Navigant Research Blog

Do Water and Electricity Mix?

— July 21, 2016

Plant - WaterThe water-energy nexus is the interaction between energy, water, and all the aspects of generation and distribution that are involved with each. Many times, this nexus is used to describe the amount of energy used to distribute water and wastewater between water treatment facilities and end uses. This energy use is by no means small. In the United States, energy generated for water ranges from around 4% to 19%; California alone consumes 19% of its electricity for water and wastewater. Variations in energy generation are caused by geographic differences; hilly regions need to expend more energy to pump water across variations in altitude, and arid areas pump source water from aquifers deep underground.

Another aspect of the water-energy nexus is the amount of water it takes to produce electricity. Certain generation types (such as hydroelectric) have an obvious liquid component, but others are less apparent. New innovations in renewable energy, while still consuming water, help to preserve the resource by utilizing more region-specific energies.

A Flood of Electricity Generation

In Hawaii, an ocean thermal energy conversion (OTEC) plant recently began operations. This OTEC plant draws in warm surface water from the ocean, vaporizing ammonia and spinning a turbine, which generates electricity. The ammonia is condensed by water extracted from deep in the ocean. Other types of OTEC plants do not use ammonia at all, but utilize vaporized ocean water to power the turbine. This is the first plant of its kind in the world, though it is worth noting that the United States has been researching OTEC technologies since 1974. Makai Ocean Engineering and the Hawaii Natural Energy Institute developed this 100 kW facility as a way to test the OTEC process, and the plant produces enough energy to power 120 Hawaiian homes for a year.

For cities farther from the water, solar power might seem like the way to go. However, to get the most out of solar, many plant operators are turning to auxiliary steam components. For example, the Ivanpah Solar Power Facility in the Mojave Desert of California utilizes heliostat mirrors to focus sunlight on solar power towers. These towers are heated by the solar energy, and steam is created to drive a steam turbine. The combination of steam power and photovoltaics makes this plant one of the largest solar installations at 377 MW capacity. In addition, its air cooling system means that other than the water used to generate energy, the plant uses 90% less water than other solar thermal technologies with wet cooling systems. However, there are drawbacks to solar power at this concentration. On May 19, 2016, one of the solar generating towers at Ivanpah caught fire due to improperly tracking mirrors that focused sunlight on the wrong part of the tower. There have also been reports of effects on wildlife, such as birds and tortoises. The issues in the development of high intensity renewable energy must be ironed out before these types of plants become widespread.

Renewable energy is important, and not just for the conservation of fossil fuels. Well-integrated renewable energy will utilize the natural resources of the region to produce sufficient electricity without wasting scarce ones. Traditional electricity production uses large quantities of water, but renewables (even those designed specifically to utilize water) can help conserve this. Producing energy may be a very water-intensive process, but many innovations in electricity production hold the promise that this market is becoming less thirsty.


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.


Germany’s Progress Doesn’t Match Ambitious Emissions Plan

— April 1, 2016

Springtime landscape over natural oilseed rape fieldGermany, a longtime leader of energy efficiency and renewable energy, is poised for another significant policy move in clean energy with a new proposal that would reduce greenhouse gas (GHG) emission in the country by 95% from 1990 levels by 2050.

Germany’s National Energy Efficiency Action Plan (NEEAP), which is updated every 3 years, already requires stringent energy savings goals as part of the European Union’s (EU’s) Energy Efficiency Directive (EED) for member states. Germany’s current national target set forth in its NEEAP aims to achieve 40% GHG emission reductions from 1990 levels by 2020 and 80% reductions by 2050. Germany’s environment ministry expects to present the new proposal to the cabinet by this summer.

Increase in Emissions

Many countries increased GHG emissions reduction goals prior to or as a result of the Paris Climate Summit in late 2015. Countries were not required to set a specific carbon emissions level, but were instead allowed to create a reduction target and strategy. Germany was not alone in increasing emission reduction targets, but based on the slow progress achieved in recent years, it will be difficult to further reduce emissions.

The country saw increases in emissions in both 2012 and 2013 but did experience a 4.6% reduction in GHG emissions in 2014 compared to the previous year. It has been suggested this decrease can be attributed to the warmer than usual winter weather in Germany during that year. In 2013, Germany’s GHG emissions were the highest of the EU member states, representing 21.17% of the EU’s total emissions. The targets seem almost out of reach without substantial changes in how energy is produced and consumed in the country during the next few years.

Germany’s GHG Emissions

Germany GHG(Source: Clean Energy Wire)

Meeting the Self-Imposed Targets

Germany is not naïve to the fact that it is currently not on track to hit its 2020 reduction targets, let alone the reductions required by 2050. The country is focusing on energy efficiency as a means to achieve these goals. It is expanding power generation from renewables such as solar and wind power, but so far these have proven insufficient to the task. However, renewables accounted for 27.8% of power consumption in the country in 2014, up from 6.2% in 2000.

Self-imposed GHG emissions reduction targets, both in Germany and elsewhere, must be enforced for the policy changes to have an impact. While the country is working to reduce emissions and is optimistic in its ability to reach these targets, its ultimate success (or failure) could largely be influenced by the actions taken in the next few years.


Moving Beyond the State of California at CAISO

— December 23, 2015

The California Independent System Operator (CAISO) is one of nine independent wholesale grid operators in North America. Today, roughly two-thirds of the U.S. electrical grid is managed by independent system operator (ISO) entities, which manage and coordinate all generation resources, including the large and rapidly growing amount of variable renewable resources.

California’s recent passage of legislation increasing the target for meeting 50% of total state demand for electricity from renewables by 2030 underscores why the CAISO is moving in new directions that will likely require a name change as it expands its access to out-of-state resources.

ISO Control Areas for North America

Peter CASIO Blog 1

(Source: California Independent System Operator)

Various studies—including one from the Regulatory Assistance Project—confirm that these impartial grid operators lower overall costs of power supplies, as well as enhance the environmental performance of the power sector. With current trends toward coal plant retirements and the subsequent increase in reliance upon variable renewables such as solar and wind power, it turns out, however, that bigger is indeed better.

Since I am a strong advocate for decentralized distributed energy systems such as microgrids, this may seem like an odd argument to make. To put this statement in context, consider the following truism I learned while researching my book on wind power: the larger the control area for a balancing authority such as a utility or an ISO, the less an issue the variability of wind. Why? Chances are that the wind will not all die at once if you can manage this resource over a large swath of wind resource areas. This general axiom also applies to solar energy, though the dynamics are different.

Today, CAISO serves an estimated 35% of the electric load in the West, but this number is expected to grow steadily over the next several years due to the creation of two new organized markets designed to help the state meet its aggressive energy goals, programs highlighted at the recent Paris Climate Summit.

The two recent major market expansions by CAISO are:

  • Energy Imbalance Markets. CAISO is now reaching out to utilities outside of its traditional control footprint to purchase ancillary services. The Energy Imbalance Market (EIM) improves the efficiency of dispatching resources by using devices and sophisticated software systems that analyze the needs of the grid every 5 minutes and automatically find the lowest-cost generation to meet demand. Without an EIM, utilities have to meet demand with resources in their own service areas, which can translate into having to start higher-priced generation or dip into even more expensive energy held in reserve.

CAISO Energy Imbalance Market Participants (Partial List)

Peter CASIO Blog 2

(Source: California Independent System Operator)

  • Regional Energy Markets. An even more dramatic step by CAISO is creation of a fully integrated Regional Energy Market. The control area of CAISO may encompass many new partners. The first step is to integrate with the system resources of PacifiCorp, which has control area of over 11 GW of resources in Oregon, Washington, Idaho, Nevada, and Wyoming. The diversity of resources available in these states, ranging from hydro to wind and fossil fuels, will help diversify the energy economy managed by CAISO. Benefits of this integration include resource procurement savings, lower peak capacity needs, and more efficient unit commitment and dispatch.

Given these looming changes, CAISO will need a new name. This is just speculation, but I would bet it will rebrand itself as the Western Regional Independent System Operator (WRISO) at some point in the future.


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