Navigant Research Blog

Google Has Reached 100% Renewable Energy, so I’m Issuing a New Challenge

— April 19, 2018

As consumers press companies to be more conscious of their environmental impact and sustainability, corporate procurement of renewable energy has gained momentum around the world. Some 130 companies have signed the RE100 pledge to make their operations run on 100% renewable energy. One of the companies that started this trend was Google.

Google’s First Renewable Steps

In 2010, Google started a journey to replace the electricity it uses with renewable sources by signing its first power purchase agreement (PPA) with a 114 MW wind farm in Iowa.

To ensure that its purchases have a meaningful impact on the environment, Google has followed the concept of additionality, which means that all the electricity it buys is funding new renewable energy projects.

In 2017—2.6 GW over 20 projects and 7 years later—Google announced that it reached its 100% renewables target. This is a massive achievement, especially considering that Google began these plans when grid parity was little more than a dream for wind, and solar energy was a technology that only rich Californians and Germans put on their roofs.

My Challenge to Google

While Google’s achievement should be applauded, I believe it is possible to move that target further afield. It is true that Google is buying all its electricity from renewable sources, but it is unlikely that all the electricity it is using comes from renewable sources. This is because solar and wind, Google’s choices for renewable sources, are both variable, while Google’s electricity demand is not. In other words, there are times and locations when Google must use electricity that comes from traditional sources, while simultaneously the electricity generated from the renewable projects funded via Google’s PPAs is curtailed and lost.

So, here is my challenge to Google (or any company willing to accept it—looking at Apple, Amazon, Microsoft) to move its energy program forward:

  • Work with the 20 projects it has funded to ensure they have onsite storage, which reduces the chance of curtailments and increases impact on the grid. This also means the balancing cost is not passed to other ratepayers.
  • Ensure all energy assets (distributed generation and loads) are part of demand response programs or virtual power
    plants, which makes the flexibility of these resources open to grid operators.
  • Make sure any new electricity procured is locally generated, and has no impact on the grid (or that the sites at least fulfill bullets 1 and 2 above).
  • Encourage employees to take their own energy consumption choices along the same journey!

Major Companies Should Continue to Set a High Bar

This is not an easy challenge, but it’s also not impossible. It’s probably as difficult as the goal to achieve 100% procurement of renewables seemed in 2010, when Google embarked on this mission. Google addressed these concepts in a white paper released in 2016, but mostly in a future tense. In my opinion, the technologies and regulations to make this possible are already here and are starting to reach scale. Now it is up to Google and other visionary organizations and individuals to make this happen.

 

How Many Ways Can We Control a Microgrid?

— April 17, 2018

How to control a microgrid? Let me count the ways. In the Navigant Research Leaderboard: Microgrid Controls report, all energy storage and smart inverter companies were excluded. This was done to have an apples-to-apples comparison since controls encompass many different technologies. Among the available solutions, microgrids are controlled with digital relays, smart switches, traditional automation products, and increasingly, new sophisticated software algorithms.

This blog traces the evolution of one battery vendor—EnSync Energy—and acknowledges how key microgrid control innovation has flowed from the energy storage community. The story illustrates how battery vendors have evolved over time, turning many early assumptions about microgrids upside down. Whereas in the past microgrids were designed to minimize or eliminate the need for battery storage due to cost, today the vast majority of microgrids include some form of energy storage, especially systems that incorporate renewables.

The roots of what is now EnSync focused first and foremost on a unique flow battery chemistry, with its control architecture as a secondary feature. “The original company had significant intellectual property in power controls. That was one of the key reasons I joined the company,” said Dan Nordloh, executive vice president. “I believed there was peril ahead in remaining a flow battery supplier,” he noted, referencing the recent bankruptcy of ViZn Energy in validation of his concerns.

In contrast, EnSync is no longer focused on flow batteries and has an agnostic approach to battery type. It now boasts over 22 current projects in Hawaii alone, and these represent $35 million in electricity sales over the term of the power purchase agreements (PPAs). The company is deploying a modular, scaleable, off-grid system in East Africa that will likely link up with a larger village nearby. EnSync has also added to its list of partnerships by entering into a strategic relationship with Schneider Electric.

Is Plug and Play the Way to Go?

The key to EnSync’s success? “We decided to move away from single application cul-de-sac designs and instead shift[ed] to a more modular, rack-mounted plug-and-play approach, which future-proofs microgrids. Adding a new resource? Just slide a new drawer in,” said Nordloh. Picking up on a trend also evident among energy storage vendors such as Greensmith, companies that started out with a focus on battery optimization have expanded their reach to generation and loads. In short, they now offer microgrid controllers.

“I like using the analogy of Lego blocks. Remember, a small microgrid is just as complex as a large microgrid. But with our direct current (DC) bus as a backbone, it is easier to add to the microgrid over time, reducing the need to re-engineer the microgrid every time you want to expand the distributed energy resources (DER) mix. And with their integrated cloud-based DER Flex controls package, microgrids can be changed to enable export of grid services with a simple software adjustment,” continued Nordloh. He pointed to the Palama Holdings meat processing plant on Oahu that is installing a microgrid under a self-financed PPA. At present, the microgrid reduces costs by enabling demand charge abatement strategies. Yet state regulators are considering creating markets for grid services. This microgrid could provide demand response and frequency regulation through EnSync’s DER Flex controller with a simple software switch.

An advantage of EnSync’s DC-centric approach is that users do not need to control variable solar PV. Instead, voltage algorithms keep the microgrid in balance. This approach is the corollary to the droop in frequency of the alternating current controls approach known as CERTS. Both control schemes shy away from the common master/slave control protocol, moving the market closer to plug and play.

 

Tracking Blackouts: Validation That C&I Microgrids Are the Next Big Thing?

— April 10, 2018

A number of reports tracking power outages in the US have been released this year. These reports underscore why this country continues to be the global leader on grid-tied microgrid capacity, according to Navigant Research’s Microgrid Deployment Tracker. These statistics also show why commercial and industrial (C&I) customers have emerged as the fastest growing microgrid market segment globally.

Eaton Blackout Tracker Results

Eaton, a leading microgrid solutions provider, releases its annual Blackout Tracker every year. The data for 2017 revealed a few surprises. The US sustained 3,526 blackouts in 2017 that interrupted grid delivery of power services to an aggregate population of 36.7 million. The average power outage averaged 81 minutes of down time. While the total number of overall outages in 2017 was 9% less than in 2016, the number of people affected by these blackouts more than doubled. This seeming dichotomy can be explained by the longer term and wider geography of major blackouts occurring last year due to extreme weather hitting Florida, Texas, and Puerto Rico (along with wildfires hitting California).

As noted in a previous blog, the state that features the most power outages is California. No doubt, part of this is due to sheer size. Nonetheless, the state has had the dubious distinction of taking top honors for blackouts for the ninth year in a row. Top identifiable causes were weather and falling trees followed by failing equipment and human error. All 50 states were affected by power outages, with the average cost at $100,000 per hour. One of the most expensive costs incurred by a single C&I customer was Delta Airlines, which lost $50 million due to an outage at the Atlanta, Georgia airport.

Ranking All 50 US States by Number of Blackouts: 2017

(Source: Eaton Blackout Tracker)

S&C Electric Results

S&C Electric, a leading company active in utility distribution microgrids, released its own analysis focusing explicitly on C&I customer blackouts in the US. Some 251 companies representing operations including manufacturing, data centers, and healthcare, among others, responded to this survey conducted in 4Q 2017. Here are some of the highlights rendered from this research:

  • 41% of respondents claimed the average power outage was up to one hour of time, while 26% said one hour or more.
  • In terms of frequency, just under half (49%) said they experienced one or more power outages every year; 21% said once a month or more (see the figure below).
  • In the past 12 months, 84% of respondents recalled some form of power outage.
  • Longest duration power outages were reported in the manufacturing sector with 58% reporting outages of an hour or greater.
  • Productivity loss was the main impact upon C&I customers experiencing power outages (76%).
  • On a regional basis, the longest power outages occur in the South, with 62% of respondents being affected by a power outage lasting more than one hour.

US C&I Outage Frequency by Region, 2017

(Source: S&C Electric)

What Does This Mean?

What basic insights can one glean from this analysis? While initially laggards, C&I microgrids are now picking up momentum and will continue to grow at a fast pace not only in the US, but globally. The S&C Electric report supports this view as 71% of respondents say they own or plan to develop alternative energy sources to supplementing their utility power supplies. From a microgrid market perspective, even more important is that 70% see power reliability as an existing cause for concern, and 40% would pay a premium to improve it.

 

America Movil Enters the Residential Solar Market

— March 20, 2018

On February 26, Mexico-based America Movil, one of the world’s largest telecom companies, announced the launch of a solar product in Mexico, becoming the first leading telecom company to fully embrace distributed energy resources (DER). America Movil currently serves 363.5 million access lines, including 280.6 million mobile subscribers in Latin America and Central and Southeast Europe.

Its fixed-line subsidiary, Telmex, will provide the service to customers who own a roof. Telmex will install the modules and file all its customers’ paperwork. A 3.3 kW system will cost MXN 166,844 (US$8,957 or US$2.7/W) paid in cash or up to MXN 236,000 (US$12,600 or US$3.8/W) when financed. Payments will be made through an existing Telmex invoice.

Telmex will target high consumption residential customers currently paying the regulated domestic high consumption (DAC) tariff, which in February 2018 was US$0.24/kWh. A user pays this tariff if they consume more than 250 kWh per month in temperate regions or up to 2,500 kWh in the hottest areas.

A Need to Diversify

America Movil already offers mobile, fixed-line, broadband, Internet of Things, and television services in Mexico, but its 61% market share is at the limit of what regulators allow. In addition, after regulatory reform in 2014, Mexican mobile competition increased significantly, cutting margins at America Movil’s cash cow. In April 2017, Mexico’s telecoms regulator put America Movil on notice to legally separate its Telmex fixed-line division from its cellular and retail divisions, putting even more pressure on the company’s finances.

DER: A Tool to Capture the Energy Market

With no room to expand in the telecoms sector, America Movil needs new markets where it can leverage its infrastructure and large customer base. Residential solar fits this description perfectly. Telmex must create new solar installation teams, but other infrastructure already exists: sales, retail partners (Carlos Slim, America Movil’s majority shareholder, owns a large Mexican retail empire), finance (Slim also owns a local bank), customer service centres, billing, etc.

Both Telmex and customers will benefit. Solar improves customer stickiness (finance contracts run for up to 6 years), while reducing electricity costs for its customers.

The America Movil Case Is Unique, but Some Drivers Are Global

America Movil’s situation is unique. Few telecoms are permitted a 61% market share, or have an owner that also owns a bank and a retail empire, or are entering a market with one player not used to competing. But other drivers are global. All telecoms have a large customer base and the infrastructure to serve and bill them once DER is installed. Many also operate in regions with regulated electricity tariffs and abundant sunshine.

Other telecoms are already exploring DER. Last year in the US, Sunrun and Comcast partnered to offer Comcast customers Sunrun’s DER services. In Europe, O2 Telefonica has tip-toed into DER through smart home energy devices like smart thermostats, albeit with mixed results.

 

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