Dr. Sioshansi has a new article up on the Renew Economy website. It is titled, “War on coal – already lost”. To read it, click here.
Dr. Sioshansi’s latest book, Distributed Generation and its Implications for the Utility Industry, is now available from Elsevier. For more details, including a complete contents list and a special price, click here.
The August 2014 issue of EEnergy Informer is now available. Here is the contents list:
- Ignoring Climate Change Is Risky Business
- War On Coal – Already Lost
- Regulators Ask Simple Questions, Get Complicated Answers
- Germany To Introduce Capacity Payment Scheme
- Nuclear Construction: Never On Time, Or Budget
- Renewables Breaking New Records
- Australia’s Falling Demand Makes Solar Uptake More Noticeable
- Distributed Generation Calls For New Business Model
- Emerging Energy Cloud
Which has done better, or worse, in their respective energy turnaround.
This is a sample article from the July 2014 issue of EEnergy Informer.
California and Germany may seem rather dissimilar in many respects. But when it comes to their ardent support of renewables, they are nearly identical. The motivations may be different, but the goals are similar. In the case of the former, the main driver is the state’s climate bill, passed in 2006, which requires state-level greenhouse gas (GHG) emissions to be reduced to 1990 levels by 2020 — don’t ask why, or how, or at what cost. This is driving a great many sub-goals and targets, including the state’s ambitious renewable portfolio standard (RPS), which requires 1/3rd of electricity generation to come from new renewables by 2020 — ditto on the why, and how and how much.
In the case of Germany, the energiwende (pronounced energhi-wende) or turnaround, is centered on a rash political decision made in haste in the immediate aftermath of the Fukushima nuclear disaster in Japan to shut down 8 perfectly safe operating reactors immediately and phase out the remaining 9 by 2022. Again, don’t ask why or anything else because you are not going to get any good, or even lame answers.
The hasty nuclear exist plus the country’s desire to reduce its carbon emissions by moving towards a growing portfolio of renewable resources explains the developments — and the associated problems and costs — in Germany.
At an event organized on 5 June 2014, California Public Utilities Commission (CPUC), which is among the main drivers of the changes taking place in the Golden State, invited 2 speakers representing 2 of the largest utilities in each country/state to exchange notes. The parallels and the challenges were strikingly similar.
Graham Weale, RWE’s chief economist, Germany’s second biggest utility after E.ON, described the dramatic rise of renewables since 2000, especially from solar PVs since 2010 (graph above), and their impact on depressing wholesale prices while contributing to the rise in retail tariffs.
As reported in the June 2014 issue of this newsletter, German government has belatedly acknowledged, at least tacitly, that perhaps its energy turnaround has been too abrupt and possibly too expensive, certainly for residential and small commercial consumers who are bearing the brunt of the retail tariff increases. German politicians are particularly sensitive to the plight of the so-called export-sensitive industries, which are virtually shielded from all price increases associated with the rapid rise of renewables and their generous subsidies.
A proposal expected to become law in August 2014 is intended to put caps on how much additional renewables will be subsidized, while adjusting the subsidy levels downward, reflecting their falling costs
California’s experience with renewables was summarized by Fong Wan, Sr. VP of California’s largest investor-owned utility, Pacific Gas & Electric Company (PG&E) who, like RWE, must abide by edicts and targets coming from politicians and regulators. PG&E, among the greenest of major power generators in the US, is on target to further reduce its carbon footprint, already among the lowest of any major US utility (graph below right).
Not unlike Germany, with its 35 GW of installed solar PV capacity, PG&E is facing a rather steep rise from virtually nil in 2000 to over 1 GW, a trend that is expected to continue. Customer mounted solar PVs, incidentally, are not counted towards the 33% RPS target for 2020 since they are on the customer-side of the meter. They are treated as negative load by California Independent System Operator (CAISO), who can only guess their existence by watching the fluctuations in net load as the sun rises.
California renewable generation is expected to grow just as in Germany. Wan believes, as do many others, that California will in fact exceed the 33% target — partly because nobody — the utilities, the governor, or the regulators — can bear the negative publicity for failing to reach it.
Counting existing large hydro and old renewables that existed before the RPS standard was set, California’s generation mix can easily exceed 50% by 2020, making it among the highest among major global economies.
While German consumers are beginning to notice the rising retail tariffs, California’s high volume consumers have been exposed to some lofty tiered rates, but not because of the rise of renewables.
Since retail residential tariffs are tiered, consumers who get into top tiers pay steep prices. As illustrated in the graph below, PG&E’s top tier approached $0.5/kWhr in 2010, which resulted in consumer revolt in the hot central valley.
The top tier was subsequently eliminated, yet the 4th tier is now around 36 cents/kWhr, not exactly cheap. As described in the May 2014 issue of this newsletter, PG&E has proposed to move towards 3 and eventually 2 tiers over time — in an attempt to reduce the wide and widening disparity among the top and lowest tiers.
The top tiers have been rising because the bottom two were frozen after the 2000-01 electricity crisis. This resulted in all costs to be passed on to the top 4 tiers.
While both Germany and California could have done a better job of managing the transition to high renewable energy mix, on balance, it appears that the latter has done a better job — which is to say approaching its 33% new renewable target by 2020 while keeping retail rates reasonable.
California’s average retail electricity tariffs are around 17 cents/kWh, higher than the US average but a bargain compared to many high price European countries who have experienced steep retail tariff increases since 2008.
Moreover, according to a recent NREL/LBL study, high RPS targets appear to be achievable without putting undue pressure on retail tariffs
In the latest issue of Energy Spectrum magazine Dr. Sioshansi digs into the details behind varying retail electricity prices in different parts of the world. To read it, click here (PDF).
Dr. Sioshansi has an article about Disruptive Technologies on the Renew Economy website. To read it click here.
The July 2014 issue of EEnergy Informer is now available. Here is the contents list:
- Obama’s Carbon Legacy?
- EPA Unveils Climate Proposal
- Did FERC Go Too Far On Order 745?
- Backlash Against Renewables Not Justified On Facts
- Ohio Puts RPS On Hold, More States To Follow Or Avoid?
- Disruptive Technologies Are, Well, Disruptive
- Renewable Score Card: Germany vs. California
- Exxon: Oil Will Remain Indispensible
- Taxes And Levies Behind Rising European Electricity Prices
- Hawaii Regulators To HECO: NOT Business-As-Usual
- BP: Oil’s Supremacy In Decline
Solar PVs are poised to disrupt utility business model.
This is a sample article from the June 2014 issue of EEnergy Informer.
It is hard to believe, but the first demonstration of a working solar PV took place at the Bell Labs in New Jersey on 25 April 1954. For decades, the technology languished as an interesting curiosity because the initial costs were out of the reach of anyone but scientific laboratories, and later, NASA’s space program were costs posed no constraints.
As reported in the media on the 60th anniversary of Bell Lab’s first public demonstration, the world’s first practical solar panel would have cost roughly $286 per watt, which means the average rooftop installation, the type commonplace today, would have cost $1.5 million, give or take a little. And that would assume you could get enough panels to cover your roof, since the panels were custom designed and painstakingly hand-made in the Bell Laboratory.
Solar PVs, of course, have come a long way since then, especially during the last decade, with dramatic drop in price and equally dramatic improvements in their performance, longevity, and efficiency. In 2013, an estimated 36.5 GW of new solar PVs were installed, more than new wind capacity of 35.5 GW. That alone is an astonishing feat.
Solar accounted for 28.7% of new US generation capacity in 2013, and enjoys enormous popularity among consumers everywhere. According to a recent survey by Solar City, 60% of American homeowners say they’re interested in installing solar; 73% say they would welcome clean energy provided by an entity other than their utility.
There are many other developments that make the rapid growth of solar PVs noteworthy, including the claim that there are now more solar installers in Texas than ranchers and cowboys.
The most noteworthy aspect of solar PVs rise, however, is the fact that they are challenging the centralized utility business model, prompting utilities in a number of states to lobby to scale back net energy metering laws and/or raise the costs of installing solar panels as described in the lead two articles. That fact alone, is the most amazing achievement of solar PVs. Happy 60th.
On April 23, Cornwall Energy and Menlo Energy Economics hosted a seminar that examined the impacts that a rise in distributed generation could have on the traditional business models of the incumbent utilities. Dr. Sioshansi was one of the main speakers. Cornwall Energy’s Alison Forbes summarized some of the main contributions to the day for Energy Spectrum magazine. To read her report, click here (PDF).