Navigant Research Blog

Energy Access Continues to Attract Power, Internet, and Tech Giants

— June 12, 2017

Recent moves by some of the largest energy and Internet companies in the energy access space highlight the social and economic allure of providing electricity to remote, typically rural, communities in developing countries. More than 1 billion people have unreliable access to electricity and are reliant instead on harmful and expensive sources of lighting such as kerosene and diesel. Growing public and private investment in the sector continues to grab headlines—and increasingly ambitious roadmaps—but it remains to be seen how these projects will pan out. A round up from the past few months indicates the growing momentum:

  • In March, ENGIE signed three partnerships in Indonesia for microgrid and renewable energy development agreements to develop, co-finance, build, operate, and maintain microgrid and other renewable energy projects worth up to $1.25 billion over the next 5 years. As part of the agreement, ENGIE partnered with microgrid developer Electric Vine Industries to target 3,000 villages in the province of Papua over a 20-year period—reaching an estimated 2.5 million people and requiring $240 million over the next 5 years. The announcement is an exciting development that, if realized, could make a significant contribution to the country’s Bright Indonesia rural electrification program targets Papua as a priority area for increasing its electrification rate from 85% in 2015 to 97% over the next 3 years.
  • In April, founding partners Allotrope Partners, Facebook, and Microsoft launched the Microgrid Investment Accelerator (MIA) at the annual United Nations Sustainable Energy for All Forum. According to the press release, “This first-of-its-kind energy access financing facility seeks to mobilize ~$50 million between 2018-2020 to expand energy access to communities that currently lack reliable access to modern energy services in India, Indonesia and East Africa.” The MIA seeks to accelerate energy access microgrids through an ecosystem approach to finance—leveraging grant and concessionary finance from foundations and development finance institutions to mobilize private sector capital into renewable energy microgrid projects. With Internet and tech giants involved, others are likely to join; a solicitation to developers is slated for summer 2017.
  • Pay-as-you-Go (PAYG) is an Internet of Things (IoT) off-grid lighting solution that is gaining traction. PAYG enables rural, typically off-grid, customers to pay for electricity service in the form of a 1W-5W lantern or 10W-200W solar home system—or as part of a remote microgrid using their mobile phone. M-KOPA, Angaza, BBOXX, and others have been successful in expanding distribution of lighting products that are monitored and paid for via their cellular-enabled payment platforms.
  • Providing high-level context on the direction of energy access globally, the recently released State of Electricity Access Report 2017 provides an up-to-date look at how countries and governments are faring in the race to meet the sustainable development goal of universal access to electricity by 2030. The report underscores the importance of the integrated public-private approach being taken by ENGIE, Enel, MIA, and others that have operated in the energy access sector over the past year.

Taken together, these recent announcements showcase how rising connectivity—and in many cases, incomes—are attracting investment activity in the energy access sector.


Zero Emissions from a Fossil Fuel Plant … Really?

— June 6, 2017

The claim of zero emissions from a fossil fuel plant sounds too good to be true. I was skeptical when I first read the headline, “Goodbye Smokestacks: Startup Invents Zero-Emission Fossil Fuel Power,” on the Science website. But on second glance, this does appear to be a big deal in the carbon capture realm.

Oxymoron or Innovation?

Author Robert Service notes: “Zero emissions fossil fuel power sounds like an oxymoron.” And indeed, it does. But the people behind startup NET Power believe its technology makes this possible. The company is backing a 25 MW demonstration plant in the Houston area that will be activated later this year. Basically, the plant will burn natural gas in a pure oxygen combustor. By using mostly pure, high pressure CO2, the plant can avoid the phase changes of traditional steam cycles. And instead of driving a steam cycle and losing heat up a smokestack, the NET Power plant retains heat within the system, resulting in less fuel used for a turbine to reach the necessary temperature.

The result, the company claims, is a stream of nearly pure CO2 that is then piped away and stored underground, or that can be shot into sapped oil reservoirs to recover what oil remains. This latter process is called enhanced oil recovery. In either case, the CO2 is kept out of the atmosphere. The system is based on work done by Rodney Allam, a retired British engineer, and is called the Allam Cycle. The key to Allam’s idea is the recycling of the CO2 in a loop.

A Fossil-Fueled Game Changer

NET Power says it can produce emissions-free power at about $0.06/kWh, which is about the same as the cost from a state of the art, natural gas-fired plant. And lower than most renewable energy. If the demonstration meets expectations, the company intends to move to a full-scale, 300 MW version that could be operational in 2021 at a cost of about $300 million. Such a power plant could supply more 200,000 homes. One expert, John Thompson from the Clean Air Task Force, says the breakthrough plant would be “a game-changer if they achieve 100% of their goals.”

We shall see. The NET Power facility could fail to reach its goal; as carbon capture expert Howard Herzog says, “There are only a million things that can go wrong.” But if successful, the zero emissions plant could be a bridge to a cleaner environment, and could drive more aggressive use of renewable sources. So, what’s not to like about this kind of audacious engineering that aims to solve a problem in a practical way? Failure is a possibility, but success is, too.


Could Global Distributed Solar PV Prices Drop Thanks to Suniva’s Petition?

— June 6, 2017

On May 24, 2017, the US International Trade Commission (ITC) announced that it will consider a petition by Suniva, a bankrupt solar manufacturer in Atlanta, Georgia, to place tariffs on the most common kind of PV solar cells imported from around the globe. Suniva put forward a petition to set a minimum import price (MIP) to $0.78/W and requested a 4-year tariff schedule on crystalline silicon imports. According to the petition, the floor price would fall to $0.72/W in year 2, $0.69/W in year 3, and $0.68/W in year 4.

While the outcome of the ITC investigation will not be known for some time, the uncertainty that the investigation brings to project developers and investors is important. Both short-term and long-term effects can be expected:

  • Short term: Module OEMs will increase imports to meet their firm contracts for the year. Projects in the late stages of development will try to secure modules before any decision on the tariff is made, potentially bringing projects forward. Uncertainty could boost installations for the rest of the year. Currently, there is a glut of module capacity, so any increase in demand could easily be met.
  • Long term: For those developers unable to make the arrangements necessary to lessen the risks to their projects, they may postpone investment decisions until the risks are better understood (i.e., after the ITC decision).

So What If It Happens?

For now, it seems that developers see the risk of the new tariff as manageable. On the same day that the ITC began its investigation, a new contract signed by Arizona utility Tucson Electric Power (TEP) and US developer NextEra Energy set a record low price for large-scale solar power in the country. The TEP and NextEra contract allows the United States to join a select club of countries with solar at or below $0.03/kWh (alongside Chile, Mexico, and the United Arab Emirates). The project is expected to be commissioned by the end of 2019, when the tariff will have its full effect.

Navigant Research anticipates 2019 module prices will be $0.39/W. With module prices potentially leaping by at least 50%, on the surface the TEP-NextEra contract seems like a potential disaster. But while the drop in module costs over the last few years has been impressive, reductions in other costs have been at least as impressive, limiting the effect that the MIP will have on the final cost of the project.

According to the Navigant Research model, the cost of developing a utility-scale project in the United States with a 2019 commissioning date would increase from $0.93/W to $1.24/W (over 33%) due to the new MIP. In the case of the Arizona project, the cost per kilowatt-hour generated would increase from just below $0.03/kWh to just below $0.04/kWh.

More Bang (kWh) for Your Buck

Interestingly, the MIP requested by Suniva uses peak power (Wp) as its basis. This would drive a rapid shift toward quality, namely high efficiency modules. For example, developers could use SunPower’s X-series panels (currently with an efficiency of around 23%) instead of a conventional multi-Si module (with an efficiency of around 16%), thereby reducing the footprint of the plant by up to 30% for the same output. This would allow developers to offset higher module costs with lower balance of system costs and operations and maintenance costs. Using bifacial modules—which are hitting the market right now and could work well in the Arizona desert—could help reduce the footprint by another 15%-30%.

It is difficult to say whether NextEra could really bring the project cost back down to $0.03/kWh if the tariff comes into effect. However, it is important to remember that module costs do not make or break a project nowadays and that new technology is available that can reduce the module’s effect on the final cost of a project.


100% Renewable Energy by 2050

— May 15, 2017

In April 2017, the City of Portland and Multnomah County in Oregon committed to 100% renewable energy by the year 2050. Ted Wheeler, the mayor of Portland, said, “While it is absolutely ambitious, it is a goal that we share with Nike, Hewlett-Packard, Microsoft, Google, GM, Coca Cola, Johnson & Johnson, and Walmart. We have a responsibility to lead this effort in Oregon.” Other cities in the United States have also committed to renewable goals. Chicago, for example, has committed to 100% renewables for its municipal buildings and operations by 2025. Renewable goals are often tied with increased efficiency in buildings, as this assists in reducing the overall needed energy production, making it easier to rely more heavily on renewables.

At a National Level

Following in footsteps of Portland’s ambitious goal, Oregon Senator Jeff Merkley (D), Vermont Senator Bernie Sanders (I), and Massachusetts Senator Edward J. Markey (D) introduced legislation for the United States to reach 100% renewables by 2050. This 100 by 50 Act creates a plan for 50% of US electricity to be generated by renewables by 2030 and 100% by 2050. Additionally, it would require zero carbon emissions vehicle standards and ban government approval of oil & gas pipelines.

Both Merkley and Sanders understand the importance of local initiatives to propel these aggressive renewable energy goals into reality for the country as a whole. “Starting at a local, grassroots level and working toward the bold and comprehensive national vision laid out in this legislation, now is the time to commit to 100% by 2050,” said Merkley. Sanders already sees these changes occurring, and he believes in the importance of not being limited: “In Vermont and all over this country, we are seeing communities moving toward energy efficiency and we are seeing the price of renewable energy plummet. Our job is to think big, not small.”

The 100 by 50 Act is the first legislation introduced to Congress aimed to completely eliminate fossil fuels for the United States. While it is unlikely such a progressive proposal like this will initially pass, it opens the doors to additional discussions and ideas. The declining costs of renewables provide further incentive to assist in a shift toward greater reliance on renewable energy, such as solar and wind power. Local community initiatives and the individual sustainability goals of leading US companies are helping create a future that does rely 100% on renewable energy. Coupled with these siloed goals, members of Congress will continue to push toward more encompassing legislation, though it will inevitably be a long and trying endeavor.


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