Navigant Research Blog

Matching Renewable Power, Worth Billions, to Load

— July 31, 2013

The business case model in Navigant Research’s report, Energy Storage for Wind and Solar Integration (ESWS) answers three questions:

  • How much energy from renewable plants is not taken by the grid (curtailed) or is affected by negative pricing?
  • How much is this energy worth on the wholesale energy market at daily peak load?
  • How much would it cost to deploy an energy storage system to prevent these losses?

Since the business case for ESWS applies to new installations and not older installations (which have been grandfathered in with lucrative FITs), this model uses cumulative installations for wind and solar starting in 2013 and extending to 2023.  Currently there is a misalignment between variable energy production and consumption – in other words, power generated is sometimes not usable on the grid, or demand exists when the renewable resources are unavailable.  The number of hours per day that are misaligned varies depending on the technology.  The model also assumes that the amount of energy that is curtailed or otherwise not used when it is needed will decrease over time, as wind and solar forecasting technology improves during the next 10 years.

Wind presents the greatest challenge in terms of a misalignment between production and load (up to 4 hours daily), followed by distributed PV (up to 2 hours) and non-distributed solar (up to 1.25 hours).

Value at Peak Load of Variable Energy Curtailed by Technology, World Markets: 2013-2023

 Value of Variable Energy Chart

(Source: Navigant Research)

In 2013, Navigant Research anticipates that the ESWS market will be worth $143 million.  At the same time, approximately 17,238 GWh of energy from variable generation assets will not be optimized to load – or more simply put, represent wind and solar power that is generated but not useable.  If these resources were optimized to load, this energy would be worth more than $733 million globally.  By 2023, Navigant Research estimates that of the cumulative 1,300 GW of variable generation that is anticipated to be installed between 2013 and 2023, there will be 567,053 GWh of misaligned generation to load.

Wholesale energy prices are forecast to increase between 1% and 9% over that period, depending on the region – this is the piece of the model that has the most uncertainty as there are so many economies that are poised to take off in the next few years and energy prices will likely soar in these markets.  With these assumptions in mind, however, Navigant Research estimates that 567,053 GWh of output would be worth $30.4 billion in 2023.  By comparison, the investment of energy storage to integrate wind and solar assets in 2023 is expected to reach $10.3 billion.


Are EVs Really Green?

— July 29, 2013

In a recent article in IEEE’s Spectrum magazine, “Unclean at any Speed,” Ozzie Zehner argues that battery electric vehicles (BEVs) are essentially trading one environmental problem for another rather than moving the ball forward on clean transportation.  He makes a compelling case by arguing that the greenhouse gas (GHG) cost of electricity generation is too high, the production of BEVs is worse than gasoline vehicles, and that any personal automobile is ultimately worse for the environment than public transit.  I believe he falls short of proving his point because, as with many of these types of articles, he either misses or cherry picks some key facts from a number of studies.

The first is that the production of gasoline and diesel is very energy intensive and ultimately shares almost all the same attributes as electricity production, except with additional emissions.  This process does not include potential problems with transporting the fuel, which is largely a land use issue for electricity.  However, it is very difficult to compare the emissions of electricity production and gasoline or diesel production for vehicle usage.  According to Argonne National Lab’s GREET model, reformulated low-sulfur gasoline production releases 2.3 kg of GHG emissions per gallon produced, which equates to about 82 grams per mile (g/m) in a Ford Focus, which combined with its tailpipe emissions would bring the car to a total of 351 g/m (though the GREET model places its passenger car emissions at 453.1 g/m).  Distributed electricity (using the U.S. average for electricity production) produces 876.9 grams of GHG emissions per kWh.  Assuming these GHG emissions are directly attributed to an electric passenger car, this translates into 312.8 g/m according to the GREET model.  Granted, there are a lot of different ways to look at this and, depending on the source of electricity, the type of gasoline produced, and the car’s fuel economy, one can create a model in which an electric vehicle pollutes more on a per mile basis than a comparable gasoline vehicle.

Forward Motion

Zehner’s second point is that BEVs are much more energy intensive to produce.  The question of production is an interesting one, but again the article sidesteps important considerations.  To be clear, vehicle production, whether BEVs or gasoline powered, is a very energy intensive process.  Much of the materials used in vehicles are recycled, including the aluminum and other metals mentioned in the article, and these materials are being used in all types of vehicles.  Assuming that we want to build gas-powered vehicles that use less gasoline, it is pretty easy to anticipate an increase in lightweight materials such as aluminum.

Battery and electric motor research is also not standing still.  The first generation of automobiles was certainly more polluting than the current generation.  The question is not whether BEVs are the panacea for all of the automaker’s environmental ills, but rather whether this is a step in the right direction.  Mining operations for lithium are sure to get a boost from electric vehicle production (as did nickel before it), but according to research publicized by the IEEE from the Swiss Federal Laboratories for Materials Science and Technology, the environmental cost of this is much lower than the production of gasoline engines.

Change is Coming

And this brings us to the one point that I do totally agree with Zehner on:

“If legislators truly wish to reduce fossil-fuel dependence, they could prioritize the transition to pedestrian- and bike-friendly neighborhoods. That won’t be easy everywhere – even less so where the focus is on electric cars. Studies from the National Academies point to better land-use planning to reduce suburban sprawl and, most important, fuel taxes to reduce petroleum dependence.”

The best way to reduce the environmental impact of transportation is for everyone to stop using their own individual cars and trucks.  But Zehner seems to be saying, “Drive whatever you want today because these new transportation tools are not any better than the old ones, and to enact real change we have to fundamentally change transportation in America.”

BEVs are changing some of the transportation tools; new urban planning and reversing urban sprawl will fundamentally changes people’s lifestyle.

I am a bit more pragmatic and argue that based on what we know, the environmental benefits of BEVs outweigh the downsides.  People will change when they have a compelling reason to do so, and so far, the environmental impact of transportation has been an area for incremental (not dramatic) lifestyle changes.  A sky high gas tax could provide that compelling reason but remains politically untenable in most places.  However, for those hoping for dramatic changes, it appears patience may pay off as some of them are beginning to appear on the horizon.


In the United Kingdom, Biopower’s Future Dims

— July 29, 2013

Earlier this month, in what some are calling a “blow to Britain’s renewable power industry,” RWE npower announced that it would close its aging Tilbury power station.  The German electricity generator, a key player in the United Kingdom’s power market, cited a lack of investment capacity and challenges associated with converting the plant to use wood, waste oil, and other biomass materials in place of coal.

In a separate development, the U.K. government confirmed in its most recent draft Energy Market Reform (EMR) delivery plan that facilities dedicated to exclusively burning biomass for power generation would not qualify for subsidies.  The exclusion from EMR’s Contracts for Difference (CfD) subsidy scheme is a nail in the coffin for an industry that was bursting with proposals for new-build large-scale projects just a few years ago.

The timing of Tillbury’s closure and the exclusion of dedicated biomass under EMR are in part coincidence, but together they bring the challenges facing biopower in the United Kingdom – ranging from environmental concerns to feedstock access to economic feasibility – into sharp focus.


In its short quest to convert from coal to biomass, the antiquated Tilbury plant had overcome a fire in early 2012 that consumed nearly 6,000 tonnes of stored wood pellets as well as stiff resistance from those who challenge the environmental sustainability of burning organic resources in place of fossil fuels. In particular, the backlash against biomass stations has been widespread across the United Kingdom, forcing the abandonment of several proposed plants in recent years.

Although it is classified as renewable, the carbon impact associated with burning biomass remains an unsettled issue among policymakers from Washington to Brussels to London.  Campaigners also argue that the scale of demand for dedicated biomass fuel in the United Kingdom, mostly in the form of imported wood pellets, is unsustainable on two fronts.

First, the availability of biomass at home and abroad in sufficient quantity to meet the U.K.’s energy supply needs remains highly dubious.  The country currently supplies roughly 15 million tons of biomass from within its own borders, mostly in the form of agricultural residues and biogenic wastes.  Estimates, meanwhile, put total biomass demand at 102 million tons to meet an aspirational target of 6 GW of dedicated biomass power capacity by 2020, vastly exceeding domestic supplies.  With domestic biomass availability constrained by the U.K.’s limited land area, a rapid expansion of biomass importing capacity from North America and Russia would be needed.  The Tilbury plant alone would have burned more than 3 million tons of wood pellets per year – compared with 13 million tons burned in the entire European Union (EU) in 2012.

Second, biopower opponents cite the negative impacts associated with burning more biomass on the world’s forests, a key carbon sink in the fight against climate change.  While the EU has proposed sustainability policies for the use of solid biomass to generate electricity, ensuring global compliance remains a challenging proposition.


Meanwhile, the U.K. government has embarked on an ambitious effort to overhaul its incentive structure to spur investment in renewables.  With subsidies for dedicated biomass scrapped altogether, effectively eliminating a key price support mechanism necessary to drive project viability, the government has sent a clear message that it favors cogeneration (CHP), coal-to-biomass conversion projects like Tilbury, or co-firing of coal and biomass over new-build dedicated biomass facilities.

The uncertainty surrounding the future of biopower subsidies under proposed EMR schemes, combined with sticky environmental concerns, has already led to the abandonment of 2 GW of biopower development projects in recent years.  The absence of dedicated biomass in the EMR, alongside Tilbury’s closure, is likely to spark a biopower exodus in the United Kingdom.


Microsoft Builds Smart City Cred with CityNext

— July 29, 2013

Microsoft is the latest technology giant to announce a smart city initiative.  CityNext is positioned as a portfolio of technologies and products that can be used by Microsoft’s global partner network to develop solutions for a range of city challenges.  Along with products such as its Azure cloud platform, mobile application support, and data management capabilities, Microsoft is also contributing training and educational services.

The CityNext initiative embraces the core elements associated with smart cities, focusing  on eight critical functions: government administration, public safety, healthcare, buildings, tourism, education, transportation, and energy and water.  Microsoft has also lined up nine partner cities that will participate in CityNext projects: Auckland (New Zealand), Barcelona (Spain), Buenos Aires (Argentina), Zhengzhou and Hainan Province (China), Hamburg (Germany), Manchester (United Kingdom), Moscow (Russia), and Philadelphia (United States).

Microsoft’s preeminence in the government software market makes it, by default, a key player in any move toward smarter cities.  However, its engagement with the new city agenda has so far largely been confined to its work with government IT departments.  CityNext looks more like a marketing initiative rather than a significant product innovation, but it is a good start.  Its ambitions for CityNext rely heavily on its extensive partner network, but Microsoft itself can play a significant role in helping cities rethink their use of IT across a range of operations.

On the Board

In Seattle, Microsoft’s home turf, the company is showing the role it can take in supporting smart city developments.   Microsoft is working on a new smart building pilot with Seattle’s Office of Economic Development, the city’s utility Seattle City Light, and the Seattle 2030 District – a public-private collaborative of downtown Seattle property owners and managers – that aims to reduce energy use by 50% by 2030.  Funded through a grant from the U.S. Department of Energy, the project is using Accenture’s Smart Building Solutions, based on Microsoft’s Azure cloud technology, to increase energy efficiency across around 2 million square feet of commercial building space, with the possibility of future expansion.  The pilot was inspired by a project at Microsoft’s Redmond campus that is using big data analysis to provide energy savings that could reach 10% per year.  The expectation is that the pilot will surpass this figure, achieving energy and maintenance savings between 10% and 25%.

Microsoft’s announcement of CityNext came too late to have an influence on its rating in our Navigant Research Leaderboard Report: Smart City Suppliers.  IBM and Cisco have been pathfinders in the smart city concept, but as our Leaderboard grid shows, the main competition has come from the infrastructure suppliers like SE, Siemens, Hitachi, Toshiba, and others.  Other IT players have been somewhat slower to move beyond their siloed government and utility businesses.  This is changing.  In addition to Microsoft’s CityNext program, Oracle and SAP have also launched broader smart city offerings and IT services companies like Accenture, Capgemini, and Atos are following a similar route.  Increasing competition in the smart city market can only be good for cities – but, as ever, they’ll need to be able to separate hype from real innovation.


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