Navigant Research Blog

Federal Shutdown Cripples Energy Efforts

— October 11, 2013

This morning, visitors to the U.S. Energy Information Administration website were met with a banner stating that the “EIA is closed due to a lapse in appropriations.  EIA will not update its website until the agency reopens.”  Among many closures and furloughs, this one is particularly pertinent to participants in the energy industry.  Without critical EIA reports, such as the “Monthly Energy Review,” and weekly updates, such as the “Natural Gas Storage Report” and “Gasoline and Diesel Fuel Updates,” stakeholders in energy industries lose access to free information and industry standards that guide daily decision-making.

A number of outlets have published information on the reaching effects that the government shutdown has, will, and could have on the energy industry in the United States (and abroad due to mutual dependencies on resources and information).  Here, I’ve consolidated some of these stories in order to offer a more complete view of what has been (or more appropriately, has not been) going on.

The New York Times, “Shutdown Is Affecting Energy and Environmental Programs” – Highlights furloughs at major institutions such as the EPA (grants, clean air enforcement), the Nuclear Regulatory Commission, and the Interior Department (affecting offshore oil and wind projects).

Christian Science Monitor, “In Government Shutdown, who keeps the lights on?” – Discusses effects on reliability and security of the electric grid should the Department of Energy and the Federal Energy Regulatory Commission remain closed.

The Wilderness Society website, “Government Shutdown Hurting and Stalling Renewable Energy” – Ties the furlough of employees from the Bureau of Land Management and Fish and Wildlife Service (both under the Department of the Interior) to a stall in permitting for renewable energy projects on public lands.  These projects are a large part of President Barack Obama’s second-term plan to tackle climate change.

C.H. Robinson’s Transportfolio blog, “Government Shutdown and the Energy Information Agency” – Discusses the effects on the transportation industry with the loss of the EPA’s weekly bulletin board information on fossil fuel supply, demand, and prices.

The Desert Sun, “Shutdown Delays Desert Renewable Energy Conservation Plan” – Covers the hold on the Desert Renewable Energy Conservation Plan that balances construction of renewable energy facilities with environmental protection for sensitive environments in Southern California.

Renewable Energy World, “Government Shutdown Damages U.S.  Energy Innovation” – Offers a slightly more specific list of renewable projects that are on hold for permitting during the shutdown.

It is clear that renewables and clean energy projects that require permitting, funding, or both from non-essential government organizations are taking the biggest hit.  Many of these projects have already been stalled due to other regulatory hold ups, and a lot of them are far behind schedule, leaving states and regions highly susceptible to shortcomings in meeting energy efficiency targets during the next few years.  This generally means heavy fines or revisions of targets to lower standards for the amount of renewable energy required — putting the climate-change goals staked out by Obama even further out of reach.

 

On Blackout Anniversary, Demand Response Gains Ground

— August 14, 2013

August 14 is the 10-year anniversary of the blackout that dimmed cities across the Northeastern United States and Ontario.   It was hard, in that summer of 2003, to imagine the immediate and sustained costs, in addition to impact on peoples’ lives, that the incident would produce.

The summer of 2003 was unusually hot, and air conditioning use was high. Because energy costs were (and, for many, still seem to be) low enough for people to not think twice about a slightly higher bill in exchange for temporary comfort, aggregated high demand for energy strained the Northeastern electric grid.  Combined with a series of monitoring and grid management mishaps, this resulted in approximately 45 million Americans losing power for up to 2 days.  Six people died in New York City.  But most people, after they realized it wasn’t a terrorist attack, assumed the blackout was the fault of a tree falling outside Cleveland.

Since 2003, energy regulation has evolved to impose substantial fines for mismanagement of the grid.  Furthermore, the Smart Grid Investment Grant doled out billions of dollars to utilities to upgrade their grids to provide more reliable, efficient service to customers.  These behind-the-scenes policy changes and upgrades are not always effective enough to adequately reduce the strain (i.e., cost) of peak loads or to result in desired efficiency improvements, and are potentially out of reach for many utilities due to high capital expenditures.

Be Cool

The solution?  Demand response.  This grid balancing technique directly involves customers by initiating an agreement that they will curtail use upon receiving signals from the utility that the grid will be overloaded at a specified time.  There are a number of different demand response schemes that involve varying degrees of participation on behalf of the customer.  In New York City, Con Edison and ThinkEco have introduced the coolNYC program to combat one of the 2003 blackout’s indirect culprits: air conditioning.  Participants receive smart plugs and smart thermostats that the utility can directly control to cycle on and off during peak loads. Customers don’t need to directly participate, other than opting in or out, and they stay comfortable during heat waves. In addition, they achieve savings on their electric bills.

The problem? Well, the problem is that it’s doing really well, and Con Edison can’t keep up.  Having equipped roughly 10,000 window AC units with smart thermostats and plugs, the company still has millions of units to equip, and there’s currently a waiting list to participate.  That fact in itself highlights another important fact: New Yorkers are starting to care.  Navigant Research has noted that of one of the major barriers for demand response, and a reason that utilities have been slow to adopt, is that it can be hard to convince consumers of the benefits.   A decade after the 2003 blackout, it’s important to note the progress that has been made in customer engagement—arguably the greatest inhibitor for any form of energy efficiency or load management.

 

With ComEd Contracts, Chicago-Style Smart Grid Advances

— July 23, 2013

ComEd, the Illinois utility, has had quite a go of it over the past year, since announcing plans to pursue a $2.6 billion grid modernization project.  After the company said in early 2012 it will install more than 4 million meters over a 10-year period, beginning with 500,000 by the end of 2012, outcry by special interest groups and wary customers gradually increased, due to fears of rate hikes and privacy intrusions.  As a result, Senate Bill 9, which would have funded the project via rate increases over the installation period, was vetoed by Governor Pat Quinn in early May.  Shortly thereafter, the Illinois house and senate both voted to override the veto.  Meanwhile, consumers filed a class-action lawsuit demanding compensation of $182 million cost that was incurred in rate increases over the 1-year delay of the rollout.

Those last three events occurred over the course of a few days last May.  Does it get any more exciting?

With a thumbs-up from the Illinois state legislature to move forward, ComEd has started awarding vendor contracts for integrated grid solutions.  This week, both GE and Silver Spring Networks announced contract wins for the 10-year project.  For GE, the $200 million deal will include the delivery and installation of approximately 4 million meters in Chicago-area residences, while Silver Spring will provide smart grid infrastructure solutions and support.

What a Bargain

As the North American market for smart grid deployments (meters in particular) has leveled over the past year, a project of this size is represents a significant win on behalf of GE.  The advanced meters will provide hourly usage data, remote meter reading, and outage detection.  This offers both the utility and its customers the ability to better monitor personal and aggregated energy use.  As a result, ComEd hopes to gain increased reliability, savings and clarity in scheduling and planning for future generation assets, and more effective integration of smaller renewable sources into the grid.

Given these advanced capabilities, ComEd is getting these meters at a bargain rate.  At about $50 per meter, the price is substantially below the average selling price that Navigant Research foresees for advanced meters through the remainder of the decade, which is closer to $80-$100 per meter.

This comes back to the leveling off of the North American smart meter market, which is increasingly shifting toward smaller, specialized deployments as Smart Grid Investment Grant mega-rollouts came to an end in 2012.  Large utility contracts are increasingly scarce, leaving contracts for smaller batches of custom (translation: cumbersome) meters for municipal and cooperative utilities.  With the scope of ComEd’s smart grid upgrade, this alone seems like incentive enough to bid low and invest in a more efficient supply chain.

Now, if ComEd can manage to keep any Chicago-style hiccups and scandals at bay, it should do well on the deal.

 

The Facilities of the Future

— June 5, 2013

Bill Gates, who is working to promote a carbon-free energy future, also wants to spend the next 20 years of his life eradicating disease in the developing world.  And he wants to do it, in part, by turning poop into profit.  In May, he appeared on 60 Minutes to discuss a variety of initiatives deployed by the Bill and Melinda Gates Foundation that promote forward-thinking technologies as logistical solutions for sanitation problems.  One of these, the Reinvent the Toilet initiative, provides funding for engineer teams to develop a solar-powered toilet that can provide a sanitary way to dispose of waste and generate a useful, salable byproduct.

An estimated 2.5 billion people across the globe lack improved sanitation facilities.  Along with increasing disease levels, these unhygienic facilities generate a range of direct and indirect costs, including hospitalization and healthcare costs, loss of productivity, and lack of access to education.  In Nigeria, these costs amount to more than 1% of total GDP.

Despite this hefty price tag, persistent barriers to the development of utilities infrastructure prohibit the types of solutions that the developed world takes for granted.  That brings me back to the toilet – and to Bill Gates.  Reinvent the Toilet (RITT) has committed to provide nearly $40 million dollars for a competition to develop a toilet that meets the requirements to process waste remotely (i.e., without water or outside electricity), produce a profitable byproduct, and cost no more than 5 cents per visitor per day to operate (which includes the upfront cost and any ongoing maintenance).

Possible Privies

That basically sounds impossible.  With teams developing models based upon technologies such as membrane filtration (not cheap), fiber optics (less cheap), and hydrogen-storing fuel cells (WAY less cheap), it remains unclear how the 5-cents-a-day requirement can be achieved without a massive user base … which would then probably raise issues of capacity and maintenance.

I spent part of last year working with the University of Colorado-based team competing in the RITT competition.  With a third round of funding/weeding out of proposals approaching this August, we were pressed to address issues surrounding the cost and feasibility for our model, which utilized fiber optic cables to concentrate solar power.  There are a number of organizations that operate profitable human waste disposal programs, and there’s potential for a sizeable international biochar market.  But these programs face various barriers that range from cultural acceptance to biochar health/safety regulations.

The toilet is a funny thing.  The other technologies Gates supports, such as the portable vaccine refrigerator, don’t seem to trigger as many logistical or cultural issues.  It remains to be seen if RITT teams will be able to successfully devise a business plan that addresses these while leveraging business opportunities that make it affordable.  It’s already very clear that they can make a sexy toilet.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Lauren Callaway","path":"\/author\/lcallaway?page=8","date":"12\/11\/2017"}