Innovating Regulatory and Business Models in the Electric Industry (because climate change)

15 November 2014 / raminskibba / Leave a comment

At a Climate and Energy Law Symposium at the University of San Diego on Friday (7th November), scientists, policy experts, lawyers, and business leaders gathered to discuss trends driving changes in the electric industry and regulatory and business responses to them. It was a rather sunny and hot day for southern California in November, perhaps highlighting ongoing climate change and the need to adapt the regulatory framework, market rules, and interactions between electric utilities and customers. The symposium was titled, “Innovative Regulatory and Business Models in a Changing Electric Industry.”

The symposium seemed to lean more on the business and legal side of things rather than the policy and science side, so I was out of my element, but I’ll try to write about some of the interesting things I learned there. USD also publishes the San Diego Journal of Climate & Energy Law, if you’d like to read more about related topics.

In one of the morning sessions, Jamie van Nostrand from West Virginia University spoke about drivers of electric industry innovations including climate change mitigation and adaptation—for example following the experience of Superstorm Sandy. The electric industry is adapting to the rapid expansion of photovoltaics and solar panels in recent years and is preparing for the growth of “distributed energy” stored in small, decentralized grid-connected devices. (These images of rooftop solar and smart-grid technology are courtesy of NREL and DOE.)

These were common themes throughout the day, especially the growth of solar and the proliferation of distributed energy resources. Although Sky Stanfield (at Keyes, Fox, & Wiedman LLP) stated that the increasing number of grid-connected solar installations has been mostly in the residential sector, as you can see from this recent report by the Union of Concerned Scientists, solar PV is growing exponentially in residential as well as commercial and large-scale sectors in the US.

Of course, some countries, such as Germany, have surpassed these levels. Germany now generates as much as ~30% of its electricity from renewables, mostly from solar and wind power. The government’s goal is to double that amount by 2035, and they’re on track to successfully do so. However, in the meantime, they need to address issues of adapting the electrical grid and constructing new grid-storage capacity—issues also faced by the US electric industry.

Distributed energy, such as with rooftop solar panels, has the potential to allow individuals and communities to have more power (no pun intended) and influence with respect to utilities. Distributed generation could not just decentralize but also even democratize electricity systems, although that seems a little overoptimistic to me (see this article in Grist). Some states have witnessed opposition to distributed generation and to “net metering,” in which an electricity consumer who generates on-site electric energy (such as with solar panels) can offset part of their electricity bill. Some people have portrayed that as “free riding,” and Troy Rule (Arizona State Law School) showed this anti-net metering advert, which is ridiculous and funny as propaganda.

So what’s next? Kevin Jones (Vermont Law School) talked about five environmental pathways for an improved electric grid in his book, “A Smarter, Greener Grid,” including things like distributed energy technologies and optimization, electric vehicles, and areas to improve energy efficiency. Dian Grueneich, a former Public Utilities Commissioner, outlined proposals for “California’s Electricity Policy Future: Beyond 2020.” This included updated net-metering policies so that individuals and communities could more easily share a solar project’s electricity output. More importantly, she argued for a inter-agency policymaking structure that integrates electricity with climate, water, air quality, and transportation goals.

For all their talk of “innovation” (or even “disruptive innovation”!), I can’t say I left feeling like these people are transforming the electric industry in a fundamental way; they’re just gradually adapting to worsening climate change, which means more people with solar panels and making grids less vulnerable to Sandy-like storms. They’ll have to adapt to much more than that, judging from the conclusions of the newest IPCC report.

But what do Californians, industries, and policy-makers really need to do to mitigate, and not just adapt to, climate change? The symposium, which included speakers from and was sponsored by San Diego Gas & Electric, made inroads but only touched the surface of this question. The final person to ask a question during the final Q&A period referred to this issue, but her question remained unanswered and was postponed to the reception, where alcohol would be served.

Californians and the Environment

18 September 201421 December 2015 / raminskibba / 1 Comment

The Public Policy Institute of California (PPIC), a nonprofit, nonpartisan thinktank based in San Francisco, recently conducted a survey of Californians’ views of environmental issues. This is particularly important in light of the ongoing drought in the southwest and the upcoming elections in November. According to the report (available in PDF format), the results are based on the responses of 1,705 adult residents throughout California, interviewed in English and Spanish by landline or cell phone, and they’re estimated to have a sampling error of 4% (at the 95% confidence level). I’ll describe what I see as their most interesting results, and if you want more information, I encourage you to read the report.

Global warming: A strong majority say they are very concerned (40%) or somewhat concerned (34%) about global warming. Approximately two thirds of Californians (68%) support the state law, AB 32, which requires California to reduce its carbon emissions to 1990 levels by 2020, but the partisan divide (Democrats at 81% vs Republicans at 39%) has grown on this issue. 80% of Californians say that global warming is a very serious or somewhat serious threat to the economy and quality of life for California’s future. Only 45% of people are aware at all about the state’s cap-and-trade system, which took effect in 2012, but after being read a brief description, Californians are more likely to favor (51%) than oppose (40%) the program. Under a recent agreement between the governor and legislature, 25% of the revenues generated by the cap-and-trade program will be spent on high-speed rail, 35% on other mass transit projects and affordable housing near transit, and the rest for other purposes.

Energy policies: overwhelming majorities of adults favor requiring automakers to significantly improve the fuel efficiency of cars sold in the U.S. (85%) and increasing federal funding to develop wind, solar, and hydrogen technology (78%). Strong majorities support the requirement that oil companies produce cleaner transportation fuels and the goal that a third of California’s electricity come from renewable energy sources. But residents’ support declines significantly if these two efforts lead to higher gas prices or electricity bills. (This is unfortunate, because gas and oil companies are heavily subsidized in the US, and maybe our gas and electricity bills are too low.) Most residents (64%) oppose building more nuclear power plants, as they have since the Fukushima disaster.

The survey includes other contentious issues: 54% of Californians oppose hydraulic fracturing, or fracking, for oil and natural gas extraction. But a majority (53%) support building the Keystone XL pipeline.

Water policies: Asked about some of the possible effects of global warming in California, majorities say they are very concerned about droughts (64%) or wildfires (61%) that are more severe. 35% say that water supply or drought is the most important environmental issue facing the state today (which is 27% higher than the fraction in a 2011 survey), and this is the first environmental survey in which air pollution was not the top issue. In another measure of concern about drought, strong majorities of residents (75%) say they favor their local water districts requiring residents to reduce water use. The CA legislature is discussing a $11.1 billion state bond for water projects that is currently on the November ballot, and a slim majority of likely voters would support it (51% yes, 26% no).

If you’re interested, the PPIC has useful information and publications on water policies and management of resources: see this page and this blog post series. Water policy analysts argue that in the Central Valley, where most agricultural water use occurs, the failure to manage groundwater sustainably limits its availability as a drought reserve. In urban areas, the greatest potential for further water savings lies in reducing landscaping irrigation—a shift requiring behavioral changes, not just the adoption of new technology. Finally, state and federal regulators must make tough decisions about how and when to allocate water during a drought: they must balance short-term economic impacts on urban and agricultural water users against long-term harm—even risk of extinction—of fish and wildlife.

People’s Climate March

This is a different topic and has nothing to do with the survey, but I want to use this opportunity to plug the People’s Climate March, which will be taking place on Sunday. (This website can direct you to events in your area.) One of the biggest marches and rallies will be in New York City, where the UN climate summit will soon be taking place. Even Ban Ki-moon will be participating! For San Diegans, you can find information about Sunday’s downtown events here. Californians also organized a “People’s Climate Train” to take activists and participants by train from the Bay Area through Denver and Chicago to New York, where they’ll be arriving tonight. Finally, I recommend reading this well written piece by Rebecca Solnit on Dr. Seuss’s The Lorax and the need to raise our voices on Sunday.

The Physics of Sustainable Energy

11 March 20141 December 2014 / raminskibba / 1 Comment

I attended a conference this weekend called “The Physics of Sustainable Energy” at the University of California, Berkeley. It was organized by people affiliated with the American Physical Society, Energy Resources Group, and a couple other organizations. Most of the speakers and attendees (including me) seemed to be Californians. I had some interesting conversations with people and attended some great talks by experts in their fields, and here I’ll just give you a few highlights.

First though, I want to make two general comments. I did notice that only ~20% of the speakers were women, which is worse than astrophysics conferences, and it’s too bad the organizers weren’t able to make the conference more diverse. (There were a few people of color speaking though.) Secondly, I think it’s excellent that people (and not just in California) are actively involved working on solutions and innovations, but I think we should be careful about an technophilic or technocratic emphasis. This was a conference for physicists and engineers though, and energy policy and communication with the media and policy-makers, for example, were mostly beyond the scope of it. I was struck by the apparently close ties with industry some speakers had (such as Amory Lovins and Jonathan Koomey); to some extent that’s necessary, but I was a little concerned about potential conflicts of interest.

…On to the conference. Ken Caldeira spoke about the global carbon balance. When accounting for CO₂ emission per capita from fossil fuel use and cement production: the US is worst (50kg CO₂/person/day), followed by Russia, China and the EU. California emits half as much as the rest of this country, but 2/3 of the difference is due to a fortunate climate (it doesn’t get very cold); according to an audience member (Art Rosenfeld?), “we’re mostly blessed with good luck as well as some brains.” Daniel Kammen (one of the organizers) then talked about developing a framework for energy access for all. According to the International Panel on Climate Change (IPCC AR4 in 2007): “warming will most strongly and quickly impact the global poor.” Kammen described the concept of “energy poverty”: 1.4 billion people lack access to electricity today, and that will still be the case for a similar number in 2030, with more having unreliable/intermittent access. There appears to be a strong correlation between electricity access and human development index.

It seems that many people are working on interesting research & development on renewable energy sources. Jennifer Dionne spoke about the “upconversion” of solar cells, which includes thermodynamic, electronic, and photonic design considerations. The upconversion process improves cell efficiency by at least 1.5× (see Atre & Dionne 2011), and it often works well at optical near-infrared wavelengths. (She pointed out that of energy from the sun, 5% is in the UV, 43% in optical, and 52% in infrared. And if you’re interested in what those proportions are like for different types of galaxies, check out my recent paper.) Then Chris Somerville spoke about the status and prospects of biofuels, the production of which is currently dominated by the US and Brazil. The combustion of biomass has challenges for providing low-carbon energy: depends on tilling of soil, land conversion, fertilizer, transportation, and processing. I’m concerned about deforestation and effects on ecosystems as well as the effects on food/crop prices (remember the food riots in 2007-2008 and the rising cost of corn/maize?). In my opinion, Somerville didn’t sufficiently address this, though he did argue in favor of miscanthus and other biomass rather than the use of corn. John Dabiri spoke about the advantages of vertical-axis wind turbines (called VAWTs, see the figure above), in addition to the ubiquitous horizontal-axis variety. VAWTs have a smaller structure size and cost, simpler installation logistics, and are safer for birds and bats as well. Currently only four countries get >10% of their electricity from wind (Spain, Portugal, Ireland, Denmark, followed by Germany with 9%), but this can be easily improved.

This flow diagram is pretty nice, and it describes current energy use in the US (presented by Valerie Thomas). And Daniel Kammen, in a paper on the relation between energy use, population density, and suburbanization, shows the spatial distribution of carbon footprints (where the units are tCO2e, or total carbon dioxide equivalent per household).

Tilman Santarius give a nice talk about energy efficiency rebound effects, which is closely related to my previous post, where you can find more information. He discussed the interactions between energy efficiency, labor productivity, human behavior, and economic growth, and he distinguished between rebounds due to an income effect vs a substitution effect. In any case, average direct rebound effects appear to be around 20-30% (Greening et al. 2000; Sorell 2007), in addition to a 5-10% of indirect rebound. In other words, around 1/3 of income savings due to energy efficiency is lost because of an increase in energy demand. He also talked about the psychology of rebounds, including moral licensing (such as Prius drivers who drive more) and moral leakage (people feel less responsible). It will be a difficult task to try to separate energy demand from economic growth.

There were many other interesting talks, but I’ll end with the issue of climate adaptation and geoengineering. Ann Kinzig described how the combined risk of a phenomenon is the sum Σ p (event) × impact (event). Mitigation seeks to reduce the probability p while adaptation seeks to reduce the impact. Climate change will have impacts on food, water, ecosystems, and weather events, and decision-makers in urban areas can try to prepare for these (see this website). Kinzig also spoke about historical case studies of failed adaptations by people in the Hohokam (Arizona), Mesa Verde (Colorado), and Mimbres (New Mexico) regions, and the dependence on societal hierarchy and conformity. Alan Robock spoke about the risks and benefits of “geoengineering”, which involves gigantic projects in the future to address climate change, such as space-based reflectors, stratospheric aerosols, and cloud brightening (seeding clouds), and basically involve using the Earth as a science experiment with a huge cost of failure. In particular, he studies the many problems of injecting sulfate aerosols into the stratosphere to cool the planet. (Some people have supported this idea because of the supposedly benign effects of volcanic eruptions in the past.) He discussed the potential benefits of stratospheric geoengineering but compiled a list of 17 risks, including drought in Africa and Asia, continued ocean acidification, ozone depletion, no more blue skies, military use of technology, ruining terrestial optical astronomy, moral issues, and unexpected consequences. For more on Robock’s research and for other useful references, go here.

Jevons paradox: a problem for energy efficiency?

11 February 2014 / raminskibba / 5 Comments

I’d like to discuss an issue that probably isn’t sufficiently studied or addressed. If the Jevons paradox is relevant for today’s energy consumption and efficiency problems (or to other resources), then it is certainly worth further investigation.

The “Jevons paradox” (which I briefly mentioned in a previous post) is the idea that improved energy (and other material-resource) efficiency ultimately tends to lead not to conservation but to increased consumption. It’s named after the English economist William Stanley Jevons, who in his book The Coal Question (1865) observed that the coal-powered steam engine made coal a more cost-effective power source, leading to the increased use of the steam engine in a wide range of industries. This in turn increased total coal consumption and depleted reserves, even as the amount of coal required for any particular application fell. He argued that increased efficiency in the use of coal as an energy source only generated increased demand for that resource, not decreased demand, as one might expect. This was because improvement in efficiency led to further economic expansion.

Jevons was wrong about a few points: he failed to foresee the development of energy substitutes for coal, such as petroleum and hydroelectric power, or that coal supplies would take a long time to be exhausted. But the “Jevons paradox” appears to be a very important insight that has lately become a popular issue again (see for example, this New Yorker piece). In addition, some consider it an extreme version of the “rebound effect”, in which there is a rebound of more than 100% of “engineering savings,” resulting in an increase rather than decrease in the consumption of a given resource. In other words, savings from efficiency are used for additional consumption, thus cancelling the savings. In light of recent efforts to improve energy efficiency, the significance of Jevons paradox effects has understandably generated considerable debate (such as here and here).

If the Jevons paradox and rebound effect are real, then this has important policy implications. It does not mean that efforts for improving efficiency in homes, businesses, and vehicles are wasted, but it does mean that those efforts by themselves won’t reduce energy consumption and carbon emission. Major environmental problems like climate change cannot be solved by purely technological methods in a “free market”. In addition, cap-and-trade systems might not be as successful as hoped in terms of reducing emissions (for example, see this critique of California’s cap-and-trade program, which allows carbon offsets). There is no simple solution, but energy efficiency goals should be combined with other strategies and policies for reducing demand for fossil fuels, such as a carbon tax, requiring utilities to generate a higher fraction of their electricity from renewables, requiring automakers to increase fuel economy standards, etc. Some of these would be less popular with particular industries because it would be a bigger break from business-as-usual, but business-as-usual is clearly worsening climate change (and other resource-related environmental problems, such as involving water resources and pollution). Any effective strategy must cut carbon emissions deeply enough to avoid the worst effects of climate change, which means at least 80% below 2000 levels by 2050. The transition to a low-carbon economy will be a difficult one.

US Energy Policy (part 2)

28 January 2014 / raminskibba / 1 Comment

Since President Obama will deliver his State of the Union address on Tuesday, I’d like to write a bit more about energy policy, which may come up during the address in the context of the Climate Action Plan that was initiated last summer (when the picture below was taken). In addition, some new energy policies that are being advocated would create new jobs, especially in manufacturing and government sectors, whose employment rates haven’t improved much yet during the recovery from the economic recession.

The president can call on Congress to do its part to pass laws that will complement his Climate Action Plan. Some of the recommendations below would be difficult to achieve in the current political climate, but it’s important to at least demonstrate the political will and public commitment to improve energy and climate policies.

1. President Obama could urge Congress to extend tax incentives for renewable energy technologies, in particular for solar electricity and wind power, which have already expired for the latter. These could at least be extended to 2020. This may be politically feasible, considering that some conservatives are now in support of renewable energy. This is also popular: wind and solar power increased nearly four-fold in the US over the past five years, and nine states currently generate 10% or more of their electricity from wind and solar power. The technology already exists to have dynamic electricity grids that are designed to handle variability in supply (such as due to unexpected weather) and demand, making it possible to transition to an increasing reliance on renewables and less on fossil fuels. (See this report for more info.)

2. President Obama could lay the ground for eventually rejecting the Keystone XL pipeline (see also our earlier post). He said last year that it would be approved “only if this project does not significantly exacerbate the problem of carbon pollution.” We have to wait for a supplemental Environmental Impact Statement before a final decision will be made.

3. The Environmental Protection Agency (EPA) has proposed a carbon pollution standard for new power plants. These limits, which are required under the Clean Air Act, could be applied to existing plants as well. In order to meet the carbon pollution reductions outlined in the Climate Action Plan, 25% cuts in carbon pollution will be required.

4. The president could outline new energy efficiency policies for homes, automobiles, businesses, and industries. For example, the industrial sector is responsible for about 1/3 of all U.S. energy use. Energy-efficient building designs and investment in high-efficiency combined heat and power systems can reduce these energy demands. For cars and trucks, Corporate Average Fuel Economy (CAFE) standards should be enforced by the EPA and Department of Transportation. In addition, a June 2012 study by the Blue Green Alliance finds that the new round of CAFE standards will create an estimated 570,000 full-time jobs throughout the US economy by 2030. The president could also urge Congress to expand investment in public transportation infrastructure that was begun in the The Recovery Act; this too would create thousands of new jobs.

US Energy Policy (part 1)

21 January 2014 / raminskibba / 2 Comments

After traveling for a few weeks, I’m back in San Diego, and I’d like to discuss US energy policies.

Currently, about 85% of our energy in the US comes from fossil fuels: coal, oil, and natural gas; a similar proportion of energy comes from fossil fuels worldwide. Most of the rest of the energy in the US comes from nuclear power, while only a negligible contribution is drawn from renewable sources. Energy consumption is continuing to grow (though not as rapidly during the economic recession), and this growing demand is primarily being supplied by fossil fuel production.

While we’ve talked about the relation between energy policy and climate change in previous posts, note that it’s also related to water policy. With the current drought in the US, it’s critically important to reduce water consumption. However, conventional coal power plants consume massive amounts of water, while natural gas and nuclear power also require significant amounts. The best are wind turbines and solar panels, which require almost no water at all.

There has been some opposition to US energy policies. For example, environmental groups (including the Sierra Club, Friends of the Earth, and Natural Resources Defense Council) announced in a letter a few days ago that is breaking with President Obama and opposes his “all of the above” energy policy: “With record-high atmospheric carbon concentrations and the rising threat of extreme heat, drought, wildfires and super storms, America’s energy policies must reduce our dependence on fossil fuels, not simply reduce our dependence on foreign oil…[A]n ‘all of the above’ approach that places virtually no limits on whether, when, where or how fossil fuels are extracted ignores the impacts of carbon-intense fuels and is wrong for America’s future.”

Current fossil fuel-focused energy policies involve many contentious issues. For example, hydraulic fracturing or “fracking” technologies have made it possible to extract oil and gas from shale and other tight rock formations, but they involve blasting large amounts of water and chemicals into the ground and they create more environmental degradation, especially water and air pollution, than other energy sources. The extraction of oil from tar sands in Canada has also been criticized, and the Keystone pipeline, which would transport this oil through the US, has faced massive protests. In addition, the coal industry has advocated for so-called “clean coal” technologies, but these do not appear to be as clean or viable as they’re touted to be.

Perhaps most importantly, it is clear that we need to focus on demand, not just supply, and to increase energy efficiency. Many strides can be made to improve energy efficiency in industry, power plants, homes, and automobiles (and more investment in public transportation infrastructure would help too). With expanding economies, rising standards of living, and population growth, it will become increasingly important to reduce energy consumption whenever possible. For example, the Union of Concerned Scientists has a list of energy efficiency policies that are being or can be implemented. (However, energy efficiency also raises the issue of the Jevons paradox, but we can discuss that later.)

In the future, for energy policies to be more sustainable, we will have to
decrease reliance on oil and gas and shift to cleaner renewable energy sources, especially wind and solar power. However, we also want to reduce carbon dioxide emissions as soon as possible (with larger reductions in the future) so as to minimize the effects of climate change. In order to build renewable energy infrastructure, energy will be required, raising questions about how we can achieve sustainable energy policies nationally and internationally without consuming too many fossil fuels in the process. These questions don’t have easy answers, but it does seem clear that in the short term, we should focus on energy efficient technologies and on making wind and solar energy economically competitive with fossil fuels.

Ramin Skibba

Science Writer and Freelance Journalist

renewable energy