Navigant Research Blog

EPA Heads to Court with CPP

— August 28, 2015

The Clean Power Plan (CPP) has been a hot topic in recent months. It is about to get even hotter as 15 states band together in opposition to take the final ruling to court (details of the CPP can be found in the following links: link 1 and link 2).

Early Resistance

The CPP has met resistance since day 1, with federal court challenges filed well before the final rule was released by the Environmental Protection Agency (EPA) on August 3, 2015. Portions of the CPP were even shed in anticipation of a legal fight. The draft CPP rule included four Building Blocks (BBs):

  • BB1: Heat rate reductions
  • BB2: Switching from coal to gas
  • BB3: Renewables
  • BB4: Focused on energy efficiency (EE)

The EPA removed BB4 in order to strengthen the CPP’s legal position since EE is a demand-reducing resource, not a supply resource covered by the Clean Air Act (CAA, the CPP’s core federal law). Dropping BB4 removed a key legal concern cited by many who commented on the proposed CPP rule. However, a large block of states still oppose the CPP and plan to file in federal court to block implementation of the rule. Arguments against the rule range from its potential to substantially alter the power industry and the economic drivers of that business to unemployment and the threat of weakened power reliability.

CAA Battle

The CPP is not the only EPA rule being challenged in the courts. Florida is leading a group of 17 states over EPA startup, shutdown, and malfunction (SSM) rules. These states argue that the CAA gives the federal government the authority to set standards involving harmful pollutants, but it is up to the states to determine how they want to implement those standards.

The CAA is often upheld by the Supreme Court despite vigorously fought cases against the EPA. In the case of Coalition for Responsible Regulation v. EPA (2012), various state and industry group petitioners challenged all four EPA greenhouse gas (GHG) actions, alleging that they are based on improper constructions of the CAA. The Court upheld the GHG actions, supporting the EPA’s interpretation of the CAA in those cases. The Court also upheld provisions of the CAA in the Chamber of Commerce v. EPA (2011) case that permit the EPA to allow California to set its own automobile emissions standards. In this case, the U.S. Chamber of Commerce and National Automobile Dealers Association could not prove that these standards would cause any economic harm.

Primed for an Ongoing Battle

If the CAA’s previous Court success is any indication of the future, states need to prepare now for how they will meet the EPA’s CPP requirements. While numerous states fight the CPP (most recent state count was more than 15), many more are already preparing plans to reduce carbon emissions. In fact, a study conducted by the Union of Concerned Scientists shows that the 31 states that have already made commitments to the CPP will be more than halfway toward meeting their 2022 benchmarks, and 21 of these states will actually surpass it. Georgia, North Carolina, and South Carolina, all of which are suing the EPA, are also on track to exceed their 2022 benchmarks. The ongoing battle between states’ rights and the implementation of federal EPA rules will be on full display once the final CPP is published in the Federal Register (on or about November 3, 2015) and the opposing states file their federal court cases. The outcome of those joint cases will have a great impact on the future of the U.S. power industry.

 

The Internet of Things Invades Garbage Cans

— July 20, 2015

The Internet of Things (IoT) is a trend that is seeing a lot of recent attention in the residential, utility, and the commercial and industrial (C&I) spaces. Through home automation, the IoT can make consumers’ lives easier and more efficient. Meanwhile, it’s allowing utilities to increase equipment effectiveness, reduce cost of compliance, enable real-time decisions in demand response (DR) events, and improve customer experiences. The IoT can also help C&I  businesses heighten asset performance, mitigate supply chain risks, and ensure product quality and consistency. 

Now, the IoT is hoping to make life easier in the Big Apple, specifically in New York’s Times Square. But the IoT isn’t on Broadway or the big screens (yet). Instead, it’s been finding use in one of the most humble, overlooked, and under-appreciated parts of New York City—in garbage cans. Bigbelly, a waste management company offering unique solutions for public spaces by leveraging solar energy and information technology, is applying for a grant from the Mayor’s Office to install Wi-Fi garbage cans in underserved neighborhoods.

Bigbelly’s garbage cans were smart before the company added Wi-Fi to them, as they are solar powered, have sensors to detect how full and smelly they are, notify trash collectors when it’s time to empty them, and some can automatically compact trash when the cans become too full. Now, with enough bandwidth to run a small business, upload 200 pictures in 27 seconds, or download an HD movie in 9 minutes, these garbage cans are becoming even smarter—and more valuable. While the Wi-Fi upgrade is certainly a big benefit, these IoT containers can provide priceless waste management and operations data, or even display public service announcement and alerts.

More to the Market

Bigbelly is not the only company expanding the IoT into public spaces and garbage cans. The city of Santander, Spain, with a population of 185,000 people, participated in a pilot project sponsored by the European Union to test sensor network technologies and other aspects of the IoT on a city scale. Over the course of the project, roughly 12,000 sensors were deployed around the city, measuring parking spaces, the amount of trash in garbage cans, traffic flow, carbon monoxide levels, and pedestrian traffic. The $9.6 million project resulted in a 25% cut in energy costs and a 20% reduction in garbage pickup costs, effectively helping the city of Santander manage some of its expenses.

In Panama City, an advertising agency partnered with Telemetro, a local news agency, to enable potholes across the city to tweet to the government for maintenance. El Hueco Twitero (The Tweeting Pothole) has Tweeted messages like, “I feel horrible, I just caused tire damage to an old lady’s car. @MOPDePanama [the Twitter account for Panama’s Ministry of Public Works], See what you made me do.” This strategy effectively annoyed the city government until it began fixing potholes.

While the IoT is still a relatively new concept for consumers that is still working to gain traction, it is beginning to have a farther reach. From residential thermostats and commercial lighting to potholes in Panama and garbage cans in New York City, this can only leave me wondering where to next.

 

Google Enters IoT World, Again

— June 18, 2015

The Internet of Things (IoT)—a much hyped, though somewhat ambiguous, concept about interconnecting devices to create a system of systems for user convenience and detailed in Navigant Research’s IoT (Internet of Things) for Residential Customers report—is not a new concept.

For years, IoT products have been available to consumers, including smart thermostats, smart meters, connected LED bulbs, and more. Today, the IoT is being implemented by big names like AT&T, ADT, and Apple. Finally, one of the largest and most well-known multinational technology companies in the world is joining the race—Google.

In late May, Google unveiled its new IoT platform, Brillo, at the company’s annual developer event, Google I/O. Brillo is an operating system that manages connected devices, streamlined specifically for use in objects other than smartphones and tablets, which allows the user to create a true IoT smart home.

Brillo is based on Google’s existing Android operating system, which is important for integration with already existing Google technologies, like Google Now voice recognition. Brillo will be paired with Google’s newly created IoT language called Weave. Weave is a communications layer, enabling devices to talk with each other, the cloud, and Android-based smartphones. Google will make Brillo available to developers in 3Q 2015.

The Second Attempt

Brillo is not Google’s first attempt at entering the IoT world. In 2011, Google introduced Android@Home, a service designed to turn the user’s home into a network of Android accessories, using Android as the home’s operating system. Similar to Brillo, Android@Home was announced at a Google annual developer event 4 years ago. However, the Android@Home concept disappeared almost as quickly as it was introduced. Today, the digital landscape is much different, and consumers and developers more readily accept the concept of a connected lifestyle.

With a vast expanse of competition for creating interoperability in devices, it is unclear how Google’s Brillo and Weave will fair. Google has the kind of brand-name recognition that could turn this small, new concept into something very big—the kind of big that exists in nearly every home in America. The fact that Google is leveraging its Android platform also means immediate scalability, so many device manufacturers can use Brillo.

Challenges Ahead

However, there are already standard, protocol, and communication layers out there, and it is unclear how Brillo will interact with these. Take, for example, ZigBee. ZigBee is a communications standard operating on IEEE 802.15.4 that has been around for over a decade. ZigBee already exists in millions of connected products, such as sensors and lights, and the next version (ZigBee 3.0, set to be released in 4Q 2015) is designed to unify and make an entire system of connected devices easier to use. This means that consumers may end up with Brillo/Weave devices and ZigBee devices that cannot communicate—a problem that will likely take some time to resolve. Regardless, Google and its entry into the IoT world is something to keep an eye on for years to come.

 

For Swiss-German Hydropower Subsidies, an Imbalance Flows

— May 14, 2015

During a recent vacation in Switzerland, I made a day trip to the beautiful city of Thun, where the Aare River cuts through the middle of the city. As I sipped white wine and watched the river flow, I thought about how high the water level was, how fast the currents were moving, and how this must be good for the Alpine country’s hydropower production. When I mentioned this to my Swiss-German friend, Marco, he gave me an interesting perspective on hydropower and foreign renewable energy subsidization.

Marco, a Swiss citizen living in Germany, explained to me that hydroelectricity is the backbone of Swiss energy. Switzerland generates 58% of its energy from hydroelectricity, and the rest of the country’s energy comes from nuclear (36%), thermal, biomass, solar, and wind power (6%). The system works well, where nuclear power and hydroelectricity ensure stability in meeting electricity demand, while the newer renewables assist with peak loads and exports to neighboring countries.

Opening the Flood Gates

However, Marco explained, Germany, which shares a border with Switzerland, has caused trouble for the Swiss energy system with its renewables policy. Germany’s high solar and wind subsidies have dramatically lowered the price of electricity (although private households pay for subsidies as part of their energy bill), and now large hydroelectric facilities in Switzerland, which are not subsidized, are no longer profitable. In fact, 24 of the 25 hydroelectric facilities planned for construction in Switzerland are unprofitable. This means that hydroelectricity investment has been put on hold because it cannot compete. With hydroelectricity costs on the rise and the Swiss on the outs with nuclear power, the country may have to revert back to old coal plants or electricity imports from neighboring countries—which would likely come from coal. Ironically, Switzerland has responded to this subsidy problem by starting its own subsidy for smaller hydroelectric facilities (<10 MW).

The German subsidies have even farther-reaching consequences, some of which hinder the success of the very energy technologies they are supporting. The boom of solar and wind has led to an increased need for electricity storage, as both energy sources are unsteady. Alpiq, a major Swiss energy producer, is investing €1.5 billion ($1.71 billion) in a new pumped storage facility in the Alps, but the project’s economic success is uncertain. If these facilities do not prove profitable, their construction will come to a halt. Without these storage facilities, wind and solar offer little benefit to the energy supply.

In the United States, wind power generators beg for consistent and reliable subsidies to help take care of initial investment expenses, so it is hard to believe that subsidies for any renewable energy could be negative. However, Marco made it clear that he thinks there must be changes to restore balance in the system (i.e., abolishing or reforming German subsidies). As a concerned Swiss citizen, he believes that this would stop the spiraling subsidization and increase CO2-free electricity. He is not the only Swiss-German who feels this way.

Alpiq published a report (which can be viewed here) that came to very similar conclusions. Regardless of whether you believe subsidies for renewable energies are positive or negative, hydropower in Switzerland is in a dire situation and reforms in subsidies are needed to restore balance. For me, it was a tragedy to sit in Switzerland, sipping wine and watching the beautiful river flow, knowing that perfectly viable hydroelectricity will not be generated.

To learn more about German subsidies with respect to wind, see Navigant Research’s World Wind Energy Market Update 2015.

 

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