Navigant Research Blog

Canada Looks to the Grid for Emission Reductions

— January 4, 2012

Last month, as the international climate change talks in Durban, South Africa wound up, Canada invoked the country’s legal right to leave the Kyoto Protocol.  Canadian officials cited several reasons for their departure from the accord; the main reason is that Canada is seeking to avoid the financial penalties from its failure to comply with its stated targets for reductions of carbon emissions.  Canada’s representatives have also indicated that Kyoto is irrelevant without the participation of two of the largest polluters: China and the United States.

That argument aside, as oil prices continue to rise over time and the opportunity cost of domestic consumption increases, Canada may decide to maximize the country’s oil exports at the expense of domestic use.  According to the U.S. Energy Information Agency, the country’s 175.2 billion barrels of proven reserves of oil put Canada behind only Saudi Arabia and Venezuela, and it is the only non-OPEC member in the top five.  That means that the global market for oil exports may give Canada an economic reason to reduce the use of fossil fuels, and thus emissions, within its own borders.  Canada, along with other petroleum-exporting countries will simply export a larger proportion of oil along with the emissions they produce.

In terms of electricity generation, Canada’s vast hydroelectricity generation capacity and pumped storage reserves are often cited as the reason why further improvements in emissions are not economically viable.  Cheap, low-carbon hydro prices many other cleantech options out of the market.  For that reason, one opportunity for Canada lies in ensuring the stability of the electrical grid as a system.  The provinces of British Columbia and Ontario have been especially aggressive in introducing the types of market drivers that encourage distributed storage, although without any obvious overall intent.  These drivers include dynamic pricing, distributed solar PV incentives, and plug-in vehicle programs.

For example, in Ontario (a partially deregulated market), there are three different time-of-use prices: 6.2¢ per kilowatt-hour (kWh) for off-peak, 9.2¢/kWh for mid-peak, 10.8¢/kWh for on-peak – and these prices are reviewed every May 1 and November 1 by the Ontario Energy Board (OEB).  British Columbia, and more specifically BC Hydro, is testing smart meters, dynamic pricing schemes, and demand response schemes (hot water heaters and thermostats) in an effort to understand how consumers use and respond to these peak-shaving measures.

Because of Canada’s position as a net energy exporter, and the country’s diverse energy resources (including hydro), any improvements to emissions on the grid side will be limited to incremental improvements in the grid.  Distributed storage is a good option for optimizing an existing system – such as the Canadian grid – bit by bit, and kilowatt-hour by kilowatt-hour.


Group Buying Comes to Residential Solar

— January 3, 2012

As I mentioned in an earlier blog post one of the key drivers for community and residential energy storage is distributed solar photovoltaics (PV).  Although the typical assumption is that the market for distributed solar power will be driven by economic incentives for residential generation, one factor often ignored is how impractical or challenging installing solar PV at a home can be for a homeowner.  For homeowners, understanding the economic benefits and vetting individual vendors and installers can be a daunting process.

One organization working to remedy this is One Block Off the Grid (1BOG), which is attempting to adapt the group-buying concept for consumers installing solar power systems.  Group-buying has taken off with several well-known deal sites (Groupon, LivingSocial) offering discounted deals on goods and services.  While the idea of a middleman who connects a vendor with a customer is a cornerstone of business-to-customer strategy, 1BOG takes this concept further.  The company is one part advisor, one part matchmaker, and one part dealmaker.

The purpose of 1BOG is to educate and advise potential residential solar PV adopters on the benefits and drawbacks of installing solar power systems (including rebates, other incentives, and return on investment).  Once clients decide whether or not to go forward with a project, they can then take advantage of a promotional deal on a system that suits them.

Installers and vendors benefit because participation in 1BOG differentiates them from the crowd of other businesses in the space.  Customers benefit by understanding the practical and financial implications of installing solar PV in their homes.

1BOG is not the only model for this type of service.  Community-based models such as the Mt. Pleasant Solar Cooperative in Washington, D.C. are less business-driven but operate on similar principals: education and facilitation.  In the case of the Mt.  Pleasant neighborhood, two neighbors’ struggle through the process of installing solar PV on their homes led them to found an association to give other neighbors an easier path to opting into solar.  The cooperative is one of eight covering various neighborhoods in Washington.

Where this gets interesting for energy storage is that 1BOG concentrates its efforts (and consequently, group buying discounts) in specific, geographically bounded markets.  Similarly, community co-ops do the same by virtue of their association-based models.  Although this is a natural model for residential PV diffusion, it’s also likely to wreak havoc with low voltage networks.  Therein lies the opportunity for energy storage technology.


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