Navigant Research Blog

In New York, Greening Older Buildings

— July 21, 2014

Building energy efficiency has reached the mainstream.  Clean energy technologies have become so common that technical training in renewable energy and energy efficiency retrofits is becoming more and more accessible.

Green City Force (GCF), a Brooklyn, New York-based non-profit, has trained nearly 300 young adults living under the poverty line in NYC for careers in the green economy with the group’s Clean Energy Corps.

The Clean Energy Corps supports a variety of projects related to energy and efficiency, including energy audits in low-income homes, urban agriculture, and energy efficiency retrofits.  The corps provides its members with an academic and technical training program to prepare them for college; the program leads to certification for entry-level work in energy efficiency and includes GPro, a nationally recognized certification in building science.

Retrofitting

One of the major partners for Green City Force, and for the Clean Energy Corps specifically, is the New York City Housing Authority (NYCHA).  More than 8.4 million people reside in New York City, and 615,199 of them are served by the authority’s Public Housing and Section 8 programs.  This represents 7.4% of the population of New York City.  Together, both programs cover 12.4% of the rental apartment stock in one of the most expensive cities in the world.

The Housing Authority’s property portfolio is equally impressive and rivals commercial housing developers.  The NYCHA oversees 334 developments, including 2,563 buildings and nearly 178,000 apartments.  In contrast, the Chicago Housing Authority has 21,000 apartments in 128 properties.  Los Angeles has 2,491 apartments across a portfolio of 93 properties.   Only 20% of the developments in NYCHA’s portfolio are less than 30 years old, and one-third of the authority’s developments are more than 50 years old.  Modern buildings are built with energy efficiency in mind, but older buildings have more room for improvement.

The More the Better

GCF develops service projects in partnership with the Housing Authority, city agencies, and other non-profits.  One example is the Love Where You Live Challenge, which bring corps members together with fellow NYCHA residents to reduce energy use in homes.  Corps members gain experience and skills, while the Authority reduces its energy costs.  NYCHA spends $535 million annually on utilities.

The NYCHA is not the only public agency using innovative approaches to promote energy efficiency.  The Washington Metropolitan Area Transit Authority (WMATA) recently awarded Philips Lighting a 10-year lighting performance contract to upgrade lighting across 25 parking garages to LED lighting.  Instead of paying out of pocket for the 13,000 fixtures, WMATA will share the savings in energy costs with Phillips over the 10-year period.

For disruptive technologies such as energy efficiency, the more business models in the market, the more accessible the clean energy economy becomes.

 

Big Savings from Replacing Diesel with Storage

— July 6, 2014

In my previous blog on diesel and energy storage, I discussed the payback period for energy storage in a remote microgrid.  What is the value of reducing diesel usage in a microgrid, practically speaking?

The table below illustrates the first-year savings of displacing 15% of the diesel generation in microgrids of different sizes using energy storage.  The average installed energy storage cost in this model is $2,112 per kW, and the assumption for the minimum cost of diesel fuel is $1.09 per liter, with the maximum cost in the model averaging $3.27 per liter.  Since the installation of storage is a one-time cost that occurs in the first year, the savings go up after that.

Size Distribution of Deployed Microgrids and First-Year Fuel Savings
at Low and High Diesel Costs: 4Q 2013

ESMG table

(Source: Navigant Research)

According to Navigant Research’s Microgrid Deployment Tracker 2Q14, 231 deployed microgrids have diesel generation capacity.  This means that 38% of microgrids have diesel gensets, and overall, gensets account for 11% of microgrid capacity globally.  Only 40% of the 79 microgrids above 10 MW include diesel generators, and smaller systems are less likely to have diesel generation.  Less than one-third of the microgrids below 500 kW rely at least partially on diesel.

Taking the example of a large microgrid system, because this is where the savings are the greatest, microgrids over 10 MW average 42.7 MW of capacity.

Still Too Costly

Assuming a microgrid does in fact have diesel generation, if a 42 MW microgrid replaced 15% of its total capacity (and assuming at least 15% of that capacity would be displacing diesel gensets) with storage, it could save between $10.9 million and $53.4 million per year after storage costs are recouped.  The total savings for all of the large microgrid systems in Navigant Research’s Microgrid Deployment Tracker would amount to $2.2 billion to $10.8 billion per year in diesel fuel using just 200 MW of energy storage.

So why is storage not more popular in remote microgrids?  Chances are it’s because $2,112 per kW installed is still not competitive in most markets where storage is displacing traditional power generation – even with the benefits of volume manufacturing.  Companies such as Samsung SDI and LG Chem are manufacturing lithium ion cells for the grid at great volume, but it’s still challenging to deliver competitive prices to the customer.  This is because a large portion of costs has nothing to do with the core technology, and instead is related to project management, system design and integration, and installation.  As more companies such as Bosch and Schneider Electric enter the market and bring power electronics and energy management expertise to the storage space, these costs will come down significantly, benefiting the entire supply chain. 

 

What Constitutes “Grid-Wide” Storage?

— June 25, 2014

A recent article in The New York Times made the claim that energy storage technology is “decades away from grid-wide use.”  Reporter Jim Malewitz did not define “grid-wide,” so it is difficult to understand how this term is defined for the purposes of the story.  We can examine that prediction, though, based on various measures.

One measure could be grid generation capacity of the capacity of installed energy storage.  Given that on its own the U.S. grid has about 1,058 GW of total generation capacity, energy storage rightfully appears to be a drop in the bucket – to be precise, 0.07% of grid generation capacity excluding pumped storage and 2.2% including pumped storage.  It’s worth noting, however, that the solar PV industry is considered to be successful and growing, and currently represents about 1.1% of total generation capacity in the United States.  Moreover, the pipeline for energy storage is expanding rapidly.  Approximately 13,000 MW of storage capacity is in the pipeline – 3,000 MW of which is advanced batteries, compressed air, flywheels, and power-to-gas.

Energy Storage Capacity, Installed and Announced, World Markets: 2Q 2014

(Source: Navigant Research)

The First Thousand

A second measure could be the number of markets where storage is present and the variety of technologies in the market.  Navigant Research is currently in the process of updating its Energy Storage Tracker, which tracks 30 energy storage technologies in over 600 projects – some of which include more than one storage system.  Overall, 952 systems in 51 countries are tracked in the database.

Worldwide, there are 2,497 MW of deployed advanced energy storage projects – this excludes pumped storage, a mature technology that accounts for 124 GW installed.  Asia Pacific continues to be the world leader in deployed capacity of energy storage, with 1,184 MW of deployed capacity, which represents 43% of global capacity.  New pumped storage makes up nearly 60% of Asia Pacific’s capacity, followed by sodium-sulfur batteries, with 31% market share.  The market share of advanced lithium ion batteries is growing quickly in Asia Pacific, with 74 MW installed currently.

Demand Flattens

Western Europe (762 MW deployed, 28% of global capacity) is primarily composed of power-to-gas, compressed air, new pumped storage, and molten salt technologies.  North America (725 MW deployed, up from 566 MW in 3Q13) is more evenly divided among technologies, with compressed air, flywheel, lithium ion, thermal, and advanced lead-acid batteries composing a majority of the capacity.  Clearly, a number of markets and technologies are being deployed across grids globally.

One other measure could be the growth of storage relative to a traditional industry.  In 2007, 28 MW of advanced energy storage were installed.  In the subsequent 6 years, 1,300 MW have been installed.  More specifically, installed energy storage grew 28% between 3Q13 and 2Q14.   In contrast, electricity sales have decreased over the past several years in the United States, and the U.S. Energy Information Administration predicts that electric demand growth will average less than 1% per year between 2012 and 2040.

Although energy storage is unlikely to revolutionize the global grid system in the near term, it will certainly begin to scale up rapidly in the next 3 to 5 years.  Perhaps then it will be closer to grid-wide.

 

Energy Storage Reduces Diesel Use in Microgrids

— June 6, 2014

One of the challenges to deploying energy storage in existing grids is building a convincing business case.  If the business case for storage is built on reducing or optimizing the use of diesel fuel, it doesn’t take much to get a positive return on investment (ROI) for a storage asset.  Two examples of diesel reduction applications are remote microgrids and mobile base stations.  In this blog, I’ll look at the numbers on remote microgrids.

Even using conservative assumptions, storage makes sense to rein in the total cost of ownership of remote power generation – and hopefully make operating systems, such as remote microgrids, less vulnerable to volatility in diesel prices.  For example, Ontario Power Authority has estimated that it spends CAD$68 million each year on diesel fuel for 20 remote communities.

Payback Time

In the case of remote microgrids, the storage system typically provides several benefits: diesel reduction, higher renewables penetration, and improved power quality.  Even if the business case is based only on diesel reduction, though, the ROI is still positive in less than 4 years across all advanced battery chemistries.  The forecasts in the chart below assume the replacement of all batteries except flow batteries at the 7-year mark – which may or may not be required.  It also assumes that for each kilowatt-hour (kWh) of energy, a diesel generator requires 0.3 liters of diesel, and that the cost of diesel is about $1 per liter and remains steady over the forecast period.

Less than 4 years is an impressive payback period, but the payback period is even shorter with a 25% increase in diesel prices. If the cost of diesel is $1.36 per liter, the payback period goes down to less than 3 years for all storage technologies.  At $1.64 per liter, the payback period shrinks to 2 years or less.

Cumulative Net Present Value of Energy Storage Technologies Integrated in Remote Microgrids by Battery Type, World Markets: 2013-2023

(Source: Navigant Research)

 

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