Navigant Research Blog

Postcard from Hawaii to Nation’s Capital

— June 29, 2017

The mood at the second annual VERGE conference in Honolulu, Hawaii last week was upbeat about the future of clean energy, despite pushback on the US mainland. Apparently, those committed to a clean energy agenda, including the private sector, are more motivated than ever to push forward with aggressive programs to bring renewables resources online. They aim to not only combat climate change, but also create jobs.

Conference attendees clearly supported the supposition that clean energy is here to stay, no matter what might be unfolding in Washington, DC. The proposed dismantling of the federal Environmental Protection Agency’s Clean Power Plan and recent withdrawal of the United States from the Paris Agreement on climate change only seemed to serve as motivation to push forward even harder.

Hawaii’s Renewable Energy Vision

Hawaii is the first (and so far) only state in the United States to commit to a 100% renewable energy future. Governor David Ige of Hawaii didn’t seem to blink in the face of counter currents flowing from the Trump administration. A confessed energy geek, he seemed to take particular delight in the fact that Hawaii has emerged as a key testing ground for bolstering commitments to infrastructure needed to integrate variable renewables for both power and transportation services. Since each island of Hawaii is its own separate electric grid control area and retail costs are high due to such a reliance upon imported sources of fossil fuel, Hawaii is in a unique spot. The economics in the state clearly favor renewable energy.

Industry Momentum Is for Renewables

Even Connie Lau, CEO of Hawaiian Electric Industries, reported that her investor-owned utilities brethren have all bought into the clean energy agenda. If the administrative about-face on clean energy had occurred 8 years ago, then the momentum for renewables and other clean energy may have been halted, but that time has passed. Past government and industry investments have driven down the price of solar PV, wind, and batteries while software innovation to manage such resources has scaled up.

Nevertheless, there are challenges in implementing aggressive clean energy goals. Just look at California, where the state is paying neighboring states to take excess solar production. Many models show that once one reaches 80%-90% renewables penetration, the cost of integration can jump dramatically.

One of the key tools Hawaii will rely upon to reach its 100% renewable energy goal is to integrate devices like energy storage into self-balancing distribution networks such as microgrids. As of now, over 90 MW of new energy storage devices has been authorized by state regulators to be installed among the Hawaiian islands, with the majority of that capacity—70 MW—to be installed in Oahu.

Continuing Conversation

I had the pleasure of helping to run a 4-hour workshop on how to overcome challenges to developing a microgrid at VERGE with cutting edge microgrid market makers such as ENGIE and Spirae. I also moderated a session on how microgrids boost clean energy on islands, with featured speakers from ABB—which is pushing forward with a 134 MW microgrid designed to reach 50% renewable energy on the island of Aruba by 2020—and representatives from Hawaii and the US Navy.

Ironically, there may still be some room for collaboration between Hawaii and Washington, DC in the clean energy space. As I noted in a previous in a previous blog, one area where the interests in promoting national security in DC and a clean energy agenda in Hawaii align is the microgrid space. Watch for a report on that topic later this year.

 

Political Posturing Won’t Stop Climate Action

— June 12, 2017

The debate over climate change wages on in Washington, DC, but the businesses that lead the national economy are taking action today. Even without regulatory mandates, corporations are making significant investments in energy efficiency, clean energy, and other sustainability initiatives to combat climate change. Uncertainty is bad for business, and climate change forces corporate risk analysis and planning. The upside is that smart investments can help combat climate change and deliver bottom-line benefits.

The Evidence: Action at the Top

Fortune  500 companies have been making commitments on climate for decades at this point. Nearly 50% of these industry majors have committed to greenhouse gas emissions reductions. More specifically, the effort of RE100 has recruited over 95 companies pledging to rely on 100% renewable energy. Pressure from shareholders and customers has driven investment in renewables and emissions reductions requirements across the supply chain.

When the top of the Fortune 100 list fail to lead, there is significant backlash. At the end of May, for example, Exxon Mobil faced major shareholder push back on the company’s failure to address climate risk assessment. According to The Washington Post, 63% of shareholders voted in favor of the oil giant assessing and disclosing the climate risk against long-term financial performance. This motion by Exxon’s shareholders echoes efforts with many other major fossil fuel-based companies in the last year, according to the advocacy group Ceres.

The Benefits: Loyal Customers, Happy Shareholders

Walmart, the world’s largest retailer, has faced its share of controversy around corporate social responsibility. However, when it comes to climate change and sustainability, some of the company’s major recent efforts are showcasing it as a leader. In 2016, the company set science-based targets for 18% greenhouse gas emissions reductions by 2025 from 2015 levels. This is a notable effort, bringing commitments inside the fence as opposed to the extensive pressure the company has historically put on its suppliers.

Walmart is demonstrating the business benefits of leadership on climate change and sustainability. As Joby Carlson, director of Energy and Operations Sustainability, explained in Energy Manager Today, “We try not to do anything that doesn’t have a good financial return. Sustainability has to hit the balance among the economics, the environmental, and the social side. Energy efficiency has been our bread and butter. We are a low-cost retailer so we are sensitive about the cost of operations. Optimizing and reducing our energy demand has translated into millions and millions [in savings].”

Corporate America is leading the charge and moving forward with combating climate change, and in the process, redefining sustainability as a metric of business success. As companies focus their efforts inside their operations, there is more opportunity to leverage technology that delivers emissions reductions while also delivering cost savings and other broad business benefits, including loyal customers and committed investors.

 

Technology and Buildings – A Solid Foundation for Sustainability

— June 6, 2017

The idea of corporate sustainability risks becoming a business paradox—a symbol of commitments without funding or substance that, in themselves, become unsustainable. However, political uncertainty, understanding of climate risk, and shareholder demands are redefining corporate sustainability strategies. Technology innovation has set the groundwork for a transformation of sustainability strategy, and intelligent buildings are a perfect starting point.

#1: Business Response to Political Uncertainty and Climate Risk Awareness

In early May, a full page ad campaign in The New York Times, The Wall Street Journal, and the New York Post made a call to President Donald Trump to commit to the Paris Agreement. The signatories, 24 companies with a market cap of over $3.2 trillion, proclaimed that US leadership on climate change would strengthen the country’s economic competitiveness, create jobs, and reduce business risks. Uncertainty is bad for business, and a unified approach to study, combat, and adapt to climate change is an imperative for the economy.

#2: Shareholder Demands

Ceres convenes institutional investors for climate change education and advocacy. Climate change risk disclosure is a major focus area, and the group tracks shareholder resolutions that demand portfolio resilience analysis. Ceres cites the resolutions filed at 15 major fossil fuel companies as one line of evidence that shareholders demand climate change preparedness and investment in mitigation. Along the same lines as #1, shareholders see uncertainty as bad for their investments, and with more unity, major investors are demanding action and planning on climate change.

Start with Intelligent Buildings

On May 4, I moderated Energy Efficiency in Buildings – Technology Helping to Set New Benchmarks, a webinar for Realcomm. The roundtable discussion and results of real-time polling support the argument that technology can provide measurable improvements on sustainability and tie to climate change commitments.

A question to the audience highlighted the confusing state of branding and opinions around sustainability. The audience was asked, “Would you rather your company be considered ‘green’ or ‘efficient’ by your customer base?” The results were striking: 80% chose “efficient,” while only 20% chose “green.” This result underscores the challenges companies have faced with sustainability initiatives that failed to rely on technology or reflected measurements in time rather than ongoing improvements.

John Seaton, director at RealFoundations, helped illustrate how technology can deliver bottom-line benefits and change the face of sustainability. In two case studies, RealFoundations identified significant energy and associated cost savings with data analytics in 4-star ($20,000 energy savings) and 5-star ($10,000) NABERS Energy (the Australian equivalent to LEED) scored buildings. This evidence sets the stage for how technology can amplify the benefits of sustainability commitments.

There is power in aligning technology and sustainability. An intelligent building is defined by a data infrastructure for ongoing monitoring and operational changes. Once a commercial building has the IT backbone for capturing detailed data on a continuous basis, there is a platform for systemic change that can deliver sustainability benefits while supporting the bottom line. The dataset is the input and the output is a near endless array of business metrics—utility cost savings, equipment maintenance reports, occupant satisfaction, or carbon emissions reductions. The real benefit is that as a tool for sustainability, an intelligent building delivers quantifiable energy, resource, and traditional sustainability metrics. It also delivers business improvements that keep executive decision makers committed and budgets lined up.

 

Presidential Candidates at Odds on Climate Change

— October 6, 2016

Oil RigOne year ago, my colleague Casey Talon published a blog on the energy and climate change policies of various presidential hopefuls. With the nominees now chosen and the first official presidential debates now over, the nation’s energy future should be clearer, but widely disparate policies have instead made it more nebulous than ever. Let’s take a look at how each nominee could affect US climate policy.

  • Democratic nominee Hillary Clinton’s plan for climate action involves a heavy focus on solar panels, increasing the installed base of solar power in the United States by 700% within her first term. Clinton’s plan also includes creating a White House transmission office, which would coordinate permitting for siting transmission lines on the state and federal levels. This plan would rely heavily on either a cap-and-trade system for carbon emissions or a carbon tax. Without increased pricing for emissions, natural gas is currently too cheap for renewable energy to be competitive in some applications. One item Clinton’s plan is relatively vague about is energy storage. In order to meet the solar energy goals set forth by the presidential nominee, a large amount of storage would have to be implemented, as solar and wind are both intermittent power sources that do not necessarily produce power at the time when electricity demand is greatest.
  • Republican nominee Donald Trump promises a return to coal-fired power plants, as well as other fossil fuels. The candidate’s America First energy plan involves a dissolution of the US Environmental Protection Agency’s (EPA’s) Clean Power Plan, as well as the EPA itself. Any move toward clean power would be entirely dependent on free market adoption. Shifting back to more coal power could be problematic from an emissions perspective, as 71% of 2015 carbon emissions from the electric power sector came from coal. Meanwhile, natural gas, the second largest fossil fuel energy source, represented only 28% of emissions. Increasing CO2 emissions would not only mean a faster rise in global temperatures, but also a deviation from international agreements on climate change. In addition, due to declining renewable energy prices and the increasing prevalence of natural gas fracking, coal is not as economically attractive an option as it once was. A lack of regulation surrounding the energy sector could either result in widespread adoption of renewables on the market or a sharp rise in carbon emissions.

Electricity demand is increasing in the United States, and carbon emissions have remained fairly consistent in the past several years. It is true that cleaner energy is needed in greater quantities, both to balance out the added demand from smart metering, electric vehicles, and increasingly connected cities and to reduce emissions. In the 2015 Paris Agreement, the United States promised to cut its carbon emissions 28% below 2005 levels by 2025. It’s currently not on track to reach that goal, and a reduction in the amount of clean power being utilized would hinder the nation’s ability to meet this pledge.

The future of America’s energy policy is uncertain. November’s election could bring some much needed clarity.

 

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