Charity Is the Best We Have to Offer In the Face of Our Energy Challenge?

Kevin Bullis posed a telling, question in an MIT Technology Review article Should Energy Startups Be Funded as Charities?

He points out, with respect to the United States, “As it turns out, there’s a provision in the tax code that says that investments in startups can be counted as charitable grantsâ€"even if those investments could in the long term bring in huge returns. The catch? The startups have to be ones that are too risky for ordinary investors.”

In Richard Smalley's presentation, Our Energy Challenge (And Opportunity} he stated:  “Energy is not just “any old issue.” Most people, in fact, understand its importance very well. When I have given talks on this subject before, I have often asked people in the audience to name the most critical problems we will have to confront as we go through this century. In every case, after a bit of discussion, the audiences have agreed that energy is the single most important issue we face.

Why is energy always preeminent?

When we look at a prioritized list of the top 10 problems, with energy at the top, we can see how energy is the key to solving all of the rest of the problems.          

That list is:

 

When Smalley spoke of energy he was talking about “new oil”â€"a basis for energy prosperity in the 21st century that is as enabling as oil and gas have been for the past century.

It is too risky for today’s ordinary investor to take on the challenge of discovering and producing this enabling energy?

Really?

In a previous post I pointed out how an old family friend wildcatted nineteen straight dry holes in the early fifties, in Alberta, before finally meeting with success and how he had been able to do this because his generation were more than eager to take on the challenges and more importantly were hungry for the opportunities.

I also tried to make the point that the challenges faced in Alberta’s oil patch 60 odd years ago weren’t that far removed from what today’s renewable energy wildcatter is up against.

In this day and age most of the items on Smalley’s list are considered government responsibilities.

Take the environment; in 2012 natural disasters combined to produce economic losses totalling USD 200 billion. Considering only about 36 percent of these losses were insured the balance of 128 billion was underwritten by government for a total of about $18 for every person on the planet.

Considering half those people live on less than $2.50 a day that represents a full week of their labour.

It is also that half that bears the brunt of climate related disasters and though effectively wards of the United Nations in terms of the issue, their protector has done little besides produce huge annual spectacles to defend their interests.

The governments of the developed nations are also mostly on the verge of insolvency and thus are limited in what they are able to accomplish even if they had the will to tackle the issue, which for the most part they do not considering their cozy relationships with existing energy industries that are sanguine with the status quo.

Debt has been another tried and true avenue for economic development but since nearly blowing up the global economy five years ago, the world’s bankers have withdrawn behind a wall of vastly collateralized loans even as they leverage themselves to the hilt with USD 606 trillion in over-the-counter notional derivatives, which by definition are exceedingly speculative and in the real world have about as much utility as Monopoly money.

Earlier this year ING Bank showed total world indebtedness, including all parts of the public and private sectors, is USD 223.3 trillion or 313 per cent of the global GDP yet little of that capital has found its way into efforts to solve the world’s oil replacement problem and by extension its next top nine most pressing concerns.

Is it any wonder then that credit default swaps, which are a bet against loan defaults or other credit events, are one of the most popular financial derivatives?

Equity is the main avenue by which investors have historically sought to finance innovation and capitalize on new opportunities.

Today’s investor however is more likely to be of the Warren Buffett mould.  

Value investors like Mr. Buffett seek to buy stocks at less than intrinsic value, which is determined on the basis of past performance that was built on the back of the company's founders and financed in the main by individuals willing to take an initial risk.

Innovators have little to no track record on which to base such valuations and thus the pool of capital, which is ever increasing as the small investor is pushed out, represented by the value investor is generally foreclosed to them because for the value investor the market is a balance sheet beauty contest as opposed to instrument of the kind of destructive capitalism necessary to meet the energy challenge.

Mr. Buffett and other high wealth individuals have pledged to dedicate the majority of their wealth ultimately to philanthropy but this again is charity and far less than our children deserve and rightfully expect and in most cases that capital won’t be enough or come into play soon enough to make the difference needed.

It would be far more magnanimous were these people to marshal their capital, skills and expertise in support of solutions to the problems of today, which compound daily. In its 2009 World Energy Outlook, the International Energy Agency announced that every year of delayed action to address climate change will add $500 Billion to the price tag of saving the planet.

According to Wikipedia, as of April 28, 2011, 69 billionaires had joined the Giving Pledge campaign and pledged to give 50% or more of their wealth to charity. An estimate of the contribution promised by the first 40 donors, based on their aggregate wealth as at August 2010, was $125 billion.

Whereas fifty years ago most investors made their own stock picks, today they are more likely to be enrolled in mutual funds or other pools, such as pension funds that are operated by conservative investment managers, uninterested in impact investing.  

Sallie Krawcheck claims in an article Big Idea 2014: Investing Will Completely Change, that the above situation is about to change. Because, she says, baby boomers are about to retire and as they do they will acquire the opportunity to express their values â€" social, environmental or political â€" through their investment dollars.

Venture capitalists over the past decade have tried to fill the energy startup void but as Mr. Bullis explains this source has dried up.

Crowdfunding is another potential avenue for funding new energy startups but current efforts are more a cross between the United Fund and television’s shopping channel than vehicles through which impact investors can legitimately seek to do well by doing good.   

Crowdfunding is however exactly what is needed because it is our children’s future at risk and no one has more interest in safeguarding that future than the individual but with that funding should come the potential for creating a financial legacy as well.

Crowdfunding with safeguards is also one of the best ways to determine wherein the social license for the various energy forms resides.

Equity-based crowdfunding models are currently legal in Australia, UK, the Netherlands, France, Belgium, Germany and once this trend becomes more widespread the rising of the oceans may actually begin to slow and our planet make actually begin to heal.

Perhaps 2014 will be the year.

We can always hope.

Happy New Year!

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Exploring Microsoft's Carbon Price and Its 5 Steps to Carbon Neutrality

microsoft and carbon pricing

The number of companies taking tangible steps to prepare for and prosper in a lower-carbon economy is growing -- even absent a national carbon tax or cap-and-trade regime.  Their actions speak much louder than the hyperbole that many advocates are using to argue for and against paying for carbon emissions.

One of the most instructive examples of what companies can do to hold themselves accountable comes from Microsoft, which uses a lot of energy at its data centers and sending professionals around the world on airplanes, emitting a lot of greenhouse gases in the process.

It’s nothing novel for a company to say it’s striving to become carbon neutral. Detailing and sharing a way to get there with an internal carbon fee is. Microsoft’s move to do just that offers a compelling example to corporations, governments, academic institutions and non-profit organizations around the world that for their own sustainability, they should â€" no, they need to -- to do the same. 

At least 28 other global companies â€" including a handful of oil and gas companies -- are headed in the same direction. Let’s hope this is a substantive and growing mind-shift that will propel thousands more organizations to account for their climate impact. By doing so strategically, such forward-looking companies can outperform their rivals over the long haul and help their communities, markets and civil society adapt to climate change.

Internal Carbon Prices

Estimated by or Shared with CDP, Inc.

Corporation

Price / ton in U.S. dollars

ExxonMobil Corp.

60

ConocoPhillips

8-46*

BP

40

Royal Dutch Shell

40

Total

34

Ameren Corp.

30

Xcel Energy Inc.

20

Walt Disney Co.

10-20*

Devon Energy Corp.

15

Google Inc.

14

Microsoft Corp.

6-7*

*external estimate

If a carbon fee or allowance of some sort becomes law somewhere in the world, these companies will have a big leg up on their competition.  Their systems, buildings and culture will already be programmed for profit.

How Microsoft stepped up to the plate can be found in its Carbon Fee Playbook. I’ll dive in with a quick summary.  I’ll leave a complete walk-through to you using the inks embedded throughout.  Note: all mentions of “carbon” refer to all greenhouse gases.

There are three primary, simple, components to the Playbook: 1) organization carbon reduction policy; 2) price on carbon; and 3) carbon fee fund investment strategy.  The price on carbon is set by calculating what it will cost to execute the company’s carbon reduction strategy.

With that, there is a five-step process to help organizations implement it:

  1. Calculate your carbon impact.
  2. Establish how you’ll reduce carbon emissions; then decide how you’ll invest the funds raised by your internal carbon fee.
  3. Determine internal carbon price.
  4. Gain executive approval, establish governance procedures and set feedback loops.
  5. Administer the fee, communicate results and adapt company actions to increase its impact.

The internal cost of energy at Microsoft includes the price it pays each of its utilities for electricity and/or natural gas, as well as the price it pays to offset the carbon emission associated with that usage. For business air travel, the cost includes the price per airline ticket â€" even by class â€" and the price it pays to offset the carbon emissions associated with each flight using algorithms from American Express and the U.S. Environmental Protection Agency. It established targets for reducing air travel and is striving to achieve them by increasing its use of collaboration technologies.

The carbon fee is divided up among the business units responsible for the resource consumption. Microsoft is quick to assert there is no “grandfathering” as is found in cap-and-trade schemes.  By doing so, the fee helps to educate the business units on their carbon impact and serves as a reminder of ways they should try to innovate and become more energy efficient.

Josh Henretig, Microsoft’s Director of Environmental Sustainability, said the company’s biggest challenge has been to shift responsibility for reducing carbon emissions from the company’s six-person sustainability team to managers in charge of every operation that uses energy or otherwise emits carbon.  “We’re changing the culture of accountability throughout the company,” he said in an interview.

The company’s evolution from mostly a software products company toward more of a devices and services enterprise has expanded the challenge, especially as it develops more cloud-based services requiring data centers throughout North America and the world.  Increasingly the impact of the company’s ever-growing supply chain is figuring into the mix.

Following the Playbook, Henretig said Microsoft first achieved carbon neutrality in its fiscal 2013 year, which ended last July, raising about $10 million in the process. Its expanding carbon footprint means they won’t be able take their eyes off that distinction, and may fall short in future years.

Microsoft set targets for reducing energy consumption in its data centers, labs and offices. A self-developed  enterprise-wide energy management program deploys seven different building management systems in helping office engineers get a grip on ways to reduce their energy consumption. The company operates in 118 buildings housing about 30,000 pieces of energy-using equipment (not including laptops) encompassing about 15 million square feet of space.  The result: 500 million data points every day. At last count, Microsoft has 100,500 employees worldwide.

To get greener, Microsoft says it is signing long-term renewable power purchase agreements wherever it makes sense. Where it cannot buy power from wind, solar and/or hydro systems to directly supply its data centers, financial managers are purchasing market-based renewable energy certificates (RECs) along with carbon offsets. These give the company credit for buying renewable energy and reducing carbon emissions in locations beyond their network of facilities because they still benefit the environment and supply the regional power grid, which Microsoft and its neighbors share.

To help ensure access to power for its large data center servers near San Antonio, Microsoft purchased RECs in signing a 20-year wholesale power agreement to for electricity from a 110 megawatt wind farm near Fort Worth â€" the Keechi Wind Project â€" set to open in 2015. Because Microsoft can only buy electricity from its regulated retail provider, CPS Energy of San Antonio, the wind turbines will supply electricity to the Texas grid, which CPS Energy can draw from.

Image“We're definitely looking at this as a first of (its) kind, but it fits into our overall desire to have more control over our energy supply,” said Brian Janous, Microsoft's director of energy strategy, told the San Antonio Express-News in November.

 On a parallel path, program leaders are striving to achieve targets for generating less waste and using less water.

Mindy Lubber, President and CEO of Ceres, says this strategy’s simplicity is what makes it transferable. “It can be adapted easily to fit other corporations, nonprofit groups and government agencies,” she said. “The basic formula is universal (carbon emissions multiplied by carbon price equals carbon fee); it’s simply a matter of tweaking the model to fit an organization’s structure, financial processes, and individual goals.”

The foundational building block for reducing all greenhouse gases is a carbon emissions inventory. This enables the company, the Playbook states, to “institutionalize a process for collecting, calculating and maintaining carbon data.”

Microsoft created seven major sections of information to track emissions data:

  1. Organizational information, including in-house project managers;
  2. Boundary descriptions;
  3. Quantification methodologies and emission factors;
  4. Data sources, collection processes and quality assurance;
  5. Establishing a base year for structural and methodology changes;
  6. Management tools, including individual roles and responsibilities, training and data maintenance;
  7. Auditing, verification and corrective actions needed.

Carbon emissions from operations are measured in metric tons of carbon dioxide-equivalent (mtCO2e). To quantify its emissions, Microsoft multiplies the organizational activities and use of resources by specific emissions factors. The resources include electricity consumption in kilowatt hours and commercial air travel in passenger miles by class of travel and the amount of space each employee uses.

To monitor and report on an organization’s emissions inventory and provide up-to-date access to data cross the organization, Microsoft deploys software developed by Australia-based Envizi (formerly CarbonSystems) on the company’s Windows Azure cloud platform. 

With its access to low-priced electricity at its Redmond, Washington headquarters supplied in part by hydro-electric generating stations operated by Puget Sound Energy, some data crunchers estimated Microsoft’s carbon price to be between $6-7 U.S.  Henretig would not disclose what its internal price is. Sharing lessons learned only goes so far.

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The Solar Net Metering Battle Moves to Colorado

The battle over net metering between Colorado's Xcel Energy and rooftop solar advocates could make the recent impassioned debate in Arizona seem tame.

Xcel Energy, Colorado’s dominant electricity provider, will have its 2014 Renewable Energy Standard Compliance Plan reviewed by the state Public Utilities Commission in February.

In its filings, the utility proposed to change net energy metering (NEM) to a “net metering incentive.” To validate the request, Xcel filed a value of solar study that puzzled Colorado solar advocates.

“They presented a draft study to the stakeholder review committee, asked for feedback, and then just filed it with the PUC with no discussion,” said Rick Gilliam, Vote Solar Initiative Research Director. “Xcel said they want a conversation about solar, but they won’t return phone calls.”

“There are two main arguments,” according to Meghan Nutting, SolarCity Policy Director. “One is that Xcel wants to recover infrastructure costs from the Renewable Energy Standard Adjustment fund.” Xcel’s net metering incentive is the difference between what the study concluded are distributed solar’s cost and benefits, Gilliam explained. “They want to deduct that from the RESA fund.”

In Xcel’s formulation, taking the net metering incentive from the RESA fund would make it as “transparent” as other performance-based incentives, Xcel VP Karen Hyde testified to the PUC in July.

“But it is questionable whether that is legal,” Gilliam said. “State law says RESA is to incur costs for implementing the RES.“

Xcel’s concern is a cross-subsidy, according to Robin Kittel, Xcel's Director of Regulatory Administration. With NEM, solar owners can sharply reduce their electricity bills and avoid much of the prorated Electric Commodity Adjustment (ECA) bill charge. This shifts system costs to non-solar-owners.

This makes it transparent that “every solar customer continues to receive benefits from the utility system that are the same or greater than the benefits received by his or her non-solar neighbor,” Hyde testified.    

“It is not clear significant revenues are lost,” Nutting said, because few solar owners actually zero out their bills and completely avoid ECA charges. “There is no cost shift. APS, Arizona’s dominant utility, reported that the average monthly bill for solar owners in its territory from July 2012 to June 2013 was $71.27. Part of that pays for infrastructure.”

“It would be different in Colorado because, overall, the average customer use there is higher,” Gilliam acknowledged. Sunrun reports its average Colorado customer pays more than $20 per month to Xcel.

Of Xcel’s 16,000 Colorado solar owners, 1,700 received checks for producing more electricity than they consumed, Kittel said, and the “average residential solar customer serves 90 percent of load” with onsite production.

“The other argument,” Nutting said, “is that the 2014 Compliance Plan should only apply to 2014 and renewables, but this decision will impact future compliance plans, integrated renewables planning and what other utilities in the state do.”

“Cost-benefit studies are complicated,” Gilliam added. “To try to go over those details in a litigated process is a poor way to get a reasonable outcome.”

“The present NEM incentive was implemented as part of the RES legislation. It is appropriate to bring it to this proceeding,” Kittel said. “It only applies to 2014, but we are asking the Commission to be aware of the cross-subsidy, because Colorado solar advocates have a 1-million-solar-roofs target.”

Motions by solar groups to remove the current debate from Compliance Plan proceedings were rejected.

Xcel’s study, which Nutting called “unvetted,” applied an “avoided costs” method. It concluded that the revenue lost to net metering is the retail rate of $0.104 per kilowatt-hour, according to Kittel. The system’s avoided cost, or benefit, is $0.046 per kilowatt-hour. Xcel wants the $0.058 per kilowatt-hour difference shifted from the RESA fund to Xcel’s ECA account to compensate for revenues lost to solar owners.

The solar industry critique of the study identified specific aspects of distributed solar’s benefit that were either undervalued or not considered by Xcel’s study. As a result, the critique concluded, “the annual net benefits of solar DG on the [Xcel] system are $13.6 million per year.”

“Xcel would say that overvalues solar,” Gilliam said. The way to get beyond the debate over which study is right, he explained, is to have a state-agency-facilitated stakeholder discussion about costs and benefits, item by item.

Future “facilitated discussions among stakeholders could define how to quantify and incorporate system costs and benefits into new rate designs,” according to Xcel VP Hyde’s testimony.

“The other alternative is we end up in a fight,” Gilliam said. And this could be the first in a series of moves by Xcel, he added. The next would be a rate change request based on the lower cost valuation. And if Xcel is compensated from the RESA fund, it would effectively cap NEM at the RESA fund’s 2 percent of utility bills cap. Finally, Xcel would, as Hyde’s testimony acknowledged, pursue a legislative change to NEM.

After proposed NEM rollbacks failed in Arizona and other states, Gilliam said, Xcel seems to have “decided to try something more subtle and creative.” A confrontation at the PUC is nearing, he warned. “The only way to stop it now would be a settlement. But I have made offers to Xcel and there has been no substantive response.” 

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

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BOEM Announces Third US Offshore Wind Energy Competitive Lease Auction

Note: This post was originally published on CleanTechnica

After successful lease auctions for offshore wind development in New England and Virginia, the Bureau of Ocean Energy Management (BOEM) is setting sail for a new location in the race to develop America’s wind potential â€" Maryland.

BOEM officially announced the offshore wind lease auction today in the Federal Register. As in previous lease auctions, prospective developers now have a 60-day public comment period in which to signal their interest and submit proposals for review.

If all goes according to plan, America could hold its third lease auction as soon as this Spring, and continue its full-speed effort to join the international race to develop offshore wind resources.

Maryland Wind Energy Area

Will The Third Time Be A Charm?

The “Maryland Wind Energy Area” spans roughly 80,000 acres between 10-30 miles due east from Ocean City off the northern Maryland coastline. The entire area will be auctioned off as two separate leases, with 32,737 acres in the North Lease Area and 46,970 acres in the South Lease Area, representing between 850-1,450 megawatts of potential wind power capacity.

If past is prologue, the Maryland auction will turn a tidy profit. Deepwater Wind was the winning bidder of BOEM’s first competitive offshore wind lease auction in August, paying $3.8 million for the rights to develop what could be America’s largest offshore wind farm, across 164,750 acres off the Massachusetts and Rhode Island coasts.

BOEM also successfully auctioned a smaller parcel of 112,800 acres off the Virginia coast to Dominion Virginia Power in September. While the auction netted $1.6 million, local environmentalists and other offshore wind developers have criticized Dominion’s intent to actually develop the lease, hinting it may only want to prevent other developers from installing turbines.

As with the two previous lease auctions, the Maryland area will go through the Interior Department’s “Smart from the Start” approach and include environmentalists, business interests, and the military to ensure the final project meets as few siting challenges as possible.

Maryland’s Role In US Offshore Wind

While additional BOEM offshore wind auctions were expected in 2014, the fact that Maryland was the third area announced could be interpreted as a response to the state’s efforts to develop offshore wind on its own.

Earlier this year, Maryland passed a carve out for offshore wind in its renewable portfolio standard, mandating a certain percentage of the state’s electrical demand is met by offshore wind starting in 2017. Initial accounts estimated the move could create roughly 200MW of new offshore wind capacity, but it’s so far unclear how the BOEM auction will affect that outlook.

Can America Harness Offshore Wind’s Potential?

If the full impact of offshore wind in Maryland is still unknown, the full potential for America couldn’t be clearer. The US Department of Energy and Department of Interior published a national offshore wind strategy in 2011 that estimated the generating capacity of potential offshore wind turbine sites in less than 100 feet of water equaled the entire generation capacity of America’s current electric system.

In addition, a 2012 report from the National Wildlife Foundation estimated harnessing even a realistic fraction of America’s offshore wind potential could power 14 million homes, create over 300,000 new green jobs, and $200 billion in new economic activity.

BOEM’s auction process is a long-overdue step toward getting America into the race to capitalize upon the estimated €130 billion global market for offshore wind by 2020, but coming the same week as news construction on Cape Wind has finally begun, it could signal a new phase in the domestic industry’s maturation.

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5 Demand Response Trends to Watch in 2014

demand response trends

The term "demand response" is so 2010. It’s still the phrase the industry throws around to describe shedding load when the grid needs some help. But these days, it’s so much more.

In the past few years, demand response has been morphing into demand management, where load is called upon more often -- both for economic and capacity reasons. Megawatts are now coming from sources that were previously uninterested in getting into the market.  

Here are five of the most important trends in demand response for 2013 that will only become more significant going into 2014.

Residential Gets Real

Every year, it seems as though we’re on the verge of residential demand response 2.0. In 2013, it actually started to materialize. Oklahoma Gas & Electric announced results of its commercial-scale residential demand response program, which will eventually involve more than 100,000 homes. It shaved about 2 kilowatts per home, far more than what the program was initially planning to achieve.

Some utilities, such as San Diego Gas & Electric, Southern California Edison and Austin Energy are rolling out “bring-your-own-thermostat” programs. Instead of using one-way radios on air conditioners, digital two-way thermostats that consumers have already purchased are offered a premium to participate in peak-time rebate programs.

Other large utilities, such as SMUD and Pepco, are also hoping to move toward dynamic pricing. SMUD is running a pilot in which participants are on different peak pricing plans, which all of the utility's customers will eventually be on. Pepco is seeking approval for a plan that would start next summer, in which all customers will be on a peak rebate program (think of it as training wheels for variable pricing).

More utilities will likely jump on the peak time rebate bandwagon in 2014, and we can expect many more utilities to leverage smart thermostats already in their territories next year and beyond. Also, now that the Nest thermostat has been on Ellen, there could be a lot more devices to aggregate in 2014.

DR Jumps Into Japan

Just about every large demand response player in North America made a foray into Japan in 2013. The partnerships mostly just laid the groundwork, but pilots will begin as early as Q1 in 2014.

Japan’s utilities have turned their attention to demand-side management as the industry continues to contend with generation limits in the wake of the March 2011 Fukushima nuclear disaster.

The big names are there, such as Schneider, EnerNOC and Comverge. The OpenADR Alliance is also making inroads. Large utilities, such as Tokyo Electric Power Company, will start with large commercial and industrial customers, although there could also be opportunities in small commercial and residential.

Most of the announced projects are pilots, many funded by Japan’s New Energy Promotion Council. But expect pilots to scale up fast if they are successful in 2014.

Don’t Call It "Demand Response"

We keep saying we'll call it something different, and then we keep calling it "demand response" anyway. But certainly, demand response is morphing into demand management, and traditional demand response companies, such as Comverge and EnerNOC, are making the case that they’re much more than just load-shedding aggregators.

Demand management is a combination of capacity demand response, economic demand response and constant commissioning for energy efficiency. Companies aren’t just dropping load when the mercury rises -- they're also shedding more load for economic reasons as the payments have been increased in PJM and are soon to be increased elsewhere thanks to Federal Energy Regulatory Commission's Order 745 (more on this later).

Automation is another factor that is bringing new players, such as casinos, to demand response markets. Service industries, farms, manufacturing facilities and critical government operations that may have never considered automated demand response in the past are reconsidering now that there are fine-tuned automated offerings that can allow critical operations to keep running while still shedding load.

In Vegas, NV Energy and BuildingIQ married energy efficiency and demand response, but that’s a trend happening everywhere. Some utilities are merging their formally siloed demand response and energy efficiency units. Constellation, and other comapnies like World Energy, help companies use demand response payments for energy efficiency upgrades.

The merging of energy efficiency and demand response is still early days, but it will gear up in 2014 both within utilities and in terms of vendor offerings. Eventually, regulation will catch up too.

Mo’ Money, Mo’ Money, Mo’ Money

Money talks. So it helps that economic demand response payments have risen in North America’s largest grid operator, PJM, even if only a small number of large commercial and industrial clients are getting the benefits. As the payments go up in other grid regions, it should benefit more than just the largest participants.

In Texas, which was not affected by FERC Order 745, there is talk of a capacity market or at least a change to scarcity pricing to encourage more demand response through higher prices -- and maybe some more generation too. ERCOT has already raised its market cap to $9,000 per megawatt-hour for 2015, which could also encourage more demand response as retailers look to hedge against price spikes.

Money is also talking on the residential side. The bring-your-own-thermostat programs offer a higher rebate than customers without two-way digital thermostats receive. At Southern California Edison, for example, the program offers a $1.25 bill credit for every kilowatt-hour saved during peak days, $0.50 more than customers without a two-way thermostat can earn.

And if you live in some alternate universe where LEED points speak louder than dollar bills, demand response is now a base credit for LEED v. 4.

Say Goodbye to Summer

Every year, there seems to be a new record for peak load in some region of the U.S. This year, it was in New York. But PJM also hit a record for the most demand response ever called upon in September, when it set a new power record of 144,370 megawatts for the month of September.

Sure, it was still technically summer. But the mid-September peak was higher than all but one day in July for 2013 and illustrates that capacity demands are popping up outside of July and August. EnerNOC said its dispatch on the day could be its largest ever.

In other regions, peak demand does not just stretch into September, but is flipped all together. In Europe, the peaks are due to heating in winter, which means that any U.S. company looking to tailor offerings to the European market will have to have solutions that address heating, and not AC load, which are far less of a problem in energy-conscious Europe.

Back in the U.S., most capacity constraints will still occur in summer, but demand response is increasingly being used for ancillary services, which are needed year-round. In some regions, demand response has helped ease the transition as old coal plants retire.

It is still early days for the applications of demand response in every region of the U.S., but as markets catch up with technology, it won’t just be a blunt instrument to help the grid in the dog days of summer.

Photo Credit: Demand Response Trends/shutterstock

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

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EcoGrid EU, Part 2: Lessons on Engaging Customers via the Smart Grid

Euro Smart Grid

On the Danish island of Bornholm, the Ecogrid EU  smart grid demonstration project is providing valuable lessons in how utilities can engage customers to help everyone gain maximum benefits from smart grid technology.

Nearly 10% of all households on the island are participating â€" an effort that involves not just the installation of smart meters, but also sensors, appliance controllers, and communications equipment in participants’ homes and businesses. Persuading residents to participate means learning how to clearly communicate the potential benefits of the smart grid to end users â€" while also managing expectations.   Price signals are a key aspect of customer communication and engagement. Ecogrid EU includes two types of web portals: one for viewing their energy usage, current cost, and trends. The other lets users specify control setpoints and actions for key home appliances. How users opt to control their homes in response to prices signals completes that communication loop for utilities.

Consumers like lower bills â€" so not surprisingly, most Ecogrid EU customers indicated that lowering energy bills was a primary motivation for joining this project. But Maja Bendtsen, Head of Projects for Østkraft (the Danish utility based in Bornholm, which is managing the Ecogrid EU project), pointed out that delivering this benefit isn’t always easy.

Bendtsen noted that in Denmark, per-kWh prices paid by end users are comprised mostly of fixed components, such as taxes; actual energy consumption only accounts for about 20% of the typical Danish energy bill. This means that even when customers act to reduce their overall energy use, or to shift usage to off-peak times, they still may not save very much money.

This poses a challenge: If energy bill savings might not seem significant, what sorts of financial incentives might utilities offer customers that would make it worth their while to get more involved with actively managing their energy use? As EcoGrid EU continues, Østkraft will likely experiment on this front.

Fortunately, engaging customers in the smart grid isn’t all about reducing energy bills. Bendtsen noted that on Bornholm, many end users silly wanted access to better technology. For instance, it can be easier to control the temperature of individual rooms in a home via the EcoGrid web portal, rather than using the limited and often cryptic built-in interfaces of typical home thermostats. Also, customers can use the web portal to remotely monitor conditions at home.

According to Bendtsen also noted that the current need for further development is needed in some types of equipment controls can make it more challenging to engage customers in smart grid efforts.

For instance, air-to-air heat pumps are common on Bornholm â€" and for many households, a heat pump is their largest source of energy consumption. However, Østkraft was unable to identify a satisfactory control solution for heat pumps, and so was unable to involve most heat pumps in the Ecogrid project. This proved confusing and disappointing to some customers.

"We're learning a lot about how to talk to customers about what is and is not possible in terms of control at this point. Sometimes it requires some explaining and convincing,” Bendtsen said.

For further information about the EuroGrid EU project, you can access a free webinar archived online.  Integrating Information Technology with Operational Technology in the Smart Grid: The EcoGrid EU Launch

See part 1: How EcoGrid EU integrates IT, OT and energy markets

For more Smart Grid blog postings, visit the Siemens Smart Grid Watch blog.

Photo Credit: Euro Smart Grid/shutterstock

Authored by:

Casey Novak

I currently serve as the liason for providing Smart Grid content from Siemens. Please see each blog post for more details about the author. In my current role, I manage marketing communications for the Smart Grid Division within Siemens Infrastructure & Cities Sector in the United States. I joined Siemens in March of 2011, and prior to that, I worked for seven years at a public relations ...

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New York Green Bank Gets $210 Million In Start-Up Funding

While most Americans wait around to see what’s waiting for them under the Christmas tree, it looks like New York State’s clean energy industry got to open its present a few days early.

Governor Andrew Cuomo announced $210 million in initial capitalization for the New York Green Bank, a new initiative created to leverage public funds into private investment to boost clean energy projects, create green jobs, and improve community climate resiliency.

NY Green Bank, first announced in Cuomo’s 2013 State of the State speech, is now primed to launch in early 2014 en route to its full $1 billion capitalization. “With this funding we will attract greater investment in New York, accelerate clean energy development, and modernize our grid,” said Cuomo.

New York Green Bank Targets Clean Tech Market Barriers 

New York has already become one of America’s clean energy industry leaders, ranking 4th nationally in total generated renewable electricity megawatt-hours and 1st in economic output per kilowatt-hour â€" but the Green Bank could unlock even more potential.

“New York’s Green Bank will target existing market barriers which currently prevent the widescale deployment of clean energy,” said Richard Kauffman, New York’s Chairman of Energy & Finance. “Merely setting up a competitive market that offers the promise of choice offers only that: a promise unrealized if projects cannot obtain financing.”

The Green Bank will focus on four main areas to overcome these financial barriers: enhancing market participation in renewable and energy efficiency projects by providing credit support and aggregation mechanisms; partnering with project developers, energy service companies, and financial institutions constrained by clean energy project financing; leveraging capital and institutional capabilities of the private sector; and earning returns on investment to preserve and expand its base of capital.

That final point may be the most important of the four, as it’s the key to moving from government subsidies to self-sustaining clean energy engine. The initial $210 million in Green Bank funding combines $165 million in state funds with $45 million in revenue from the Regional Greenhouse Gas Initiative (RGGI). While this innovative blend maximizes the decarbonization potential of RGGI, it’s insufficient to reach the $1 billion goal.

To that end, New York State’s Public Service Commission will provide oversight to ensure Green Bank financial offerings meet criteria designed to help it create return on investment, as well as review and monitor quarterly progress reports.

A Perfect Compliment To Other Policy Efforts? 

Combined with hundreds of millions in funding awarded to solar power projects through the NY-Sun Initiative, a role in the ambitious multi-state 3.3 million electric vehicles by 2025 goal, efforts to build America’s smartest grid, and cutting-edge research designed to boost energy storage technology, the NY Green Bank could be poised to unlock the Empire State’s full clean energy output.

“The New York Green Bank directly complements other clean energy policies and further leverages private capital and ingenuity, bringing additional investment, energy infrastructure and jobs to New York State,” said Michael Brower, ACORE Interim President and CEO.

New York Green Bank Gets $210 Million In Start-Up Funding was originally published on: CleanTechnica. To read more from CleanTechnica, join over 30,000 other subscribers: RSS | Facebook | Twitter.

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Toward a New Clean Energy Politics

clean energy politics

By Tripp Brockway

On November 5th, Virginians traveled to the polls to elect a new governor. The election was marked by ambivalence, as the candidates for Virginia’s highest office were exceptionally unpopular, even within their own parties. The Virginia gubernatorial race is an example of how occasionally in American politics, voters’ choices can be severely limited. On an average election night, each voter has two options, regardless of how complex their own preferences are: they can vote for the “Conservative Republican” or the “Liberal Democrat.” In our bifurcated political discourse and thinking, each party and its supporters always believe the same things about policy and governance, and, as the only available alternative, the other party must believe the opposite. Through this simplistic narrative, we create generalizations that fail to capture the nuance of an individual’s policy preferences. Further, by limiting our range of options with dogmatic boundaries, we hinder creative ways of building coalitions around specific societal problems that could lead to solutions acceptable to a majority of people, ideology aside. This phenomenon is particularly pertinent to clean energy politics.

According to a Gallup poll conducted earlier this year, a vast majority of Americans support greater emphasis on developing solar and wind energy, regardless of their political party. An outside observer would probably feel comfortable asserting that, in a democracy, any policy with such wide-ranging support would easily come to fruition. Yet Congress has done little to support clean energy investment and deployment, which is primarily the result of ideology and dogma interfering with pragmatic governance.

For clean energy politics, the devil is in the details. Liberals are apt to favor more government intervention to support their objectives, and clean energy is no exception. Policies like a carbon tax, renewable portfolio standards, and subsidies have long been in the liberal playbook as means to reduce carbon emissions and incentivize clean energy production. These policies, however, do not jive with a conservative worldview. Higher taxes, mandates, and government intervention in the marketplace are abhorrent to an average Conservative. Yet clean energy advocates seem intent on continuing to push for these policies. They either intend to bludgeon conservatives into submission, or they are holding out hope that alienating half the country and crossing their fingers for a Democratic takeover of Congress will give them their long sought after policies (which is possible, but unlikely). This strategy is largely the result of a lack of political imagination: because Liberals are “for” clean energy, conservatives must always be “against” it, right?

Wrong. In many ways, policies that enable clean energy deployment can make quite a bit of sense within a conservative worldview. Our current electricity system is a highly regulated industry in which government officials, heavily lobbied by big utilities, set prices in the marketplace. Consumers often have very little to no choice as to who supplies their electricity. Our system of electricity generation and distribution is centralized in such a way that makes the United States vulnerable to devastating terrorist attacks. These realities are as anathema to conservative ideology as the “big government” Democratic policies are. Conservatives believe in free market principles and competition, and distributed clean energy would create a freer electricity market and offer increased competition. Consumers would have a choice. The grid could be liberalized and decentralized. Individuals would be empowered to produce their own electricity and sell it in the marketplace. Our electricity system would be more resilient to attacks. With the proper framing, clean energy makes sense within conservative priorities.

Consider the alternative to business-as-usual clean energy advocacy. Instead of highlighting the country’s ideological fault-lines, bemoaning “conservatives’ do-nothing attitude” toward climate change and clean energy, and continuing on a path that is not likely to generate much in the way of results, advocates could find common ground suitable to all. This summer’s tea party movement in Georgia that united environmentalists and conservatives in support of clean energy deployment represents such an alternative at the state level. The Georgia Tea Party demonstrated that clean energy is not inherently contrary to conservative beliefs, creating a glimmer of hope for a new clean energy politics.

Georgia’s bipartisan movement in support of clean energy shows that, regardless of political persuasion, policies enabling clean energy deployment make sense. Some such policies may be more palatable than others to a majority of Americans, and advocates should be willing to find middle ground that will enable the rapid and continual deployment of clean energy. There are several policy options that are already in place or are available now that could inspire bipartisan support if given adequate focus and resources. Federally supported research and development into cutting edge clean energy and smart grid technologies can enable tremendous follow-on private sector investment and economic growth. Dynamic pricing, whereby the price of electricity responds to supply and demand in real time, would incentivize efficiency and additional investments to the system. The deployment of advanced metering policies and technologies can empower individual consumer-producers to participate in a 21st century electricity marketplace, buying electricity when they need it and selling their excess to the open marketplace of the smart-grid. Let’s imbue the clean energy movement with political imagination, circumvent our limiting political dogma and boundaries, and forge new alliances around policies that can build a safer, cleaner, and more prosperous energy system in the United States.

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Top Washington D.C. Clean Energy Policy Stories from 2013

clean energy stories 2013

U.S. clean energy policy was as caught up in Washington gridlock as most other issue areas in 2013. No climate-saving clean tech bill passed through Congress and even modest, bi-partisan energy efficiency legislation failed to get to the President’s desk. In fact, 2013 will largely be known for energy policy actions that didn’t happen â€" a sort of 365 day buffer period until bigger decisions are made in years to come.

With that said, while Washington D.C. policymakers chose not to act on anything energy-related, that doesn’t mean under-the-radar policy maneuvering wasn’t taking place, which could have significant impacts in the future. With that, here are my top Washington, D.C. clean energy policy stories of 2013.


The Clean Energy RD&D Budget Continues To Fall

Comparison of major budget proposals, created by ITIF.

Comparison of major budget proposals, created by ITIF.

The seemingly endless fight for robust public investment in clean energy research, development, and demonstration (RD&D) programs continued well into 2013, as Congress passed the FY2013 Continuing Resolution, applied mandatory sequestration cuts, and fought over appropriations bills for FY2014. The full-year Continuing Resolution (CR) appropriated funding to energy RD&D programs consistent with FY2012 budgets, but the impacts of sequestrationâ€"which reduced DOE office budgets by hundreds of millions of dollarsâ€"put federal R&D investment “at its lowest point since FY2002,” according to AAAS.

While President Obama’s budget request for FY2014 prioritized energy innovation by upholding and even raising budgets for programs supporting basic science, low-carbon transportation, and clean energy manufacturing, House appropriations proposals decimated critical investments in DOE programs, including cutting the Office of Energy Efficiency and Renewable Energy (EERE) by 43 percent from FY2013 CR levels. Support for these “connective tissue” programs is integral to successful development and commercialization of clean energy technologies. Perpetual cuts to energy innovation funding and the Department of Energy and the Department of Defense in particular restrict the development of a functional innovation ecosystem capable of producing clean energy technologies that are cost and performance competitive with fossil fuels.

Congress also failed in 2013 to come to a compromise over the 2013 America COMPETES Act reauthorization, which supports core science and engineering programs that directly translate to national economic development and competitiveness. The reauthorization should include a recommitment to doubling funding for federal basic science research over the next ten years, which unfortunately the nation has fallen behind since its initial promise in 2008.


DOE National Lab Commercialization Reform Taking Center Stage

Battery Innovation Test Facility, NREL

Battery Innovation Test Facility, NREL

The Department of Energy (DOE) National Labs represent almost $15 billion in public investment in advanced energy, materials, physics, chemistry, and nuclear weapons R&D. Spanning 17 institutions throughout the country, the Labs were originally created to develop the atomic bomb and are today used to conduct research and tech development universities and the private sector are unwilling or unable to do. And while their list of success stories is long â€" everything from full body scanners at airports to thin-film solar panels â€" the need to quickly move more Lab innovations to market is increasingly more important because of pressing global challenges like climate change and a slow economic recovery.

As a result, Washington policymakers are starting to lay the groundwork for reforming the National Lab system to spur more tech commercialization. Secretary of Energy Ernest Moniz has made National Lab reform a key component of his term at DOE. In his first testimony in front of the House Science Committee in June, Sec. Moniz stated that he wants the Labs to tap more into regional economies to facilitate technology transfer and intends to make the Labs more like Innovation Hubs, which are deep collaborations among researchers and industry. In practice, he’s created a National Laboratory Operations Board to work out management and operations barriers between the Labs and DOE and created a unified Under Secretary for Science and Energy to create an overarching strategy among the 13 non-nuclear security Labs.

In Congress, Sen. Tom Udall (D-NM) is developing the Technology Transfer, Invention, Innovation, and Implementation Act to strengthen the tech transfer functions within the DOE and the National Labs. The House Science Committee approved Rep. Chris Collins (R-NY) and Rep. Derek Kilmer’s (D-WA) TRANSFER Act, which aims to direct a small share of STTR funds towards a new program aimed at supporting innovative approaches to tech transfer at universities and federal laboratories, such as the DOE Labs. And there is additional bipartisan interest in National Lab reform brewing on Capitol Hill, particularly as it related to reforms that could be added to the America COMPETES reauthorization bill.


ARPA-E Losing its Bipartisan Support

Despite an extremely successful year introducing six new programs to tackle the nations most significant clean energy technological challenges, ARPA-E faced substantial threats to its budget for FY2014. Currently funded at $260 million for FY2013, the House Energy and Water Appropriations committee voted to slash ARPA-E’s funding by 80 percent, to only $50 million. A funding cut of this size would decimate the relatively young agency’s ability to perform just as it is beginning to reach maturity.

ARPA-E’s new programsâ€"METALS, REMOTE, FOCUS, RANGE, SWITCHES, and REBELSâ€"finance breakthrough research projects in energy efficient manufacturing, natural gas to liquid fuels conversion, advanced solar conversion and storage, electric vehicle battery systems, power electronics for a more responsive and effective electricity grid of the future, and transformational fuel cell technology for distributed power generation. These investments serve as an invaluable piece of the energy innovation ecosystem and have leveraged millions of dollars in private sector follow-on investment.


Another Showdown over the Expiring Wind Production Tax Credit

Wind farm, taken by ITIF.

Wind farm, taken by ITIF.

The Wind Production Tax Credit (PTC) started 2013 on a high, but is ending 2013 on a low. The PTC â€" a 10 year, 2.3 cents per kilowatt hour subsidy eligible for operating wind turbines â€" expired in December 2012 only to be saved in January 2013 fiscal cliff deal. The 11th hour bill, the American Taxpayer Relief Act, extended the PTC for one year, but also allowed projects to benefit from the credit as long as they begin construction before it expires. Historically, the PTC only applied to turbines that were put in operation before the credit expired. As a result, more wind projects could gain the subsidy.

Nonetheless, the PTC is set to expire again as the ball drops in Times Square and Congress seems unwilling to take on extending any tax credits, let alone one for the wind industry. But some in Congress are pushing for changes. Sen. Max Baucus, outgoing Chairman of the powerful Finance Committee, released his draft energy tax reform proposal which would continue the PTC for another three years, but eventually replace it with a broader production tax credit for low-carbon technologies. A group of nine Republican Senators and one Democrat are instead pushing to allow the PTC to sunset. In comparison, a bicameral group of Senate and House Democrats are pushing to extend the PTC long-term.

More likely than not though, the PTC will lapse once again causing dramatic changes for wind deployment in the United States beyond 2013. According to The Energy Collective’sJesse Jenkins, “Outside of the Interior states then, only compliance with state renewable portfolio standards would keep the wind industry moving without the federal tax credit. In short, while the wind industry will survive without the PTC, it won’t necessarily thrive.”


Keystone XL Pipeline Decision Continues to Drag On

Keystone XL Demonstration, 2011

Keystone XL Demonstration, 2011

In what feels like an episode of the Twilight Zone, the State Department continues to drag its feet on whether to approve the Keystone XL Pipeline. The pipeline under review is a 1,179-mile proposed stretch between Hardisty, Alberta and Steele City, Nebraska, which would bring crude oil from tar sands operations in Canada to Texas oil refineries. Environmental groups have fought construction of the project since 2010, questioning the potential impacts an oil spill could have in critical Nebraska aquifers as well as the efficacy of deploying greenhouse gas intense tar sand oil into the world energy market as it tries to address global climate change.

Ultimately, the Department of State provides final approval of the cross-boarder pipeline, which it’s been considering since 2012. In March 2013, the State Department released its Environmental Impact statement of the project, finding that it would cause no significant impacts. The EPA responded the following month stating the State Department findings were incomplete and further analysis was necessary. As a result of the need for more environmental analysis as well as over 1.5 million public comments on the review, the State Department decision has slipped into 2014.

The delay seems to be having an impact as many environmental and climate advocates focus more on fossil fuel divestment campaigns across the country, which doesn’t have a definitive end like the Keystone decision does. Nevertheless, 2013 didn’t bring an end to the Keystone XL saga, but 2014 looks like it will. The sooner the better, as it’s clear that new activist strategies are needed to address climate change.


Coal Power Plants Are Warned: Innovate or Die

Brayton Point Power Plant, Massachusetts.

Brayton Point Power Plant, Massachusetts.

With Congressional gridlock continuing to stymie any effort for new climate or clean energy policies, President Obama is turning to executive actions to cut greenhouse gas emissions. In June 2013, the President announced his Climate Action Plan, while relatively quiet on new efforts to spur clean energy innovation, aimed to advance new regulations on power plants to account for carbon emissions. In September, the EPA released their first regulations for carbon emissions emitted from new power plants, essentially requiring new coal plants to use carbon capture and sequestration or not be built at all. Advanced natural gas plants meet the new standards.

Of course, the new standards won’t go into effect right away. It will take a year for EPA to finalize the new rules, after which it’s almost certain the regulations will face legal challenges, which may delay implementation even longer. Nonetheless, the coal industry in the United States has been warned â€" either innovate better, cheaper carbon capture technologies or continue to lose energy market share to natural gas.

The latter shift to natural gas is also being helped by new EPA regulations on power plant mercury and arsenic emissions that officially go into effect in 2016 and impact all power plants, new and old. These regulations, combined with the prospect of new carbon regulations for existing power plants in 2014, may be the beginning of coal’s gradual death as a major producer of U.S. electricity.

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