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GreenBiz

Why wholesale POWER markets matter SO MUCH to big ENERGY buyers | GreenBiz

When a big brand such as Google, General Motors or Walmart unveils an eye-popping commitment to use more renewable energy, the news usually gets attention. And as these pledges have multiplied in number and scale, corporate energy buyers are having impacts beyond the headlines. They’re reshaping larger U.S. power trends by pulling investment into renewables.

Already, roughly half of the Fortune 500 have climate and clean energy goals; over 250 large companies have committed to using 100 percent renewable energy. Corporate buyers have collectively deployed over 23 gigawatts (GW) of new renewable energy over the past five years, according to the Renewable Energy Buyers Alliance (REBA). Over the next decade, renewable energy demand from Fortune 1000 companies could add 85 GW.

To speed progress, REBA and its membership of 200-plus energy buyers and sellers have launched a set of guiding principles to standardize wholesale electricity markets across the U.S. 

By making it easier for big power buyers to synchronize terms with utilities and project developers, the principles should stimulate investment, drive down renewable energy prices and, the alliance hopes, boost market competition while growing supply. REBA’s goal is to catalyze 60 GW of new renewable energy projects over the next five years.

Wholesale power markets already serve most U.S. consumers. The largest of these — such as the middle-Atlantic’s PJM or MISO, which spans Louisiana to Minnesota — straddle multiple states and coordinate the intricate flow of power from thousands of power plants, across millions of miles of wires, to tens of millions of customers. Today, roughly 80 percent of corporate power purchase agreements take place within existing wholesale energy markets, according to REBA. 

The principles are significant because American businesses are making wholesale market design a central priority not just to meet their own clean energy goals but also to shape the market structures …

Yet large swaths of the economy remain outside these regions. So standardizing rules for all the participants and extending wholesale markets across the entire country could enable even more deals. 

In a document released during a breakout session at last week’s VERGE 20 event, REBA laid out key principles to organize extant and new wholesale markets. According to this roadmap, well-functioning wholesale energy markets are defined by three core principles which should:

  • Unlock wholesale market competition to catalyze clean energy by ensuring a level playing field, large energy buyer participation, and services that provide actual value for energy customers.
  • Safeguard market integrity through independent and responsive governance structures, transparency and broad stakeholder engagement and representation.
  • Design to scale to the future by ensuring operational scale, customer-oriented options to meet decarbonization goals, alignment with federal and state public policy and predictable investment decisions.

Improving wholesale markets

“The principles are significant because American businesses are making wholesale market design a central priority not just to meet their own clean energy goals but also to shape the market structures that are critical to help decarbonize the entire power most affordably, for everyone,” said Bryn Baker, director of policy innovation at REBA.

Operators should ensure customers have pathways to engage in decision-making, which is not always the case today, Baker explained. “Energy buyers can and want to have a seat at the table. It’s going to be really important that a broad cross-section of customer voices are present in these markets.” 

From the perspective of a big buyer such as GM, an effective wholesale market can capture supply from a larger geographical area. This can help optimize for price, by buying wind one day in one region and switching to solar in another area on another day. 

Diversity of sources reinforces grid resiliency, said Rob Threlkeld, GM’s global manager of sustainable energy, supply and reliability. In one region, solar power may be surging, while in another wind output is waning.

“A wholesale market allows you to really match that generation with the load at the lowest cost possible,” Threlkeld said.A wholesale market allows you to really match that generation with the load at the lowest cost possible.

“As we think about the wholesale markets, we want to drive toward a clean and lean grid,” Threlkeld added. “We’re moving from big, centralized plants to more decentralized operations … It allows us to optimize the grid itself, matching generation with load.”

GM has accelerated its commitment to renewable energy, aiming to power 100 percent of U.S. facilities by 2030 and global operations by 2040. Wholesale markets can help, Threlkeld said, by hastening the deployment and procurement of cost-effective clean energy. 

Energy consumers take the lead

REBA’s efforts reflect wider trends in the energy industry, where households and big businesses alike are pushing energy companies to respond to their needs. “The conversation is shifting from a production focus to one where consumers are driving the next wave. It’s about what customers want and how they’re consuming power,” said Miranda Ballantine, REBA’s chief executive. 

Localization of renewable energy is also guiding REBA’s agenda. In the past, companies had little choice but to contract renewable capacity from far-off markets. Today, more are seeking to procure renewable energy near their facilities on the same grid they operate. “More companies are saying that they want to time match those renewable electrons with their consumption,” Ballantine said. 

Google recently unveiled plans that highlight the challenges corporate energy buyers face in upgrading their renewables sourcing from such a first-generation approach, where they may still use local fossil-generated energy but net that out against purchases elsewhere. In April, the internet goliath unveiled complex software-based plans to dynamically match its actual minute-by-minute consumption with low-carbon electricity supplies by region, a technical challenge no other large company has yet solved.

For other companies, simply accessing regional grids with sufficient low-carbon energy remains a challenge. Somewhere between 30 and 40 percent of corporate assets are not in the kinds of regional transmission organizations (RTOs) that can draw and balance power from a wider region, Ballentine said. 

“Those customers have very little opportunity in those markets to actually make choices to drive zero-carbon electrons to power their facilities,” Ballantine added. Absent organized wholesale markets, companies can’t really use their demand signals to drive change in the type of electricity they’re consuming. 

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Originally published at Greenbiz.com.

BusinessWeek

Here comes lunar power | BusinessWeek

Think windmill, but underwater. In 2006, six of Verdant Power's 10-foot-tall turbines will spin in New York’s East River, supplying a supermarket.

Moon-driven tides, ocean currents and waves generate more oomph than wind, are more consistent that solar

A drama is unfolding in New York City’s East River. This summer the Popsicles at a Gristedes supermarket on Roosevelt Island, midstream between Manhattan and Queens, will be kept icy by power generated just a stone’s throw from the riverbank. Anchored 30 feet down, six underwater turbines will turn day and night, driven by the tidal flows in the channel. At a fish-friendly 35 rpm, the propellers will crank out up to 200 kilowatts of clean power, or roughly half the peak needs of the supermarket.

Projects like this one are still small fry. But hydropower, the granddaddy of green energy, is making a comeback. Think Hoover Dam, but less visible and a whole lot easier on the environment. This born-again breed of clean energy isn’t yet on the agenda for George W. Bush, who is out barnstorming the nation on behalf of renewable power. The President is pointing to the earth for plant-based ethanol, to the sky for wind power, and to the sun for photovoltaics. But he should also be pointing to the moon, say fans of the new hydropower, and to the seas that lie below it. Tugged by lunar gravity and stirred by wind and currents, the oceans’ tides and waves offer vast reserves of untapped power, promising more oomph than wind and greater dependability than solar power.

The appeal of next-generation hydropower is hard to miss. “It’s local, reliable, renewable, and clean. Plus, it’s out of sight,” says Trey Taylor, president of Verdant Power LLC, the Arlington (Va.) startup developing the East River site. Adds Roger Bedard, ocean energy leader at the Electric Power Research Institute (EPRI), the industry’s research-and- development arm: “Offshore wave and tidal power are where wind was 20 years ago, but they’ll come of age faster.” By 2010, Bedard predicts, the U.S. will tap about 120 megawatts of offshore wave energy — enough to power a small city — up from virtually zero today.

GROWING DEMAND

The planets are certainly in alignment for hydro. Prices for natural gas and coal are high, making renewables more cost-competitive. And in an effort to halt climate change and cut energy imports, 19 states have mandated that a share of their power come from green sources. Demand for alternatives is soaring: U.S. wind capacity surged by nearly 2,500 megawatts last year, up 35%, and solar is sizzling.

Wind and solar won’t be able to satisfy all the green-power mandates. So more than two dozen companies worldwide are developing systems to unlock the power of waves and currents. The first to sell devices to a commercial project is Edinburgh’s Ocean Power Delivery Ltd. Its Pelamis system is a snake-like steel tube that floats, semi-submerged, in the ocean.

In its Scottish factory, OPD is putting the finishing touches on three of these 400-foot-long machines. This summer they’ll be towed to a site three miles off Portugal’s northwest coast and hooked into the power grid. Lying low in the water, the snakes are invisible from a distance, unlike offshore wind farms that are causing “not in my backyard” complaints across the Atlantic, in Cape Cod. Initially the project will supply 2,500 kilowatts of juice, enough to run 1,500 Portuguese homes. OPD hopes to have 30 units at the site by 2008, pumping out enough current to power a town of 15,000 homes.

With its vast stretches of shoreline, the U.S. has some 2,300 terawatt-hours of potential near-shore wave power, estimates EPRI. That’s more than eight times the yearly output of the nation’s existing fleet of hydroelectric dams — “a very significant resource,” says Bedard. What’s more, since water is heavier than air, marine systems pack a bigger punch than wind power. Because they work not by impounding rivers behind costly bulwarks but by tapping water’s energy as it ebbs, flows, rises, or falls, upfront costs are lower than for dams. Maintenance to keep away barnacles and similar “biofouling” generally runs higher than for wind. Still, on balance, wave energy will evolve to be cheaper than wind was at similar levels of development, Bedard believes.

The power is more predictable, too. Unlike dam-based hydroelectric generators, which depend on rain or snowpack to keep current flowing and which shut down during droughts, newer “hydro- kinetic” systems exploit less capricious natural forces. “Lunar power” is the term offered by experts such as George Hagerman, a senior research associate at Virginia Tech and co-author of a recent EPRI marine-energy study. “You can’t know if the wind will be up in an hour,” he says, “but you can predict the tide 1,000 years from now.”

Hydropower already propelled one revolution in the U.S. Starting in the Great Depression, the government erected thousands of dams, spreading cheap power across many states. Today they supply 7% of U.S. demand, some three times the combined share of wind, solar, and other renewables. Yet even as existing dams are being upgraded, environmental concerns thwart new building.

EUROPEAN EMBRACE

Before the U.S. fully taps tidal power, it will have to play catch-up. Marine-energy R&D was born in the energy programs of the Carter and Reagan eras, but these experiments lost their funding in the 1980s. “We were the leaders when I started out. Now Britain is entreating us to set up there,” says Verdant’s technology director, Dean Corren. He dreamed up the East River project in the mid-1980s while investigating alternative power at New York University. But then “power got cheaper, and research stopped,” he says.

Across the Atlantic there is a long history of subsidies for renewable energy. For example, the EU-backed European Marine Energy Center Ltd. in Orkney, Scotland, is a one-stop shop for lunar startups. Entrepreneurs can get a test rig in the water and get hooked up to the grid quickly, says EMEC managing director Neil Kermode.

Ocean Power Technologies Inc. in Pennington, N.J., opted for a London stock listing because of stronger interest from European backers, says CEO George W. Taylor. Both the U.S. Navy and Iberdrola, a utility in Spain, have signed contracts to test OPT’s PowerBuoy, which generates energy by bobbing up and down.

In the U.S., last year’s energy bill raised hopes in the hydropower community. By unifying the licensing of offshore wind- and marine-energy projects under the jurisdiction of the Interior Dept.’s Minerals Management Service, “it sets the stage for faster approvals,” says Carolyn Elefant, co-founder of the Ocean Renewable Energy Coalition. But the bill failed to recognize ocean energy as eligible for the sorts of production tax credits that jump-started wind power investment in the ’90s.

At the East River, Verdant is confident its compact submarine turbines are ready for the long haul. Once an 18-month trial is completed, Verdant hopes to get the O.K. to install up to 300 turbines. That would generate enough power to supply some 8,000 New York homes. “It’s our flight at Kitty Hawk,” says Taylor.

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