Stuck in the Past: Old Models Stymie Clean Energy Transition

With the upcoming COP 24 session in Poland, I recently published a post that looks at the progress that has been made since COP 21. COP 21 is when we saw the drafting of the Paris Agreement. COP 24 is the opportunity to truly put together implementation strategies for countries to meet their greenhouse gas reduction goals. There are several market sectors that are impacted by the Paris Agreement. Here I want to take a quick look at the electric power sector and the slow transition to more clean energy power systems.

What’s the Hold Up?

One uncertainty ahead for renewable energy is how investors will take to the coming period in which project revenues have less government price support, and instead depend on private sector power purchase agreements or merchant power prices.

Why can’t this transition happen more quickly, particularly in regards to electric power generation and consumption. When countries submitted their INDCs in 2015, the energy world was a bit different than today. One of the most significant differences from then to today is the price of clean energy resources, particularly solar, wind and batteries.

With significantly lower costs for clean energy power generation since the Paris Agreement shouldn’t we be seeing a more rapid transition. A key  argument has been that the higher costs of renewable energy was a key barrier. It is very difficult to make the same argument today. As demonstrated by the most recent levelized cost of energy studies.

Economics are there for clean energy

According to the Lazard Levelized cost of energy report, in 2015 combined cycle gas plants and utility solar were pretty much event in cost per kWh. Solar was a bit cheaper at $64 and Gas combined cycle was $65. Wind was less expensive than both at $55. If we look at the most recent Lazard report for 2017, prices have continued to drop for all technologies, but solar and wind by considerably more. In 2017 wind was $15 less than gas at $45 and solar was $10 less than gas at $50. Solar made the largest gains in price reduction per square foot and closed the gap on wind. There is now only a $5 difference between wind and solar applications.

The other argument has been that renewable energy is intermittent and too much renewable energy on the grid would hurt grid reliability. This argument appears to be losing some of its validity. One would expect that with early deployment, there was not the diversity of resources, solar and wind, nor the geographic disbursement of these systems to ensure grid stability. However, as we see greater deployment of solar and wind, we see the complementary nature of these resources and how they are better able to support the overall grid when coupled together. Throw in batteries and you really solve the intermittency issue. Granted, solar and batteries is still a bit more expensive, than your base load combined cycle natural gas plants, but not by much.

Texas Not Showing the Way

A recent decision by the Texas Public Utility Commission (PUCT) on AEPs Wind Catcher facility is a good example of how developers may not be using the appropriate assumptions for their models and how the PUCT is slow to adjusting to the clean energy transition. What this means for both the developers and the regulators is that they have not been able to properly model the long-term benefits of clean energy resources and future risks of a fossil-fuel based power grid.

The AEP’s Wind Catcher would have been a 2 GW wind farm in the Oklahoma Panhandle. The largest wind farm in the United States. AEP argued that customers would receive significant benefit due to the expected fuel savings of the project. Because power would be provided to Texas, the PUCT had a say on whether the project was seen as beneficial to Texas customers. The PUCT denied the project on grounds that it placed too large a burden on rate payers.

What has changed in the market?

The clean energy market is tougher place to be than it was a year ago. Three key factors a lower federal tax rate, low natural gas prices and in Texas the fact that the renewable portfolio standard has long been met and provides no requirement for utilities to take on additional clean energy.

Because the renewable energy standard goals of Texas have been met, AEP had to demonstrate that the costs of the plant were competitive and provided cost savings to customers. Another strike against the project was when first conceived, the federal tax rate was higher. Higher tax rates provides a greater benefit to projects looking to participation in the federal production tax credit. When taxes go down, less tax burden and less benefit via this credit. AEP saw a $245 million decrease in tax benefit with reduction in federal taxes.

Old Way of Thinking Continues

Those are two valid concerns that have a material effect on the value of this project. There are two concerns expressed by the PUCT that are more difficult to accept. The first is that the PUCT does not feel there will be a carbon tax or any other climate regulation supporting clean energy investment in the near to mid-term. However, that is likely to be only as long as the current administration stays in power. Looking beyond 2020, we should anticipate a swing back toward carbon related regulations which would get the US back in line with the rest of the world.

Further, as we continue to see greater climate related extreme weather activity, it is increasingly likely that more interest will be paid in mitigating climate risk through the development of policies for more clean energy resources. This could be done through a “punctuated equilibrium” event such as an extreme long-term drought or the largest fire in California’s history, that would mobilize voters for more climate focused policies. Not only may a large event drive policy change, think Fukishima, but so would current state and local efforts. We are seeing a significant horizontal diffusion across states and communities of climate policies. As this builds, we could very well see a vertical diffusion, a snowball effect that drives action at the federal level. We see from COP 23 that a sizable portion of US cities and states are “still in.” To not take into account, the possibility of future climate regulations is short-sighted energy planning that goes against many of the indicators that would suggest otherwise.

Natural Gas Prices to Remain Flat for 30 years?

The second argument by the PUCT against the Wind Catcher project was that natural gas prices are low and will remain low for the foreseeable future.  With such low natural gas prices, wind is not believed to be competitive and would increase cost burden to customers.

The analysis by the PUCT does not take into account the ongoing decrease in wind energy prices. As mentioned earlier, according the most Lazard report, the LCOE of wind is less than natural gas combined cycle plants. A recent Rocky Mountain Institute (RMI) report finds that an “optimized clean energy portfolio” is cost competitive with natural gas at $5 MMBtu gas now and with $3 MMBtu gas in the next 15 years. The study also looks at a Texas case study.  When comparing a combined cycle plant with a clean energy portfolio which includes energy efficiency, solar, wind, demand response, etc., the clean energy portfolio has a 25% savings over the cap ex of a the combined cycle plant.

The Chairperson of the PUCT, DeAnn Walker, stated that one of the key problems with the project is that “the costs are known…the benefits are based on a lot of assumptions that are questionable.” However, looking at the decision of the PUCT, one should ask the same thing of the PUCT assumptions of low natural gas prices. Natural gas prices are historically volatile. To base the conclusions on the premise that natural gas prices are going to remain stable and flat over the next couple of decades indicates that the PUCT has not learned from history. By assuming that natural gas prices will follow a very stable, minor increase for the next thirty years does not reflect the reality of the last 30 years. This false assumption puts energy consumers at greater risk.

Here is the PUCT’s assumption – natural gas prices is the orange line.

Here is the historic reality of natural gas price volatility.

There were some other strikes against the Wind Catcher project, particularly the additional costs of transmission construction to interconnect the system. Further, AEP should have done a better job on how it presented its analysis and assumptions with the more recent changes in the natural gas market and regulatory environment.

That being said, AEP and other developers should learn from this project. One key area that has yet to be touched to the degree necessary is future climate risk and the increasing likelihood of climate regulations. Energy planning models are not properly taking into account either of these risks. By not doing so, models will not adequately value clean energy projects and limit opportunities for speeding up the energy transition. More to come on energy planning in the next post.

 

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This is the Truth About Coal

There has been a recent push to revive US coal-fired power plants in the name of electric power resilience and reliability. Why is this a bad idea? It is a bad idea for several reasons. Following is a list of the top 4 reasons why coal is a bad idea

Electricity from Coal Plants is More Expensive

Coal requires all of us to pay more on our energy bills. It’s expensive compared to most other forms of power from renewable energy to natural gas. According to Lazard’s most recent report on the unsubsidized levelized cost of energy, the lowest cost coal plant is $60/MWh this is in comparison to wind at $30/MWh, gas combined cycle at $42/MWh and utility scale solar at $43/MWh. When there is an apples to apples comparison between coal and renewable energy. This means that we are looking at plants that produce the same amount kWh per year, coal is much higher than solar and significantly higher than solar. The facts demonstrate that coal is more expensive than most other viable options. Keep in mind that this is unsubsidized costs, none of the “unfair” investment tax credits or production tax credits are included in this price. Further, this does not include the social and environmental costs that come from coal. That is covered later.

Coal Plants are a Public Health Nuisance

Speaking of social and environmental costs, coal power plants emit mercury and a variety of other greenhouse gas emissions that should be properly accounted for. The key concern here is the amount of mercury emitted by coal plants. which can result in significant health risks. According to a recent EPA analysis, over 42% of mercury emissions in the United States come from coal fired power plants. Overall 50% of mercury emissions comes from fossil fuel plants. This does not include all of the other dioxins and heavy metals that come from primarily coal plants. Below you can see the dispersion of mercury/toxic emitting power plants.

EPA – Toxic Rule Facilities

The problem with mercury is that it significantly increases a community’s health risk. High levels of mercury emitted from power plants can harm brain, heart, kidneys, lungs and immune systems of people of all ages. Further, mercury from power plants has been found to have a significant negative impact on a baby’s development, with particular impacts to a baby’s nervous system.

Coal Plants are not that Resilient

Coal power plants are not as resilient as some would like us to believe. Coal plants and the supply chain that gets coal to the power plants are highly susceptible to cyber, physical and climate risks. A recent study by the National Academies of Science titled Coal: Research and Development to Support National Energy Policy found that ““The rail net­works that transport the nation’s coal—like air traffic control and electric trans­mission networks—have an inherent fragility and instability common to complex networks. Because con­cerns about sabotage and terrorism were largely ignored until recently, existing networks were created with potential choke points [like some rail bridges over major rivers]…that cause vulnerabili­ty…[and] the potential for small-scale issues to become large-scale disruptions.”

Climate Change May Hurt Rail System

The Department of Energy further elaborates on the fragility of coal transport by finding  “Hardly a month goes by that delivery of Powder River Basin (PRB) coal somewhere in the supply chain is not interrupted by a derailment, freezing, flooding, or other natural occurrence.” Climate change is likely to increase heat that buckles rails, floods and storms that undermine tracks, and extreme weather that spikes electric demand. Meanwhile, utilities, having cut coal inventories threefold during 1980–2000 to save cost, keep trying to squeeze out more cost, exacerbating risk.” A recent example of coal not being that fuel secure was the Texas WA Parish plant. During Hurricane Harvey, the plant had to switch from coal to natural gas due to saturated coal piles. Those proponents for coal should also recall the Polar Vortex that resulted in frozen coal piles. You can’t burn frozen coal.

One other thing, coal or any other water-cooled power generation system can’t operate or at least not very efficiently when the water is too warm or there is not enough water to cool the plant. I covered this in a recent blog post on the power sector having a significant water problem.

Climate Change Induced Lack of Water Reduces Power Resilience

Coal Plants are Significant Greenhouse Gas Emitters

Can’t forget this one. Coal power plants emit significant greenhouse gas emissions. In the US, coal accounts for 67% of greenhouse gas emissions in the power sector. Of the total greenhouse gas emissions, 28% comes from electric power generation. Granted, overall GHG emissions have come down due to fuel switching since 1990, but not by much. This largely due to much of the switching is to natural gas, another greenhouse gas contributor, although not as large of one. Also, there have some increases in demand across parts of the country which has limited overall reduction.

Coal Power Plant’s Climate Change Problem

The current administration has not made the connection between greenhouse gas emissions and climate change. By not making this connection, that cannot see that sustaining or increasing emissions will result in a significant increase in storm intensity that will negatively impact the overall power system, i.e. hurt system resilience. Storm intensity, demonstrated by Superstorm Sandy, Hurricane Harvey, Irma and Maria, the Polar Vortex, to name a few, is anticipated to significantly increase under current greenhouse gas projection scenarios. If the concern of the administration is resilience of our power system due to extreme storms, there probably should be some effort to reduce the likelihood of this intensity by reducing the cause.

To Conclude

There are four really good reasons why coal fired power plants may not be the best option for a resilient and reliable grid. This was just a high-level overview. Each of these topics could be their own posts. For the long-term resilience of our electric power system, it is key that we not look to short-term fixes to the detriment of long-term health, economic and environmental well-being.

 

 

How does Texas Measure Climate Risk to Power Grid?

How does Texas Measure Climate Risk to Power Grid? The short answer is that it doesn’t.

I attended the Gulf Coast Power Association (GCPA) Houston monthly luncheon last week. It is always a great opportunity to learn something new about the power sector and talk with a bunch of energy experts. Today, Colin Meehan, Director Regulatory and Public Affairs with First Solar, gave a talk on “Solar Power in Texas.” It was a good presentation and Colin did a nice job explaining how solar is entering and will continue to enter the Texas market at an increasing rate.

There was one specific slide in the presentation that caught my attention. This slide looks at different ERCOT power generation capacity addition scenarios out to around the year 2031. One of the items that jump right off the page is the amount of solar that ERCOT anticipates coming online in each of the scenarios. Currently, solar makes up the second largest percentage of new generation capacity being considered for the Texas market; second behind wind. According to the ERCOT Generator Interconnection Status report, as of March 2018, 23 GW of solar is now in some stage of the interconnection process.

Meehan Solar First Solar

Things are looking good renewables in Texas. But that was not what really got my attention. What grabbed my attention was the Extreme Weather bar in the graph. First, it was good to see that there is some consideration as to how future weather conditions could impact power generation in the state. I was curious to learn more about what the extreme scenario entailed so I checked out the ERCOT Long-term System Assessment. I find that the ERCOT LTSA extreme weather scenario assumes there is a long-term condition that impacts water-intensive generating resources. In a previous post, I discuss how the Texas grid, as well as most of the US grid, is too water dependent.

In this particular LTSA scenario, ERCOT assumes a six-year drought occurs during 2022 and 2027 leading to significant stress to the power system. This includes derating the water-cooled generation systems, as well as the complete outage of these systems. ERCOT uses a drought prediction tool to build this scenario. This tool uses historical water usage data, current reservoir data, and current generator information.

What is missing here is a consideration of future weather patterns due to climate change. I have written on a couple occasions, most recently the article on How Smart Companies are Using Block Chain to Improve Resilience in Wake of Climate Change and The Key Reason the Texas Power Grid is at Risk to Climate Change. Many of our state’s key decision makers are still having difficulty coming to terms with climate change. This is unfortunate and climate risks should not be ignored particularly when long-term decisions are being made for power generation in Texas.

The capability to assess climate risks is available, particularly when considering future water risks due to climate change. The National Climate Assessment does a nice job laying out the risks for Texas and the southeast.  Hopefully, we will see the latest version sooner rather than later, but it appears to be held up.

In any case, new report or not, the data is available for Texas energy planners to start taking account future water conditions for the state. Water is not the only concern, another issue will also include the placement of power generation systems in areas with increasing likelihood of more intense tropical storms and hurricanes.

Increasing storm intensity, including flooding, as well as sustained droughts are two conditions that are discussed a good bit in Texas, depending on the most recent crisis. However, what is less discussed are changes in wind patterns and cloud coverage.

If Texas expects to have wind and solar providing a significant portion of the generation capacity, should we not take into account how future climate change may impact the ability of these resources to perform? The data and models are available to consider changing cloud coverage and wind patterns. I have come across a large number of studies for Europe but only a handful for the US.

With so much at stake, an effort must be made to consider climate risks. As the second largest economy in the US and the 10th largest globally, Texas plays a significant role in driving the global market. How does the state maintain this position or advance, if we can’t keep the lights on?

How Smart Companies are Using Blockchain to Improve Resilience in Wake of Climate Change

One of the more significant constraints to the operation of the Texas power grid is lack of water. I discussed in previous posts how our power system is largely dependent on water for thermoelectric power plant cooling and that due to climate change, the future does not look too bright for having water available for existing much less new water-cooled electric power generation plants. With this significant water constraint, it is key that we deploy at an accelerated rate other power sources that are air-cooled or do not require cooling.

Fortunately, the trend is heading in the proper direction. We see in Texas that much of the new generation that is coming online is utility-scale wind and solar, neither require water to operate. Much of this development is happening out in west Texas and is exported along the CREZ lines to the central and east side of the state. (CREZ is the Competitive Renewable Energy Zone developed by Texas to promote the development of transmission lines to carry wind-generated power from west Texas.)

electric power and climate change resilience

It is great to have such significant investment in these resources as they can reduce the carbon emissions of the state and help mitigate against climate change. However, is it wise to have such a concentration of much our new generation resources in one portion of the state? Not only are we concentrating these resources, we are only providing these resources a limited infrastructure to get the power to where it is needed.  This may be a problem if we anticipate more intense storms in the near term as predicted by the most recent climate change models. Hurricane Harvey provided a glimpse as to what a strong hurricane can do to the power transmission system. ERCOT was scrambling to reroute power as transmission lines succumbed to the high hurricane winds. If it were not for the high-pressure system that pushed Harvey south and east, we would have anticipated significantly greater power outages due to damage to transmission system infrastructure.

To limit this risk, a possible solution would be to focus resources on developing a power system that has more distributed energy resources, whether this is roof-top solar, community solar, battery storage, combined heat and power, geothermal, etc. Much of the reluctance to build out a more distributed power system is cost, as well as lack of visibility by the independent system operator (ISO – ERCOT is the ISO in Texas) of power generation systems that are connected to the power distribution system.

Electric Power System and Climate Change

In Texas, ERCOT knows who is plugged into the transmission grid and is able to manage these resources. It has less of a picture as to what is on the distribution grid and this makes it much more difficult to manage and coordinate these resources to support the overall power system.

Specific to costs, a good example is the cost difference between utility-scale solar vs. rooftop solar. The soft costs, which include financing, customer acquisition, permitting, installation, inspection, of building a utility-scale solar power system is less than the soft costs of roof-top solar. Much of this is due to significantly lower marketing and customer acquisition costs for utility-scale solar versus rooftop solar on a per kW basis.

How Can Blockchain Improve Grid Resilience?

So how do we lower the costs and improve the visibility of distributed energy systems? Blockchain may provide a solution. Blockchain allows for a more transactive energy system to be developed that would likely increase transparency to those interconnected to distribution and transmission systems.

What is Blockchain?

blockchain climate changeA blockchain is a way to structure data in a decentralized fashion. It removes the need to have a centralized authority to collect, manage and share data with other entities or counterparties. Entities can be spread out geographically, across a variety of institutions and participants.  Blockchain uses a distributed ledger structure that hosts shared records in blocks. Each new block or transaction is chained together with the previous block in linear, chronological order with a cryptographic hash. As a distributed ledger, changes to the record will be seen by and must be approved by all participants. This distributed nature reduces risk of fraud. Transactions are all completed automatically based on predefined rules, preferences and algorithms and can only be seen by those with defined permissions to participate in the specific blockchain. The distributed and automated nature of blockchain is expected to improve transactional security, as well as lower transactional and operational costs.

Blockchain Helps Distributed Energy Systems Transact with Grid

There are several examples of blockchain technology being deployed to assess opportunities to improve operation and viability of DER. The blockchain is being used in California Pacific Gas and Electric microgrid project using OmegaGrid as the blockchain provider. The project is a pilot looking at how to use blockchain to determine optimal power flow and locational price for each asset on a five-minute interval.

Another example is Bovlabs work with Enchanted Rock to assess opportunities to use blockchain to bid their distributed natural gas generators into the ERCOT wholesale market. Enchanted Rock recently received some positive press due to the success of its “On Demand Electric Reliability” program with the HEB grocery store chain. During Hurricane Harvey, Enchanted Rock systems were able to keep HEB stores fully operational during the widespread power outages. However, the Enchanted Rock approach is more than providing peace of mind to retail, commercial and industrial facilities. The projects are set up to where when Enchanted Rock systems are not providing power to a site during a power outage, they are looking to sell power to ERCOT and take advantage of market volatility. With blockchain, they are looking to reduce transaction costs of bidding into the grid. The benefit for Texas is that if we can reduce transactional and operational costs of distributed energy systems, the number of systems, whether they are natural gas generators, combined heat and power, solar or battery storage, can be deployed at a higher rate.

Blockchain Helps with Peer to Peer Power Transactions

We see a growing number of distributed energy system companies working to better engage and transact with the grid. The more distributed energy systems, if properly placed along the grid, as well as known and recognized by the ISO, may significantly improve the resilience of the grid.

To further enhance the distributed nature of our power systems, there is growing number of energy blockchain companies that are focusing on peer to peer transactions. According to a recent GreenTech Media blockchain report, 59% of new blockchain companies are focusing on peer to peer applications. A peer to peer approach would remove the third-party intermediary, such as exchanges, energy companies, etc., and allow individual power producers to directly transact. Further, peer to peer transactions will allow the development of a more distributed energy system that will produce energy where needed at the time it is needed. This flexibility can provide a significant boost to power resilience. For example, P2P would allow individual owners of rooftop solar systems to transact on a bilateral basis.

Due to the removal of a middleman, P2P is anticipated to lower overall costs of buying and selling power.  Further, As a side benefit, the opportunity to deploy more distributed energy systems may reduce overall system costs to ratepayers as there is a decreased need to build large transmission infrastructure to export power from one side of the state to the other.

Barriers to P2P

To make this happen will require some changes to our regulatory structure. As the regulations are currently structured in the deregulated ERCOT market, a retail electricity provider (REP) must be a part of any grid transaction. Further, similar to the discussions around net metering and grid defection, there will need to be a discussion as to the role of the distribution utility. Although P2P blockchain technology may allow for a direct financial transaction, the utility lines are still needed to provide the power. Because we have already had similar conversations around grid defection and the viability of the distribution system due to defection and some solutions have already been developed, this may not be a huge hurdle. The more significant hurdle is to figure out what to do with the REPs. What is their role in a P2P market? There will be plenty of time to contemplate this due to the fact that most people do not really want to think about their electricity supply. As long as the lights come on and the price is right, people go on autopilot. I do not see a big push by the public to spend any more time than they do now on buying electricity.

Final Thoughts

My money is on approaches taken by companies like Enchanted Rock and the Local Sun Community Solar

renewable energy climate change blockchain
Local Sun Plant in Sealy, Texas

project in Sealy, TX. These are larger distributed energy systems that can scale. They are able to be placed strategically within a wide geography to take advantage of grid congestion and price volatility. They are not reliant on transmission infrastructure or realize the losses that occur with transmission systems. Finally, they are not reliant on water to maintain operations.

Houston and Detroit – Twin Cities?

Why is Texas letting the clean energy transition move ahead without it? There are a lot of people asking this question. The new head of the Greater Houston Partnership affiliate Center for Houston’s Future, Brett Perlman was recently  asked this question by the Houston Chronicle. He suggested that if Houston does not get its act together, the City may no longer be a relevant player in the energy industry as the transition moves forward.

Why is it important to ask this question? Because the transition is real and it is enginehappening at a pretty decent clip. In the latest issue of the Economist there is an article about the coming demise of the internal combustion engine due to recent technological breakthroughs of electric vehicle battery technology.  Battery prices have gone from $1,000 per kWh in 2010 to $130-$200 per kWh today. With this reduction in pricing it is anticipated that by 2025 EV’s will make up 14% of total global car sales, per the Economist article. This number of EV’s may continue to raise as more countries and automakers make statements of going fossil fuel free by 2040 and shifting resources to EV R&D and production. How much of this is greenwashing, time will tell. However, with decreasing technology costs and changing consumer attitudes we may be close to that uptick in s-curve.

Houston is a bit vulnerable to the oil and gas roller coaster as has been demonstrated time and time again. This vulnerability was demonstrated during a time when oil and gas was the only game in town. Granted there was some really expensive hydrogen options, some very short range EVs and a bunch of compress fossil fuel options. However, now there are some true alternatives and these alternatives are quickly coming to price parity with our traditional transportation fuels and their range is becoming just as good as the internal combustion option.

A recent University of Houston Bauer College of Business Institute of Regional Forecasting report presents a good picture of how the Houston economy is still very much dependent on the oil and gas market and one can draw some interesting conclusions on what may happen to the Houston economy if prices remain low or go lower. in reality we are already in a long-term low price market. Shell CEO Ben van Beurden predicted we are in a “lower forever” oil price environment. This is at a time when demand for transportation fuel has been increasing due to growing transportation demands. So what happens if demand starts to fall due to EV’s?

Much of this oil and gas activity has some tie to Houston and Texas. Oil and gas is  a global industry but Houston has some involvement at some point whether it is R&D, refining, transportation, manufacturing, oil field services, financial/transactional, etc. We are responsible to some degree for the 36.9 quadrillion BTU’s of petroleum production in the US and make much of the 27.9 quads used in transportation. See the LLNL chart below.
Energy_US_2016

Houston is a major player in the transportation market due to our position in the production of oil and gas and refining fuels. So, why not build on this, extend a bit beyond fossil fuels. The City has the engineering expertise and the industrial base to play an active role in making a clean energy transition. If we do not do so, we face a double climate risk. Risk from physical climate change and risk from an economy that is stuck in time and being left behind. I discuss this in an earlier blog post

There is no definite timeline for when this transition will really ramp up and significantly reduce demand for fossil fuels. There is plenty of skepticism among if and when this will actually happen. However, different from the past, the technology is quickly becoming cost competitive with traditional fossil fuel transportation options. The infrastructure needs to be built out, attitudes and perceptions of electric vehicles will need to be changed, costs will need to continue to come down, etc.

Much of it appears to be dependent on battery storage. The deployment of EVs is anticipated to increase significantly as the price points, size and weight of batteries decreases. The intermittency problem of renewables also is largely dependent on battery and other physical storage options.

 

Electric Power Sector…you have a water problem

Our electric sector has a significant water problem. This is not news to much of us in the industry, particularly those of us who think about the energy/water nexus. A couple of my favorite Texas energy/water nexus experts I like to follow are here and here.

I was working on a presentation for a talk at HARC and HTC’s Innovator in the Woods series and was struck by this water dependency. One of the first slides I included was this EIA slide that shows the current US electricity generation source by fuel type.

power generation

It appears pretty uninteresting regarding water at first glance. We see a sliver of hydropower and think that there is not much to see here in regards to water.  However, if you take a closer look and think about what is the one thing that keeps all of these power generation systems operating, you realize that the one thing that 90% of our power sector is dependent upon is water. We talk a lot about the diversity of fuel sources. In this case, we have a diversity of fuel sources, coal, natural gas, hydropower and nuclear, but we have very little diversity in a very key component. Our power supply is highly dependent on water. Water dependency for cooling in regards to coal, natural gas and nuclear and water dependency for actual power production in terms of hydropower. The lack of diversity of our power sector in regards to what keeps it running and humming along is rather frightening.

A better look of our dependency on water can be found in this hybrid sankey diagram provided by Lawrence Livermore National Lab.sankine

This diagram is a few years old and the Lab has actually produced some newer energy specific ones. The reason I use this map is to show not only the tremendous energy waste we have in this country (an argument for more energy efficiency and distributed generation), but also to better show the interconnect between water and our power sector. Here we see that on a daily basis the power sector uses 196 billion gallons of water. Most of us think, it is the agricultural sector is the largest user. They are the largest consumer, not the largest user.

In any case, as we bring it closer to home, we can check out this heat map for water consumption across the United States, what we see here is that one of the more politically red states, is very blue when it comes to water consumption. Texas is the bluest state west of the Mississippi.

blue water map electric

This can be a problem when the Water Sustainability Index looks like this for Texas in the year 2050. This image is brought to you by a joint Tetra Tech and NRDC water risk study. 

drought sust index

Of course, by 2050, the expectation is that we will have a lot more solar and wind and our dependency on water will decrease. According to the Bloomberg New Energy Finance report “New Energy Outlook,” 34% of global power production will be renewables, largely solar and wind. Further, when you look at ERCOT’s  summary of generation interconnection requests as of December 2016, of the nearly 60 MW that are in some part of the interconnection queue, almost 70% are wind and solar interconnects. Of course not all of these will go forward, but that looks pretty promising in regard to the water concerns. In the next couple of decades, we should be out of the woods. Problem solved. Except, when you see this…

TX_dm_110913-620x563

This is the Texas drought map in September 2011. For those not familiar with this map, dark red is not good. It is a D4 on the scale,  the highest score you can  get, which means exceptional drought. Exceptional means this…

140327-F-EQ901-004

Much of the reservoirs and rivers that cool our power plants were getting too low to provide cooling or the water that remained was becoming too warm. During 2011, ERCOT, the organization that manages the Texas grid, was concerned about losing “potentially several thousand megawatts” if the drought did not end. There were also plants during this time curtailing operation at night so they would have plenty of water to provide power during the day, as well as plants that were piping water from other sources to ensure they could operate.

Fortunately, we are already moving in the right direction as far as reducing our water dependency in the power sector. We do see growing deployment of solar and wind. Solar installations were up 95% from 2015 to 2016 and wind looks to continue to grow at a considerable rate. Battery prices continue to fall, which will help with the intermittency of our renewable energy resources. We also see increasing deployment of microgrids, which use battery, solar, as well as air cooled combined heat and power. This market is expected to reach 3.71 GW by 2020.

microgrid_Carlos
SOURCE: A KNOWLEDGE DISCOVERY IN DATABASES APPROACH FOR INDUSTRIAL MICROGRID PLANNING. Gamarra, C.,Guerrero, J M.,Montero , E. Renewable & Sustainable Energy Reviews. 2016. (doi 10.1016/j.rser.2016.01.091)

In the meantime, as we wait for the deployment of this less water intensive power infrastructure, what we all could be doing is using less of it. Energy efficiency is still the best resource we have to hedge against this problem of water dependency of our power infrastructure. If we do not need the energy, the system does not need to produce it. If less energy is needed, less water is needed. Energy efficiency provides the best bang for the buck for all of these resources. It has the lowest levelized cost of energy, it is proven and it is easily deployable. So, let’s keep building the new sexy renewables and microgrids, but let’s now forget our greatest water saver, energy efficiency.

 

 

 

 

Regardless of the GOP’s withdrawal from the Paris Agreement…TX decarbonizes

Regardless of what the GOP is trying to do at the federal level to bring back coal and roll back the Paris Agreement, one of the reddest states in the country will continue to decarbonize. (a short list of things that are happening)

Wind continues to be the fastest growing generation resource…

Currently Wind Generation is 20% of portfolio mix

ERCOT Wind Production Expected to be 28.5 GW by 2019

Solar growing exponentially…

787 MW of Solar Capacity Installed as of April 2017

780 MW to be installed in 2017

1.2 GW to be installed in 2018

Texas Oil and Gas Companies Getting More Serious on Climate, well at least their shareholders are…

Occidental – 67% voted in favor of climate disclosure

ExxonMobil – 62% voted in favor of climate disclosure