Navigant Research Blog

How Green Is My Casino?

— December 21, 2014

On a recent trip to Las Vegas, I found myself wondering just how much energy is being consumed compared to other cities around the country.  It doesn’t take much research to grasp the enormous amount of energy needed to power all the neon, slot machines, sound systems, sports book TV screens, and massive air conditioners required to make the desert city an international tourist destination.  While recent efforts by resorts to “green” their operations have made an impact, they don’t address the root of the problem.  Sin City is unique in its geographic location – which provides both challenges and opportunities to operate a sustainable energy system.

Can’t Take the Heat

Las Vegas’ desert location would be very uncomfortable throughout the summer without modern air conditioning.  This presents significant challenges to resort designers who must overcome the desert sun to provide comfortable environments across millions of square feet.  At the scale of an individual hotel room, this challenge is easier to understand.  Large floor to ceiling windows are quite popular in the city but allow tremendous amounts of heat to enter the room.  Simply installing automatic blinds or smart glass windows could dramatically reduce this effect.

Although HVAC systems have been a target of recent conservation efforts, older hotels rely on outdated systems.  The New York, New York hotel I stayed in had only a very basic analog thermostat with simple controls and no ability to schedule.  Innovations to improve the efficiency of commercial HVAC system are discussed in Navigant Research’s report, Advanced HVAC Controls.  Perhaps the most effective addition to this hotel would be the installation of advanced occupancy sensors.  Visitors in Las Vegas often spend long periods of time outside of their hotel rooms.  In many cases, lights are left on and cooling systems set at full blast while a room is unoccupied for hours.  Occupancy sensors, integrated with a more intelligent building management system (BMS), could dramatically reduce the amount of energy used by each hotel room.  This could be an extremely beneficial investment for hotels that must absorb the cost of energy used by their guests.  Solutions to improve efficiency in hotels are explored in detail in Navigant Research’s recent report, Energy Management in the Hospitality Industry.

Untapped Resources

While the natural environment of southern Nevada poses challenges to conserve energy, it also provides vast untapped potential to generate it.  The Hoover Dam has enabled dramatic growth in Las Vegas over the years, although it currently provides barely 20% of the city’s peak energy needs.  As noted in a recent blog by my colleague Mackinnon Lawrence, recent droughts threaten the reliability of this resource, as well as the viability of fossil fuel plants requiring large amounts of water to keep cool.  A quick glance out my hotel room window revealed a massive casino roof – a perfect spot for a solar array totally unutilized.  Satellite images of the city show that this is very common and little to no solar power is installed on roofs of power-hungry mega-resorts.

For a city that receives intense sunshine nearly year-round, this is a huge opportunity to generate clean and affordable power.  And efforts are underway to take advantage of the clean energy resource available to the city.  This past summer, MGM Resorts announced a partnership with NRG Energy to install a massive rooftop solar array at the Mandalay Bay Resort.  The 20,000 panel, 6.2 MW installation is expected to generate nearly 20% of the Mandalay Bay’s power demand.  This project represents an important step in the right direction; hopefully, it will inspire others in the city to fully utilize the natural resources available to them.

 

The Global Biofuels Industry: A Promising Future

— December 17, 2014

As I described in my previous blog, the global biofuels industry faces an uncertain future amid declining crude prices and a surge in shale oil production in key markets like the United States.  Creating even greater uncertainty, the Environmental Protection Agency (EPA) recently announced that it is abandoning 2014 rulemaking around production quotas for biofuels under the Renewable Fuel Standard (RFS2), a clear concession to the controversy that has plagued the rule in recent years.

While these shifts will likely further dampen investor appetite for biorefinery projects focused on producing biofuels for ground transportation, the industry continues to advance on several fronts.

By Air

The commercial aviation industry, for example, has played an important role in driving research and development investment as well as providing a strong demand signal to producers.  More than 25 international carriers from all global regions have tested or piloted biofuels programs in the last 3 years.  These efforts have resulted in more than 60,000 biofuel miles flown according to Navigant Research’s report, Aviation and Marine Biofuels.

 Commercial Airline Biofuel Miles Flown by Flight Type, World Markets: 2008-2013 

(Source: Navigant Research)

Earlier this month, Boeing completed a test flight using a blend of 15% green diesel – a synthetic, drop-in substitute for diesel – and 85% petroleum jet fuel.  To meet growing demand, several high-profile, dedicated biojet biorefinery projects have begun construction.  Led by the Oslo Airport’s commitment to receive 660,000 gallons of biojet fuel beginning in March 2015, emerging bioports also demonstrate a commitment to ensuring that biofuels play a permanent role in future aviation.

The advantage commercial aviation offers the advanced biofuels industry is consolidated infrastructure and like-minded potential off-take partners.  According to the International Air Transport Association (IATA), 1,600 airports worldwide fuel 95% of the world’s flights.  This compares to more than 161,000 gas stations in the United States alone.  This lowers the capital needed to invest in infrastructure to bring fuel to the customer and streamlines contracting opportunities that should accelerate commercial deployment of biojet fuel under favorable market conditions.

By Sea

The U.S. Navy is also moving forward with its goal of sailing its Great Green Fleet in 2016, a fleetwide overhaul aimed at integrating energy conservation into the U.S. fighting fleet, in part by powering ships and aircraft using biofuels.  In anticipation, the Navy has procured nearly a half million gallons of advanced biofuels to support early testing and certification initiatives.  Biofuels were also included in the Navy’s annual procurement for bulk fuels this year for the first time ever.

But non-road transportation applications are not the only area where biofuels are gaining ground in energy applications in recent months.

Primary Energy

In the developing economies of sub-Saharan Africa, Southeast Asia, and Latin America, the wide availability of biomass, combined with limited access to reliable sources of energy, provides significant opportunities to expand the utilization of bioenergy as a primary energy source.  Conversion of agricultural waste into biogas that is consumed in gas-fueled generator sets, for example, can help anchor community microgrids.  These opportunities build off an already established tradition of utilizing biomass for traditional energy (e.g., burning wood or dung for cooking and as a source of heat) and well-established technological processes.

As discussed in the United Nations’ report, The State of the Biofuels Market: Regulatory, Trade, and Development Perspectives report, the developing world remains a significant growth opportunity for biofuels.  Biofuels used in off-grid cooking applications to industrial power generation continue to gain traction as key target opportunities for ethanol fuels, biodiesel, and emerging advanced biofuels.

Bio Niches

Supply chains to support these opportunities have begun laying the early foundation for an emerging global bioeconomy centered on renewable biomass for economic activities, including commodity and food trade, the IT and automotive industries, and environmental technologies.

While the refocus of investment away from ground transportation applications to a wider range of opportunities will mean less biorefinery capacity built through 2020, these niche opportunities are expected to result in the development of specialized capacity expansion in spite of cheap and plentiful oil.

 

The Global Biofuels Industry: A Future in Doubt

— December 11, 2014

In its recent report, The State of the Biofuels Market: Regulatory, Trade, and Development Perspectives, the United Nations (UN) notes that although the emerging biofuels industry has made great strides in the past decade – with ethanol and biodiesel becoming established commodities traded on all continents – significant barriers to commercialization persist across the developing world.  Global biofuels forecasts published in Navigant Research’s report, Market Data: Biofuels, support the view that future capacity deployment is heavily contingent on accessing a shrinking pool of capital investment targeting the industry.

As the UN report notes, conditions in the 2000s that drove annual investment in biofuels in the range of $10 billion per year – including uncertainties related to the price of petroleum products and peak oil speculation – have largely dissipated.  With shale oil & gas production on the rise in key biofuels markets like the United States and the price of crude sliding well under $100 per barrel, market realities have shifted.

Poor Timing

For the emerging advanced biofuels industry, the timing of this macroeconomic shift could not have come at a worse time.  While growth aspirations for the global biofuels industry shifted away from conventional pathways, such as corn starch, to ethanol, palm oil, and biodiesel during the financial crisis of 2008, greenfield biorefinery projects producing advanced biofuels have only just come online in the past year.

The development of these facilities involves capital costs in the hundreds of millions.  Since many of these projects were initiated and financed during a time when macroeconomic realities were quite favorable, a primary concern going forward is whether these first-of-kind facilities can spark additional investment to drive sustained capacity expansion.

This is unlikely given current realities.  To put this into perspective, according to our market data report mentioned above, global biofuels capacity – including conventional and advanced pathways – was just shy of 40 billion gallons per year at the end of 2013.  This represents 4.2% of the global liquid fuel market, or just under 1% of global final energy consumption.

Another $25 Billion Off

Advanced biofuels installed capacity – the focus of current commercialization efforts – accounts for just 1.2 billion gallons, or less than 2% of global biofuels production.  While that’s by no means insignificant, there’s still a long way to go in terms of reducing dependence on liquid fossil fuels, which account for 35% of global final energy consumption, according to data published by the Energy Information Administration (EIA).

In order for advanced biofuels to meet projected production capacity requirements by 2020 under expected biofuels supply mandates in key markets like the United States, European Union, China, and India (Brazil relies mostly on blending quotas), $25 billion to $35 billion in annual investment will be needed over the next 6 years, according to Navigant Research estimates.  This is a tall order for a suite of technology platforms that are not yet at price parity with petroleum-based fuels.

 

Are Corporate Clean Energy Initiatives Real?

— December 10, 2014

In November, Amazon made a commitment to power its infrastructure with 100% renewable energy over the long term.  Among tech companies, Amazon is late to the game in announcing its sustainability goal; Apple, Google, and Facebook had already released similar pledges over the past few years.  Although cloud computing is more environmentally friendly than previous computing technologies, according to Amazon, a “significant amount of unused server capacity and wasted energy consumption” still occurs when powering data center infrastructure.

Since 2008, businesses and corporations around the world have begun to more actively pursue sustainability initiatives.  Between 1992 and 2012, the number of corporations worldwide issuing corporate social responsibility (CSR) reports jumped from 26 to around 7,500.

Fortune 500 Leads the Way

Many of the leaders in corporate sustainability are part of the Fortune 500.  In 2013, 43% of Fortune 500 companies had established goals for greenhouse gas (GHG) reductions, energy efficiency, renewable energy, or some combination of the three, and 60% of Fortune 100 companies had set sustainability targets.  Although large corporations have made progress in establishing sustainability initiatives, only 75 of the Fortune 500 had specific energy efficiency targets in place by 2013.  GHG reduction targets made up the greatest share of climate and energy initiatives.

Companies with long-standing commitments to reducing energy use have already seen energy and dollar savings from these initiatives.  Walmart, for example, laid out plans in 2013 to save $1 billion globally per year through energy efficiency and renewable energy programs.  The company has a long-term aspirational goal to achieve 100% renewable energy.  In the shorter term, by the end of 2020, Walmart aims to reduce emissions intensity by 30% from 2010 levels and produce or procure 7 billion kWh of renewable energy worldwide.

The Trouble with Long Term

Kohl’s is another leader in corporate sustainability efforts.  It has been implementing green building methods since 2005, and it had 432 LEED-certified stores as of June 2014, representing a full 37% of the company’s 1,160 stores across the United States.  The 432 stores represent a total floor space of 35,616,240 square feet.  Kohl’s plans to reduce absolute emissions and emissions intensity on a per-square-foot basis by 20%, both by 2020, compared to 2010 levels.

Although the growing prevalence of CSR and sustainability goals is encouraging, broad long-term goals have raised concern from some environmental groups.  Setting goals without defined milestones makes it more difficult to hold companies accountable for the clean energy initiatives they have in place.  Many companies, Amazon included, have not specified a roadmap to achieve their energy goals – an obvious next step to ensure those goals are achieved.  Publicly committing to a clean energy future is only a first step.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Grid Practice, Smart Transportation Practice, Smart Transportation Program, Utility Innovations

By Author


{"userID":"","pageName":"Renewable Energy","path":"\/tag\/renewable-energy?page=1","date":"12\/23\/2014"}