Navigant Research Blog

Bill Gates: How to Fund Energy Miracles

— August 21, 2014

Through the Gates Foundation, Bill Gates has taken a stand on improving global public health, investing in programs focused on basic advances such as developing a next-generation condom to prevent the spread of sexually transmitted diseases, creating a standalone vaccine cooler for communities that are stranded without electricity, and inventing a toilet that can solve sanitation issues by pyrolizing human refuse into something more usable (using solar power, no less).  Meanwhile, Gates is also challenging U.S. energy policymakers and their funding practices for energy R&D.

In a June blog post titled “We Need Energy Miracles,” Gates called for the United States to look hard at R&D allocations, potentially redirecting funding from the military and healthcare sectors toward energy research and pilot projects (presumably renewable ones).  Given the imperfections (intermittency, inefficiency) of existing renewable resources, Gates argued, this research is necessary to establish an equitable energy mix, both in the United States and abroad – especially in developing nations that must increase energy use to grow their economies.  He stressed the need to invest in projects that are “high risk/high reward” in order to achieve the sort of miracle needed to support growing demand and limit climate change.

Memo to Bill: DIY

Responding to Gates, Solar Wakeup (republished by Clean Technica) noted that Gates has been active in investing in energy storage with Aquion and LightSail but challenged him to be the major financer of the next energy miracle.  Why?  Simply put, it’s unreasonable to expect increased investments (private and public) in risk-agnostic energy R&D, and if one of the world’s richest men wants it to get done, he should do it himself.  Payoffs are slow for energy projects, the uncertainties many: macroeconomic conditions, volatile energy and resource markets, policy reversals, infrastructure needs, and high operating and maintenance costs.  Solar Wakeup’s challenge is based in reality.

But the cleantech and renewable energy sectors are already substantial in countries all over the world, and growth is accelerating.  China has recognized this.  In recent years, China’s public and private investments in cleantech, both at home and abroad, have explodedReports by Azure International explore the drivers for increasing investment in cleantech in China.  Risk is inherent in investors’ strategies for expanding their energy-related portfolios, and intangible values, such as technological and innovative prestige, sometimes compete with return on investment (ROI).  Encouraged by the government, Chinese investors have become increasingly willing to fund energy efficiency and conservation projects such as smart grids and smart buildings.

The topic of investment in renewables and smart grids is thorny, with many caveats and nuances that tend to shape the potential for ROI – but it’s safe to say that with China’s example, maybe Gates has a point in his stance against being risk-averse toward investing in potential energy miracles.

 

In Bangladesh, Solar Boom Benefits All

— August 18, 2014

More solar PV systems are installed in Bangladesh than in Germany and the United States combined.  At the end of 2013, Bangladesh had an estimated 2.9 million solar PV systems installed compared to 1.4 million in Germany and 445,000 in the United States.

This is despite the fact that Bangladesh is one of the poorest countries on the planet, with per-capita income of less than $3,000 per year.  In Bangladesh, solar home systems (SHSs) range from 10W to 200W.  Approximately 50% of all systems sold in Bangladesh are between 20W and 30W – roughly 1% of the capacity of a medium-sized residential system in the United States, but enough to power a few compact fluorescent or LED lights, charge a cell phone, or power a radio.  At an average cost of about $230 for a 20W SHS in Bangladesh, an upfront cash payment is out of reach for people who make less than $9 per day.  But thanks to the success of micro-credit programs that made Mohamad Yunus and Grameen Bank household names, SHSs are affordable to all.

Home Systems Multiply

Grameen Shakti, based in Dhaka, is the solar power arm of the Grameen Bank and is the leading SHS installer in Bangladesh, with an estimated 1.3 million installations to date.  These installations represent more than 30 MW of installed capacity.   The model relies on an extensive network of sales agents who can reach remote areas, low interest loans, and numerous grants that provide seed funding.  Grameen Shakti provides free operation and maintenance services for 3 years after installation, with low-cost service options thereafter.

With a strong emphasis on grassroots education, Grameen Shakti has contributed to the industry’s high visibility in Bangladesh, where there are now around 40 providers of SHSs.   The company sells approximately 1000 SHSs per day and is targeting 2 million SHS sales by the end of 2016.

The government of Bangladesh – whose low-lying topography makes it especially vulnerable to the effects of climate change – has set a target of generating 5% of its power from renewable energy sources by 2015 and 10% by 2020.  The pipeline of projects started small, but is now growing considerably.  The country has approximately 10 GW installed capacity, with only 75% of that power actually available at any given time due to grid reliability issues.  That relates to roughly 136 kWh available per capita each year – one of the lowest rates in the world.  Compare that to an average household consumption of 1000 kWh per month here in Portland, Oregon.

Changing the Model

Rahimafrooz Renewable Energy Ltd. (RREL) represents the growing number of hybrid companies with a foot in the SHS market and many others, including agriculture, healthcare, education, telecommunications, rural street lighting, and marketplaces, as well as government and private institutions.  RREL has installed 300 solar water and irrigation pumps, 2 MW of solar rooftop solutions, and more than 100 solar-powered telecom base stations in Bangladesh.

Meanwhile, the company’s not-for-profit venture, Rural Services Foundation (RSF), has disseminated nearly 426,000 SHSs under the Infrastructure Development Co. Ltd. (IDCOL) program, representing more than an estimated 12 MW at the end of 2013.  This makes it the second-largest SHS installer in Bangladesh, behind Grameen Shakti.

As I’ve covered previously in blogs and Navigant Research’s report, Solar PV Consumer Products, countries such as Bangladesh, Kenya, Tanzania, and others are challenging traditional Western perceptions of developing countries and approaches for tackling poverty.   Investors have also taken notice.  Solar’s very favorable current market forces (low cost) and unique advantages in economic development (health benefits and cost savings) can be leveraged to enable the continued expansion of solar PV to even the most remote regions – and the poorest countries.

 

Preparing for the Worst, Cities Seek Resilience

— August 7, 2014

The Rockefeller Foundation is asking cities to apply for the latest phase of its 100 Resilient Cities Centennial Challenge.  This challenge aims to enable 100 cities to better address the shocks and stresses of the 21st century.  The selected cities receive support from the Rockefeller Foundation to create and implement resilience plans and to hire chief resilience officers (CROs) to oversee strategies.  Thirty-two cities – including, for example, Bangkok, New Orleans, Durban, Mexico City, and Rotterdam – were selected in the first phase of the competition.  San Francisco appointed the first CRO in April 2014.

The Intergovernmental Panel on Climate Change’s 2014 report on the impacts of global climate change highlights the particular vulnerability of urban infrastructures.  The impact of climate change on cities can take many forms – including increased temperature, drought, and storms – but the most direct threat comes from rising sea levels.  Approximately 360 million urban residents live in coastal areas less than 10 meters above sea level.  China alone has more than 78 million people living in vulnerable, low elevation cities.  Miami, New York City, and Tokyo are also among the top 20 cities at the highest risk of coastal flooding, along with Asian megacities such as Mumbai, Shanghai, Bangkok, and Dhaka.   The 2011 Tohoku earthquake and tsunami in Japan and Hurricane Sandy off the East Coast of the United States in 2012 demonstrated how even the most advanced cities can be devastated by extreme events.

After the Flood

The threat to American cities is further emphasized in the Third National Climate Assessment from the U.S.  Global Change Research ProgramMiami, in particular, is developing into a test case for the impact of the climate changes on U.S. cities and the ability of civic and business leaders to collaborate in response.

Resilience can be characterized as the ability of cities and communities to bounce back from catastrophic events, as well as respond to more gradual changes that threaten well-being or economic stability.  Resilience is not just a question of identifying and acting on specific climate change impacts; it also requires an assessment of each city’s complex and interconnected infrastructure and institutional systems.   New York, for example, initiated a major study of the how the city’s infrastructure and services can be better designed to cope with events like Hurricane Sandy – including more resilient, distributed energy grids and new approaches to land use policy in flood-prone areas.

Urban Sensitivities

Resilience is also a driver for new technology adoption.  The Sensing City project in Christchurch, New Zealand is an interesting test case for how smart city technologies can support resilience planning.  Christchurch was devastated by an earthquake in 2011 that left 185 people dead; the rebuilding project is estimated to eventually cost around NZ$40 billion ($35 million) in total.  The aim of Sensing City is to use sensor technologies and data analytics, including smartphones and sensors embedded in new construction, to lay the foundation for a healthier, more sustainable, and more resilient city.

Coping with the threats and uncertainties of the 21st century will require a deeper understanding of the normal operations of a city and its vulnerabilities.  That’s why resilience is becoming one of the key attributes of any smart city and a significant driver for the smart city market.

 

United States, China Collaborate on Carbon Capture

— August 5, 2014

In a previous blog, I outlined some of the recent efforts to reduce carbon emissions in the United States and China.  Following that trend, earlier this month the United States and China signed eight partnership agreements to reduce greenhouse gas emissions.  Of the eight agreements, four promote collaboration in carbon capture and storage (CCS) technology.  As China alone consumes nearly half of the world’s coal and the United States consumes 11%, these agreements mark an important step in promoting international cooperation to combat climate change.

As Richard Martin noted in a previous blog post, the Chinese government has been looking at options to combat air pollution by curbing coal consumption for quite some time.  Despite the need to reduce coal consumption overall, throwing the combined weight of the United States and China at developing CCS technology to mitigate the effects of coal combustion is a move in the right direction.

Strengthening Ties

The majority of the CCS agreements are focused on regional projects that involve collaboration between research institutions in the United States and China.  One agreement, between the University of Kentucky and China’s Sinopec Corporation, features a demonstration project that will capture, utilize, and store 1 million tons of CO2 annually from a coal-fired plant in Shandong, China.  The project is projected to continue through 2017, and researchers hope to develop CCS technologies that can be used on a broader scale.  The University of Kentucky, along with the Shanxi Coal International Energy Group and Air Products & Chemicals Inc., is also working on a coal-fired power plant able to capture 2 million tons of CO2 per year.  Another of the efforts is an undertaking between the Huaneng Clean Energy Research Institute and Summit Power Group LLC to develop clean coal power generation technology. In the Shaanxi province, West Virginia University along with Yanchang Petroleum and Air Products and Chemicals will pursue an oxy-combustion coal technology project.

Issues Remain

Developing CCS technology in a world where the two largest emitters of CO2 also have massive natural coal reserves seems like a good way to mitigate emissions problems.  However, problems remain with the technology, including water intensity, high cost, and slow deployment rates.  Although coal companies and other fossil fuel advocates charge that President Obama is waging a “war on coal,” the administration has made it clear that coal and natural gas will remain a prominent part of America’s energy future for years to come. The same remains true in China, where the 12th Five-Year Plan emphasizes clean technologies and energy efficiency, but realistically acknowledges that China’s vast coal reserves will continue to be tapped to facilitate growth and economic development.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Energy Storage, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Grid Practice, Smart Transportation Practice, Utility Innovations

By Author


{"userID":"","pageName":"Climate Change","path":"\/tag\/climate-change","date":"9\/16\/2014"}