Navigant Research Blog

California Water Summit: A New Landscape for Water Management

— June 21, 2016

??????????????????Drought is not new to California, but 2012-2015 has been the driest 4 consecutive years in history. With climate change forcing us to face the idea of a new normal, the biggest question is: What if the next drought is even worse? This year’s California Water Summit highlighted how the discussion around California’s water situation is shifting focus from emergency measures to long-term preparation. This will require stakeholders to generate new solutions to address water management, both from the top down and the bottom up.

Top Down: Putting the Right Systems in Place

The California Department of Water Resources has been managing the variety of funding opportunities available to public utilities and others through Proposition 1. One focus area relates to the implementation of the Sustainable Groundwater Management Act (SGMA), which requires the formation of Groundwater Sustainability Agencies (GSAs) to oversee the management of the groundwater basins that provide over half of California’s water in dry years. The process of forming GSAs requires the input of many stakeholders on how to protect our watersheds from unsustainable use. As this effort evolves, it will be important to help these entities organize effectively and meet their planning requirements.

Another hot topic as resources become scarcer is that of water rights. Nobody wants to lose their access to water, but things have definitely changed since this fragmented system was put in place, resulting in suboptimal use of a precious resource. The summit called upon a number of Australians to share their experiences with the electronic water markets implemented in response to a culmination of factors, including their own drought that lasted over a decade. Though the endeavor was technologically challenging, the Australians said the largest obstacle was political inertia.

The California Water Summit also exhibited a strong focus on recycled water as an important water supply. Case studies showed the criticality of regulation and investment that support this resource as consumers become more comfortable with expanding its uses.

Bottom Up: Aligning the Resources

The Pre-Summit Workshop was dedicated to public-private partnerships, termed P3s, as a way to spur investment in water infrastructure. Various opportunities were discussed throughout conference sessions, including grant funding, which can take up to several years to secure. The summit wrapped up with a number of case studies that highlighted the importance of involving various stakeholders at every step in the process. One set of stakeholders to be particularly aware of is disadvantaged communities, as these sometimes overlap with areas hardest hit by drought.

Infrastructure is composed not only of large civic construction projects, but also of the more subtle IT networks that enable more precise management of water-related systems. These investments are also necessary as utilities seek to eliminate inefficiencies from leaks and other sources of waste. As the saying goes, “You can’t manage what you don’t measure.” We can expect increasing focus on (and hopefully investment in) California water data over the next few years.


New Distributed Energy Services Model Targets Large Corporate Energy Users

— June 9, 2016

AnalyticsThis past week, MGM Resorts and Wynn Resorts announced they will pay exit fees to Nevada Power to allow them to purchase wholesale power on their own. To do so, MGM and Wynn will pay $86.9 million and $15.7 million in fees, respectively, to ensure their decisions are ratepayer-neutral. MGM Resorts indicated that important drivers behind its decision to leave Nevada Power included not only the desire to reduce its energy spending, but also to procure more renewable energy to meet its customers’ desire for environmentally sustainable travel destinations.

Given these developments, it is reasonable to wonder what type of energy companies might be best poised to help companies analyze and execute similar strategies. Further, Navigant is watching closely to see if this kind of disruptive customer choice will spread to other utility service areas and emerge as one of the megatrends discussed in Jan Vrins’ Take Control of Your Future  blog series.

An Integrated Approach

One recently formed company that appears poised to meet the turnkey energy needs of customers like MGM Resorts and Wynn Resorts is Edison Energy. Edison Energy, part of the deregulated service offering of Edison International, has recently assembled several acquisitions under a single banner that can support an integrated approach to energy procurement (renewable or otherwise) through the use of energy efficiency and distributed renewable generation paired with battery energy storage. The companies under the Edison Energy banner include:

  • SoCore Energy, a distributed solar storage developer that helps commercial and industrial companies and rural cooperatives to develop onsite solar storage, energy efficiency, and demand response solutions.
  • Eneractive Solutions, a full-service energy services company that develops and executes energy efficiency projects at colleges, universities, schools, data centers, and other commercial and industrial sites.
  • Delta Energy Services, a custom energy consulting services firm that focuses on energy management strategies, energy procurement, and enterprisewide energy data management for large commercial and industrial energy users.
  • Altenex, which provides renewable energy advisory and procurement services focused on long-term power purchase agreements for renewable energy on behalf of large corporate clients with significant sustainable energy commitments.

At Navigant Research, we see battery energy storage as a key unifying technology that will position energy efficiency, demand response, and onsite distributed generation technologies like these to take advantage of new virtual power plant software and power market rules driving distributed energy resources business models. New turnkey offerings addressing the needs of large corporate entities like what Edison Energy is now doing along with new efforts by GE Current and Duke Energy Renewables should be watched closely as large corporate energy users look to chart new courses to take control of their future  and meet their sustainable energy needs.


Wastewater Heat Recovery an Increasingly Hot Topic

— June 3, 2016

Home Energy ManagementWastewater is not something that frequently crosses the average person’s mind. Yet ask anyone their opinion on the topic and they will give you some basic characteristics: Wastewater mostly contains a variety of wastes from residential, commercial, or industrial processes. Few people acknowledge that large amounts of wastewater contain recoverable, valuable components such as nutrients, irrigation water, and heat.

The inherent wastefulness of single-use water systems is being addressed in a number of ways. Systems like purple pipes utilize gray water (i.e., water that has been used but is not contaminated with sewage) for things like flushing the toilet and watering lawns. Gray water comes primarily from sinks, showers, and bathtubs. Purple pipes are becoming increasingly popular, especially in drought-ridden areas like California. In early 2015, San Diego began working on plans to expand its purple pipe infrastructure in an effort to reduce the need for imported water. Purple pipes can be very beneficial for reducing total water consumption. However, these systems currently do nothing about capturing heat waste.

Every day, billions of gallons of hot water go down the drain as hot showers are taken, dishwashers are run, and food is cooked. Most of this heat is lost entirely, while fresh water is heated up in isolation. In fact, between 80% and 90% of the energy used to heat household water goes down the drain. Domestic water heating also accounts for 15%-25% of household energy consumption, so wasting this heat represents a solid chunk of inefficiencies. International Wastewater Systems (IWS), Power-Pipe, and other companies are working on solving this problem by installing heat exchangers in the wastewater system.

Entropic Inevitability?

Similar to an energy recovery ventilator (ERV) in an HVAC system, heat exchanging systems for wastewater are typically most economical at large volumes, so they are currently installed mostly in commercial and industrial buildings. These systems transfer heat from wastewater directly into the fresh water stream without any direct contact between the waters. IWS has a patented system suited for large buildings (the SHARC) that can reduce energy costs by 30%-85%.

Other companies such as Power-Pipe sell individual components for residential systems. One Canadian company, Watercycles, markets a drain water heat recovery system for household use that utilizes water from the shower drain to preheat water from 40°F to 70°F before it hits the water heater. This preheating has the potential to double the output of the heater itself, reducing energy costs by half. Heat exchangers are not as common in households yet, primarily due to high investment cost. However, they are increasingly popular in high occupancy commercial properties like apartment complexes and hotels.

Wastewater is gradually becoming viewed as a valuable resource. Reducing the amount of water, nutrients, and heat that go down the drain is not only necessary, but valuable. As more buildings adopt purple pipes and heat recovery systems, this value will be realized.


Deploying Energy Efficiency to Lower CO2 Emissions and Comply with the Clean Power Plan

— May 17, 2016

Cloud ComputingThis post originally appeared on the Association of Energy Services Professionals (AESP) website.

This article was co-authored by Frank Stern and Rob Neumann. Amanvir Chahal and David Purcell also contributed.

There has been a great deal of discussion on compliance with the Clean Power Plan (CPP). Surprisingly, there is little discussion of specific costs and benefits in leveraging energy efficiency (EE) to reduce CO2 and move toward complying with the CPP. Navigant investigated the effects of deploying additional EE resources to decrease CO2 emissions in two regions—California and PJM [1]. Our analysis shows that deploying additional EE for CPP compliance results in reduced CO2, as would be expected, but it also reduces costs and system congestion. Additional EE can reduce cost to serve load by 3% to 5% in California and PJM, which reduces costs annually up to $825 million in California and $1.5 billion in PJM. Another benefit of deployed EE is system congestion relief, which reduces the cost to serve load—this is important since large, urban utilities are focused on reducing congestion points, and EE can be used as a solution.

CPP and CO2 Reduction Timeline

The CPP has been stayed by the U.S. Supreme Court until final resolution of the case through the federal courts. The U.S. Supreme Court may not have final resolution of the case until 2018, although it could be sooner. Regardless, many states and regions continue to move toward the CPP goals to reduce carbon emissions, plan for an advanced energy economy, and meet cleaner generation goals. It is not known at this time if the deadlines in the CPP will be modified.

Modeling EE for CO2 Reduction

Navigant has been modeling supply resources for many years and has been including EE as a modeled resource. For this analysis, we focused on modeling PJM Transmission Interconnection and the state of California. To establish our EE base case across California and PJM, we included levels of EE modeled in each of Navigant’s most recent PROMOD and POM [2] transmission model runs. The data and assumptions in these runs are updated and verified with industry experts each quarter. Variables in the model include (i) rate of EE adoption over time, (ii) amount of EE compared to new generation, and (iii) varying amounts of EE deployed. EE was modeled across CA and PJM for the three cases (high/medium/low)—each case was run for 2025 and 2030. These years are important since 2025 is the middle of the CPP implementation period and 2030 is the first year of full compliance with the rule (final goal). The low case included a 50% reduction in EE from the base case, while the high case included a 50% increase in EE from the base case—the base case in 2030 is 33 million MWh for PJM and 24 million MWh for California.

Modeled Results

Deployed EE can provide up to 8.8% of California’s and 3.6% of PJM’s overall CPP Compliance goal in 2030. There is also a reduction in the cost to serve generation load based upon deployed EE. In PJM, the cost savings from the low EE case to the high EE case results in over $1.5 billion in savings annually in 2030 (3.6% of total cost to serve load), while in California, the same metric results in up to $825 million in savings annually in 2030 (4.7% of the cost to serve load). To state it in different terms, the cost to increase EE in 2030 to assist meeting CPP requirements is approximately $900 million in PJM and $550 million in California, which results in an EE return on investment of $600 million in PJM and $300 million in California. This lowers 2030 system capacity requirements by 5.6% in PJM and 10.7% in California. The lower savings and returns in California are due to aggressive renewable and EE policies already underway today in advance of CPP compliance.

Another benefit of deployed EE is reduced system congestion, which reduces the cost to serve load. EE will lower the need for new thermal generation on the system and put downward pressure on capacity and resource prices. Our model shows that system congestion is reduced by approximately 1.5% and is seen systemwide. This amounts to cost reductions of more than $765 million a year in PJM and $270 million a year in California. This system congestion finding is important, since there are various efforts underway across the nation to improve congestion (e.g., Con Edison Brooklyn/Queens Demand Management Initiative).


CPP initiatives would benefit greatly by incorporating additional EE into the planning process. EE reduces emissions and systems costs and pushes out the need for large, costly new generation projects. Specifically, we showed that CO2 emissions would be significantly lowered in PJM and California in both 2025 and 2030, while system costs are lowered in PJM and CA by at least 3% and 5%, respectively. This all adds up to longer glide paths for meeting regulatory requirements or when state goals have to be implemented. By including EE as a resource into the resource mix, system planners and environmental offices gain significant benefits in the form of decreasing costs, flattening demand and a zero-emitting resource.

[1] PROMOD IV is a detailed hourly chronological market model that simulates the dispatch and operation of the wholesale electricity market. It replicates the least cost optimization decision criteria used by system operators and utilities in the market while observing generating operational limitations and transmission constraints. The Proprietary Portfolio Optimization Model (POM) is leveraged for regional analysis of regulatory impacts.

[2] PJM coordinates movement of electricity through all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia – numerous states and diverse regions.


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