Navigant Research Blog

Clean Power Plan Ruling Presents Opportunities and Issues for States

— August 3, 2015

After a year in review, and following approximately 4 million comments and appeals by state public utilities commissions (PUCs), legislators, and special interest groups, the Obama Administration and the U.S. Environmental Protection Agency (EPA) have released a final ruling on the Clean Power Plan.

The Proposed Rule was released last June.  It included interim (2020) and long-term (2030) regulations that will be imposed state by state to decrease CO2 emissions from generation facilities.  It also requires gradual decommissioning of high-emissions facilities, increased support for low-emissions natural gas and renewable generation, and improvements in demand-side management and energy efficiency.  Speculations and protest across stakeholder groups has been colossal.

According to a paper sponsored by the Brookings Institute, the majority of comments to the plan centered upon several major issues: fairness, reliability impacts, attainability of goals, and its legal basis—many reaching past state boundaries and party lines.  Fairness concerns, held by 23 states, are largely based upon the 2012 baseline level of emissions. Many states had been proactive in the decade prior, already attacking the low-hanging fruit and therefore were being forced to implement improvements with higher marginal costs than those states that had not yet proactively addressed emissions. Reliability impacts, which differ from state to state, caution the over-dependence upon less reliable sources of power, in particular renewables.

Perhaps the most contentious pushback centered upon the attainability and legality of the program. According to the Brookings report, 36 states commented on attainability, predominantly criticizing the timeline as too short. Some states have even argued that the goals altogether are unattainable. Wyoming, for example, has an economy that is reliant upon coal production and coal-based generation. Wyoming Public Service Commission Commissioner Alan Minier, as well as other agencies in that state, has been outspoken in stating feasibility concerns surrounding the decommissioning of coal-fired plants as much as 30 years before scheduled retirement.  Similarly, although Wyoming has abundant wind resources, most of this power is exported and Wyoming would be unable to receive renewable energy credits under the plan.

The cherry on top is concerns on legality of the Clean Power Plan, particularly how it interprets the Clean Air Act (its legal basis), and that favoring gas-fired generation will encroach upon the Federal Energy Regulatory Commission’s least-cost principles in the dispatch of power. Experts have appropriately forecasted large sums in legal and lobbyist fees.

Issues and Opportunities

It’s clear that a number of issues exist within the Clean Power Plan’s approach to reducing CO2 emissions in the United States, and these do need to be addressed in order to realistically comply.  But there are also many opportunities.  In terms of creating pathways to alternative production and more efficient distribution of electricity, there has been more innovation in the energy in the past 5 years than in the previous 50. The introduction of the smart grid has invited the possibility of real-time, grid-wide networking and monitoring, enabling the use of renewable resources with very large to very small generating capacities, while ensuring reliability across the grid.

Many question the worth of derailing support for innovation in order to contest the rule. By supporting more engagement between utilities and building and industrial facility owners, city planners, and even individual homeowners to implement energy efficiency programs and integrate distributed generation, states can employ more creative and innovative approaches to compliance with the Clean Power Plan.  The possibilities are endless in terms of inviting an array of new stakeholders and developing new revenue-generating systems that can help states achieve their state goal. The question is whether the state will lend itself to innovation or litigation.


July Proved a Pivotal Month for Renewable Power

— August 3, 2015

The news stream started early on July 3, when the German government published a white paper presenting its proposal for power market reform known as Strommarkt 2.0, or Electricity Market 2.0. The proposed reform is focused around three ideas: the energy supply must be reliable, it must be environmentally friendly, and it must be cost-effective–even with a growing share of wind and solar power.

To achieve these focuses, the white paper proposed 20 pillars to support the new market. The most important are that the price is set by a free market, there is constant monitoring of the security of supply, that there will be the introduction of a capacity reserve (but not a capacity market), and that the power market will evolve to be balanced.

While the proposal does not impact renewables directly (Germany has been actively tweaking its incentives in the last 2 years to reduce impact on electricity bills), it does introduce the flexibility necessary to allow further growth of renewbales in the country, which is a must if the country wants to meet its 80% renewables target in 2015.

More News

A couple weeks later, on July 17, the European Union (EU) Commission proposed a new regulatory package that set the stepping stones of its EU strategy. While most of the proposal is geared toward empowering consumers so they can make better decisions affecting their energy consumption, it also advocates for a new single-market design at the European level that will add flexibility to the system to facilitate the expansion of renewables, promote cross-border competition, allow decentralized electricity generation (including for self-consumption), and support the emergence of innovative energy service companies.

And a few days later, on July 22, in the United Kingdom, the U.K. Department of Energy and Climate Change (DECC) announced a revamp of its solar and biomass policy support, ending solar feed-in tariffs for projects under 5 MW (projects above 5 MW were not eligible). DECC also said that it will remove subsidies that had been guaranteed to new biomass conversions and co-firing projects, including existing plants that were intended to burn higher shares of biomass. Finally, DECC announced it would delay new Contract for Difference tenders indefinitely.

Meanwhile, France announced a significant shift in its energy policy. On July 23, the French National Assembly approved its energy transition law. In it, the country announced that it will reduce its reliance on nuclear energy to 50% of its generated power by 2025, from 75% today, capping its nuclear power installed capacity at 63.2 GW. The country also set the share of renewable energy at 32% of its demand. In addition, France introduced a long-term target for carbon tax. Currently standing at €14.50 ($15.90) per tonne, this tax will increase to €22 ($24) in 2016, then to €56 ($62) in 2020, rising to €100 ($110) in 2030.

Overall, with their new intents, the EU, Germany, and France seem settled in their way forward, while the United Kingdom’s energy  policy is consistent at being inconsistent. After all, it’s the third time it’s changed policies in about 5 years.


Water, Water Everywhere—But Not a Drop To Drink

— July 31, 2015

Floating islands are the stuff of fantasy novels, Kevin Costner movies, and Final Fantasy VI. They can also occur in nature, as a conglomeration of aquatic plants, mud, and peat. With current predictions by climate scientist James Hansen that the sea level will rise at least 10 feet in the next 50 years, living on floating islands might become a necessity sooner than we think.

Fortunately, manmade floating cities are becoming as vogue as tiny houses.  In fact, outside of Kampala, Uganda, a group of 10 artists have taken up chic residence on a chunk of land that broke away from the mainland and is floating around Lake Victoria. The artists have everything they could want—constantly changing scenery, serenity, grass huts, a fresh supply of lake water, and even some fairly soggy garden beds.

Not a Drop to Drink

When floating islands are in a lake, it’s easy to rig up a filter or a simple chlorination system to make water potable. But water supply is an extraordinary issue when living at sea. The Seasteading Institute, in partnership with the Netherlands’ DeltaSync, recently ended a contest for architectural designs of modular floating islands. Participants were encouraged to consider sources of energy, but the contest did not require a water treatment center. Unless the island is connected to a mainland water source, though, on-island treatment systems are necessary. Some private companies have already developed solutions to this salty problem. On a $6.5 million private floating island (really more of a yacht) made by the Austrian company, Orsos, water supply is guaranteed through an onboard reverse osmosis desalination system. But with current high energy demands of traditional desalination plants, and the high price of this private island, this doesn’t seem likely to be a sustainable solution.

Enter the DESalting Island on Renewable multi-Energy Supply, or DESIRES. DESIRES utilizes several renewable energy sources (eolian, solar, tidal, wave, and hydrothermal gradient) and large storage reservoirs to produce salt-free, potable water at a cost of $0.88-$1.32 per cubic meter. Even the largest, most efficient desalination plants running on shore cost around $1.62 to produce a cubic meter of fresh water. Further, the DESIRES system has a small footprint—a module between 0.06 square km and 0.65 square kilometers can produce enough water to supply a city of about 105 inhabitants. Further still, the system utilizes enhanced energy during storms to pump water, reducing its impact even further. However, the system is only in research phases right now. Real-world implementation could lead to more expensive and less efficient operation. In addition, the sheer number of renewable energy systems aboard the system could make the commercial capital cost quite prohibitive. Only time will tell whether the DESIRES system will be far more sustainable than traditional desalination technology.

But in the meantime, future denizens of the floating island rejoice!


Smart Cities: It’s All Relative

— July 29, 2015

Cities around the world are increasingly adopting technologies to improve the quality of life in the modern city, where traffic congestion, air pollution, and a lack of mobility are often the norm. Many smart city technologies are also being developed to deal with specific issues in energy distribution, energy and water management, transportation optimization, and public safety and security. Navigant Research defines a smart city as the integration of technology into a strategic approach to sustainability, citizen well-being, and economic development.

Currently, the level of smart city technology integration varies greatly by region. What is considered to be one of the leading smart cities in Brazil, for example, may be far behind some of the leading cities in Denmark. To illustrate this, let’s compare Curitiba, Brazil, with Copenhagen, Denmark.

Apples to Oranges

Curitiba has one of the most advanced recycling programs in Brazil, yet the city recycles just 20% of its waste.  In Copenhagen, 57% of total waste was recycled in 2009. Additionally, incineration centers are converting waste to energy by using steam from the water that is heated in the incinerator ovens. Roughly 80% of this steam energy is being used in the municipal heating system, and 20% is being fed back into the electricity grid. While Curitiba deserves significant praise for pioneering a very successful bus rapid transit (BRT) system, the city is still struggling with congestion and has just recently made initial plans for subway system infrastructure. Conversely, Copenhagen Metro began operation in 2002 (22 stations, nine of which are underground), and a driverless light metro supplements the larger S-train rapid transit system. Back in Brazil, Curitiba has the highest rate of public transport use in Brazil (45% of journeys), while in Copenhagen, it is estimated that 50% of all citizens commute by bicycle every day.

Beyond specific projects, broader climate action goals between these two cities are also quite different. Copenhagen aims to become the first carbon-neutral city in the world by 2025. The city has established targets in energy efficiency, renewable energy, and green building standards (all new buildings must be carbon neutral by 2020). Navigant Research has been unable to identify any city-level sustainability or climate action plans in Curitiba.

GDP Considerations

This comparative analysis by no means intends to detract from the tremendous achievements and progress in sustainability that Curitiba has attained. Instead, it seeks to illustrate the regional nature and context of what constitutes a leading smart city. With a gross domestic product (GDP) per capita of roughly $60,000 in Copenhagen, a much larger volume of resources is available for smart city development than in Curitiba, where GDP per capita is estimated to be $13,000.

The global smart city technology market is forecast to be worth more than $27.5 billion annually by 2023, according to Navigant Research’s Smart Cities report. Cumulative global investment in smart city technologies over the decade is expected to be $174.4 billion.

Annual Smart City Technology Revenue by Region, World Markets: 2014-2023

Smart Cities Revenue

(Source: Navigant Research)


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