and the Environment (CLEE) convened a group of environmental advocates, waste-to-energy technology developers, and state and local officials to discuss prospects for moving forward on this issue.
The concerns are significant: will the technologies adversely impact nearby communities, many of which may be disproportionately low-income and of color? Will energy recovery incentives discourage recycling? How reliable are these new technologies in reducing local emissions?
Based on that discussion, CLEE is today releasing the report Wasted Opportunities: How to Secure Environmental & Clean Energy Benefits From Municipal Solid Waste Energy Recovery, which I co-authored with Daniel Gergely Szabo. It recommends solutions for the state to address this challenge, including:
- The development of technology-neutral, performance-based standards for energy recovery of waste materials that will not discourage recycling;
- A revised waste disposal hierarchy that includes energy conversion that reduces overall pollution and contemplates “dispersion” as the lowest rung beyond disposal; and
- A revised landfill tipping fee that accounts for the full range of environmental costs.
Ultimately, should decision-makers identify appropriate technologies to deploy, the state will need a discussion on land-use siting to ensure that environmental justice concerns are addressed. While that process is not the subject of this report, it would be a worthwhile second step in contemplating these technologies.
You can read more on the report page here. In addition, I will be hosting a radio show discussion on this topic tonight at 7pm on San Francisco’s KALW radio 91.7 FM, a local NPR affiliate, for the show City Visions. My guests include:
- Jack Macy, Senior Commercial Zero Waste Coordinator for the City and County of San Francisco Department of the Environment;
- Rob White, Chief Strategist at Sierra Energy, a waste gasification and renewable energy company founded in Davis, California in 2004; and
- Heather Youngs, Senior Analysis Fellow at the Energy Biosciences Institute at the University of California, Berkeley and an adjunct professor of biochemistry at Michigan Technological University.
For those not in the area, you can tune in via the website, either live or afterwards when the audio is posted.
