Navigant Research Blog

Energy Storage Association Offers a Call to Action for New Policy

— December 14, 2017

In collaboration with Navigant Research, the Energy Storage Association (ESA) recently published its latest white paper, 35×25: A Vision for Energy Storage, analyzing the evolving needs of the electric grid and the market drivers powering rapid energy storage industry growth. The study introduces the current state of the industry along with a vision where widespread storage deployments result in major economic, environmental, and social benefits.

Key to the paper’s findings is a call to action section outlining policies and programs being implemented around the country to support the growth of the industry. Over the coming years, changes in both government and regulatory policies will have a substantial effect on how the market develops and at what scale. Players in the market should ensure they fully understand the changes that may be coming and how they will shape future opportunities.

ESA’s call to action highlights considerations and actions for both legislators and industry regulators that seek to capitalize on the multitude of benefits provided by energy storage. For legislators, there are four primary categories of initiatives being explored that offer both direct and indirect support as follows:

  • Energy storage impact studies: A strong understanding of the benefits of energy storage is a great first step, allowing local stakeholders to quantify the impacts of storage deployments, such as upfront and ongoing expenses, grid operating cost savings, improved reliability, emissions reductions, and job creation. 
  • Procurement targets or mandates: Multiple states have implemented targets that serve to clarify long-term policy objectives for the industry, spurring action from utilities and providing operational experience for stakeholders. 
  • Incentive programs: Including subsidies, grants, and tax credits, which lower the costs for new storage projects to accelerate market growth and establish a sustainable local industry. 
  • Clean energy standards: A clean energy standard, or clean portfolio standard, is similar to a renewable portfolio standard; however, it often has a broader focus. States including Connecticut and Vermont have implemented standards to ensure storage is compared side-by-side with other resources in planning processes and require electricity providers to implement new technologies.

Many of the legislative actions taken to support energy storage, such as subsidies and procurement mandates, have received significant media attention. However, in many cases, the local regulators have more influence over a market’s growth. Out of an obligation to protect ratepayers and oversee utility investments, regulators must work collaboratively with all stakeholder groups to facilitate constructive dialogue around the deployment and integration of storage systems. ESA’s white paper outlines steps that can be taken by regulators as follows:

  • Clear rules regarding storage: Do current regulations adequately account for energy storage participation? If not, work with utilities, industry participants, and research organizations to better define participation methods and strategies for new technologies.
  • Updated modeling in proceedings: Many of the modeling tools used in integrated resource planning proceedings today lack sufficient granularity and an evaluation methodology that properly incorporates energy storage. For example, models for storage should assess the effect of deployments at specific locations and over sub-hourly time intervals.
  • Streamlined interconnection standards: Despite efforts, current interconnection procedures often pose a significant barrier to new entrants. Streamlining interconnection processes is critical to enable grid modernization.
  • The effects of rate design: New rate structures that accurately reflect the locational and time-based costs and benefits of integrating distributed energy resources, including energy storage, should be explored.

At this stage, it is critical that industry participants with in-depth knowledge on the true costs and benefits of energy storage technologies participate in policy development to ensure a level playing field is created. Along with greater detail on the policy initiatives listed above, ESA’s white paper quantifies the diverse benefits of energy storage and how this disruptive technology can transform the electricity industry.

 

Businesses Say Bring On IoT Regulations

— November 28, 2017

Most businesses do not seek new regulations from governments or regulatory agencies. They already have enough rules to play by. But when it comes to the Internet of Things (IoT), many take a different tack and are quite open to strong regulations since they are acutely aware of the many reported hacks or known vulnerabilities in things like webcams, baby monitors, and cardiac devices.

A new survey underscores this sentiment. 96% of business respondents saying there should be IoT security regulation, according to the study of 1,050 global IT and business decision makers conducted by Gemalto, a global digital security vendor based in the Netherlands.

Not only do business people see the need for enhanced IoT security, consumers do as well. The same Gemalto survey finds that 90% of consumer respondents (out of 10,500) believe there should be IoT security regulation. 65% of the same consumers are concerned about a hacker controlling their IoT devices.

Challenges Businesses Face

The leading challenge for companies trying to secure IoT products or services is the high cost of implementation (44%), according to the survey. That means companies either bite the bullet and invest in greater security for products or services or cut corners. The latter is obviously not a wise approach. It leaves customers too vulnerable to shoddy security in the IoT products or services they purchase. If spending remains a barrier, it could spell trouble for the emerging IoT market as a whole. With no baseline of security, IoT technology buyers will remain leery and unlikely to make purchases.

Another concern the study revealed is that only 6 out of 10 businesses encrypt all the data they capture or store via IoT devices. That means 4 out of 10 (or 40%) businesses do not, a major red flag. Not all data flowing from IoT devices is that valuable; the number of times someone turns on or off a connected light bulb is minor. But health records or personal financial details is another matter altogether.

Energy Sector Relatively Secure, So Far

So far, the energy sector has a fairly good record of thwarting attacks against devices, with some exceptions. Things like smart meters, substations, and other grid assets have remained safe for the most part. But there are many attempts to penetrate the grid, like earlier this year when nuclear facilities came under attack. Those attempts are likely to increase as more things connect to the grid through distributed energy resources and behind-the-meter devices like smart thermostats or EV chargers. Without stronger rules and incentives, the risks will rise significantly.

One can understand the desire for more stringent regulations for the IoT. The number of things connecting to the grid and other systems is growing exponentially, and so too the number of potential threats. A strong set of standards throughout the IoT value chain is needed to keep data, systems, and people safe. Strong rules will force vendors to devote the needed resources and money to make it happen sooner rather than later.

 

Two Issues That May Derail Global Sustainability Efforts

— November 9, 2017

Most nations around the world are committed to reducing carbon emissions and energy consumption. This is evidenced by the near complete global membership of 197 parties in the United Nations Framework Convention on Climate Change (UNFCC), with 168 members currently having ratified their commitment to the Paris Agreement. However, two global issues may affect the long-term success of the Paris Agreement and other national or regional sustainability goals and targets.

A Vicious Cycle

The first is the increasing demand for residential air conditioners in areas that have previously had low usage rates overall. This is most noticeable and prevalent in the Asia Pacific region, where many countries are in tropical or subtropical climate zones. Developed countries around the world have higher historical demand and usage of air conditioners, but increasingly, developing countries in warmer climates are escalating their desire for these systems. Several factors contribute to this increase of use, including general warming of the climate, increased urbanization and the localized hotspots urbanization creates, and the availability of a wider variety of affordable air conditioners.

Today’s air conditioners are much more energy efficient than their predecessors, but they can still be the single largest energy consumer in a commercial or residential building. Additionally, the industry has largely eliminated, reduced, or restricted the use of ozone depleting chemicals such as chlorofluorocarbons and hydrochlorofluorocarbons, but many of the newer refrigerants can have thousands of times more global warming potential than CO2. It is easy to see how increased uptake of air conditioners in areas of lower historical use can derail the intent and goals of sustainability efforts such as the Paris Agreement.

Miss-Measured Returns

The second issue is the miscalculation by governing bodies and sustainability related organizations of the persistence of energy conservation measures (ECMs). For example, the European Union recently proposed a new Clean Energy for All Europeans package with a goal to extend its current sustainability targets to 2030 and beyond. One important feature not included in this legislation is the requirement of ECMs persisting from one period to the next. Essentially, this may give many participating countries an out. The Coalition for Energy Savings, a European organization that promotes energy efficiency, estimates that the energy savings from measures implemented before 2020 will be lost by about 18% by 2030, and about 70% by 2040. Additionally, measures taken to correct these losses can be counted as efficiencies gained during the new period—essentially double counting a single solution. No matter how stringent the goals, if persistence is not required and double counting of ECMs is not eliminated the ultimate goals will not be reached.

Countries around the world are doing an admirable job committing to global sustainability. But commitment alone is not going to provide results if the actuals aren’t measured accurately or don’t match the targets. A key takeaway is that efficiency and sustainability goals cannot be removed from real-world dynamics, such as existing or emerging market forces (e.g., demand for air conditioners in the Asia Pacific region) or the reality of energy efficiency project measurement lives. US utilities, for example, include degradation rates on energy efficiency projects included in their generation capacity credits. This is essential for the utility to meet its generation capacity requirements for large customer bases. Global sustainability goals and targets need to include this type of consistency and accountability in order to be effective in the long term.

 

It’s a Tie! The USITC Announces Its Section 201 Solar Trade Case Recommendations

— November 3, 2017

On October 31, 2017, the US International Trade Commission (USITC) announced the remedy recommendations that it will forward to President Trump. As we have discussed in previous blogs (here and here), this case has been shaping the future of the US solar industry. Impacts have been felt around the world since May 2017, when Suniva and SolarWorld asked the USITC to investigate.

What Did They Recommend?

The recommendations of each USITC commissioner can be found here. In summary, they recommended a system involving import quotas, import licenses, and a percentage-based ad valorem tariff of up to 35% in the first year of implementation. The commissioners rejected Suniva’s petition to set a minimum import price at $0.74/W; in percentage terms, this would be comparable to a 100% tariff. Like with Suniva’s petition, the tariff will be reduced each year and will drop to up to 32% in the fourth year of its implementation (the best case would set the tariff at 15%).

So, What Will Happen Next?

On one side, even when the highest tariffs are applied, module prices in the United States would regress to those seen about a year ago—when the industry installed 14.6 GW of capacity, doubling its previous installation record. Thus, the effects on the downstream of the solar industry should be minimal. It is unlikely that the protection given by the USITC will be enough to create a boom for solar manufacturing in the United States, but it should be enough to keep a profitable cottage industry focused on the local market with modest growth potential.

On the other side, the tariff and quota limits will stop future global price declines from being reflected in the US market. This will affect the competitiveness of solar and hence, its expansion into areas with lower irradiance.

With China hitting 50 GW of installed capacity this year (3 times the second largest market), India poised to take over the United States as the second largest market, and installations in the global sun belt (Latin America, Middle East, South East Asia, and Australia) soaring, global solar players are unlikely to be affected by the tariff. However, potential mirror tariffs might push out US companies with local manufacturing capacity, like First Solar, from the international markets.

Overall, the recommendations of the USITC commissioners favor the status quo, keeping the solar industry intact but slowing its growth.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Policy and Regulation","path":"\/tag\/policy-and-regulation","date":"4\/21\/2018"}