Navigant Research Blog

Heat Wave Demonstrates Limitations to Wind Power

— July 31, 2009

The Pacific Northwest just finished four days of triple digit temperatures, which put the heat on renewable energy sources to keep up with demand. Just as records were being set for power consumption, wind power generation slowed dramatically due to the calm air from the locked-in high pressure system.

The extreme weather highlights the reality that wind — and to a lesser extent hydropower — may not be a panacea for power production.

Southern Washington and the Portland metro area had a record breaking streak of warmth that pushed energy demand to record highs, but the high pressure system also featured calm breezes. The local utility Bonneville Power Administration (BPA) had to quickly balance the reduction in wind power with increases in hydropower.

To make matters worse, during long hot and dry spells the water levels in the rivers that produce power can also drop, further reducing the ability for renewables to meet peak demand.

Granted, this is an extreme example of both weather and a utility that has a strong (and growing stronger) portfolio of renewable power. Despite the Northwest’s infamous frequent cloud cover, BPA might consider installing concentrated solar farms on the sunnier (east) side of the Cascades if it wants to avoid adding more fossil fuel production.

BPA has been dealing with wild fluctuations in wind for some time, as reported by the Seattle Post Intelligencer. The utility has been making wind power producers pay for its cost in balancing wind with other resources, and recently spiked fees by “only” 90 percent after considering quadrupling the cost.

Per the paper:

“By 2011, the agency estimates the system will run out of the capacity to adjust enough to accommodate for the variations of wind power.
As a result, the BPA, a nonprofit federal power-marketing agency, is accelerating plans for change, including: building more capacity, flexibility and quicker response times; implementing better forecasting tools; and sharing the responsibility for moving power within and outside the region.”

While wind is approaching grid parity for cost, it can’t be equally dispatchable without energy storage or being augmenting by other more manageable resource. This reality check shouldn’t detract from wind investments; it merely suggests a more balanced approach for utilities.

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Attorney Helps Algae Startups to See the Light of Day

— July 29, 2009

Putting the words “pond scum” and “lawyer” in the same sentence is no longer a slight.

Attorney Todd Taylor has become expert in helping algae and other renewable energy startups to navigate the murky waters of becoming viable entities. Taylor, who has the unique title of “lead biomass shareholder in Fredrikson & Byron’s Renewable Energy Group” in Minneapolis, has been active in the biofuel industry for more than a decade.

Taylor says his firm takes a “venture capital-like approach” to finding energy startups as potential clients. Fredrikson & Byron identifies promising young companies in renewable energy including wind and solar and advises them on negotiating contracts, obtaining financing, and finding industry partnerships.

By helping young companies — often run by scientists with little business experience — to become commercial successes, Taylor creates a stable of clients who’ll keep coming back as they grow stronger. He counsels clients on how to find and secure financing, providing advice on questions such as “What should the terms be for a $20 million investment?”

His long time in the industry and connections help Taylor to compare companies to existing technologies to determine if companies with good ideas can be commercially viable.

Taylor, who has no interest in being inside the courtroom, says he spends one-third of his day on business development for his firm and his clients. “I’m not a litigator. I’m a business attorney.” One of the value-added services he provides is to connect startups with VCs and established industry players that are also Fredrikson & Byron clients.

Despite representing many of the Midwest’s plethora of corn ethanol companies in the past and present, Taylor says he’s “not naive about its drawbacks.” He is currently working with lobbyists and the Algal Biomass Organization so that algae energy can have a fair shake in the marketplace.

“If you look at the (federal) renewable fuel standard, there is not fuel feedstock parity,” Taylor says, pointing out that biofuel from algae doesn’t receive the same treatment as more mature (and politically connected) industries.

Taylor’s mission also includes a strong component of education. To wit, he is chairing an all day seminar on August 18 on algae energy, entitled the “Fredrikson & Byron Midwest Algae Commercialization Conference.”

As industries get increasingly specialized, the lawyers who represent them become equally as expert in their intricacies. Asking questions about other industry clients is wise, because as Taylor says, “You don’t want to have a law firm that doesn’t know your space.”

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San Jose Leading EV Charge

— July 28, 2009

While San Francisco and Portland are publicly claiming they’ll have the best electric vehicle networks in place in their cities, San Jose may have made the most progress.

The city of San Jose has installed 7 charging stations so far, including spots at City Hall and a public parking garage. At the charging locations vehicle owners don’t pay for the power; instead they are charged based on the time in the parking spot. To simplify payment, EV owners get a keychain fob that’s connected to their credit card.

Nanci Klein, the manager of corporate outreach for the city, says vehicle chargers are being added to light poles in “key neighborhoods.” The city will take advantage of its control of the right of way on light poles (which will be upgraded as they are repaired) and in parking garages to create a network that will incentivize residents to purchase plug-in and battery-electric vehicles. San Jose’s redevelopment agency, as well as the Commerce Department’s Economic Development Administration, have contributed funding to the project.

Klein’s office is also working with Fortune 100 companies to persuade them to install EV charging stations at employer sites. She is also in discussions with officials involved in building code enforcement and public works to streamline the permitting process for installing charging station equipment.

The city also wants the electricity to power the vehicles to be clean. The city recently announced an organic waste to energy plant, the first of its kind. As part of San Jose’s 15-year “Green Vision” plan, the city is moving to all renewable power.

San Jose benefits from the proximity of major players in the EV and charging world including Coulomb Technologies (which installed the charging stations), Tesla Motors, and Better Place.

With its large population of engineers, software developers and other higher-income residents, San Jose is likely to see one of the highest per capita rates and total numbers of PHEVs in the coming years. The city already sees strong sales of hybrid vehicles and the micro Smart cars.

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Energy Efficiency to Drive Johnson Controls

— July 26, 2009

Johnson Controls (JCI) may be best known for its automotive products, but the sharp decline in new car sales has dampened its revenue stream. The Milwaukee company’s energy management and efficiency divisions look to become an even larger contributor to its bottom line.

Johnson Controls has upgraded its Energy and Emissions Management System to expand features for greenhouse gas reporting and “consolidates all sources of greenhouse gas emissions, baseline adjustments, and credit trading impacts….,” according to the company. The software automates carbon accounting based on the World Research Institute and World Business Council for Sustainable Development GHG Protocols.

In partnership with the non-profit Prince Albert II of Monaco Foundation, JCI will develop projects in Europe to increase the awareness of how energy efficiency can be used to combat climate change.

The economy’s freefall — particularly the drop in auto sales — has has a heavy impact on JCI’s revenue. Auto sales dropped 31 percent while the company’s overall revenue fell by 29 percent during the quarter ended June 30 from a year ago. Not surprisingly, the company’s Automotive Experience and Power Solutions (automotive battery) divisions suffered the worst.

During this financial slump energy efficiency, as long as the savings can be documented through a short return on investment, is a much easier sell than new vehicles. Energy efficiency and energy management programs will continue to rise because of the need to save money, to reduce carbon (and possibly generate revenue through carbon credits), and to cash in on Recovery Act dollars. JCI says it is bidding on stimulus-related projects that could be worth up to $800 million. However, the company is currently in a disagreement with the Duluth Steam Operative over just how much money a retrofit of a steam plant will save.

Johnson Controls is looking to earn revenue from renewable energy credits in a unique deal with the Unified School District of Hemet, California. The district hired JCI, which will assume all of the equipment costs, to build a $30 million solar network, but JCI will receive ownership of the RECs.

The commercialization of plug-in hybrid and all-electric vehicles should help to revive the auto industry overall, and will likely have even greater impact on Johnson Controls’ auto unit as they are heavily involved in both battery and drive train components of EVs.

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