Tag Archives: utilities

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.

GreenBiz

How to value solar plus storage | GREENBIZ

In the wake of California’s summer of wildfires, blackouts and planned outages, many consumers and businesses are clamoring for more resilient options. The crisis has turbocharged interest in systems that deliver power even when the grid is down. Solar plus storage is fast emerging as a top choice, both at scale on the grid and also “behind the meter,” installed in a home, apartment or commercial building. 

“Solar plus battery storage can provide value in two ways: first, energy reliability for customers during emergency power outages, and second, during non-emergencies, to help the grid balance demand and generation,” said Dawn Weisz, chief executive of California utility MCE, during a breakout session at last week’s virtual VERGE 20 event. 

Founded in 2008 as California’s first not-for-profit, community choice aggregation program, MCE today serves over 1 million residents and businesses in four San Francisco Bay area counties: Contra Costa; Marin; Napa; and Solano.

When it comes to reliability, solar-with-storage systems offer the ability to charge a battery that can keep the power on during an outage. “It’s worth a lot to know you can keep your power on, especially for customers that have medical needs that rely on electricity,” Weisz said. “And those that need electricity for heating, cooling, and to keep food fresh.” 

Solar plus storage also helps the wider grid and environment by letting consumers shift the time when they consume solar power: by storing solar energy when it’s abundant during the day, and using it at night, in place of power generated from fossil fuels.

“Behind-the-meter storage lets you optimize solar consumption, taking up excess output during the day, and discharging it in the evening, when demand spikes,” explained Michael Norbeck, director of grid services business development at Sunrun, a San Francisco-based provider of residential solar systems and services. 

Indeed, absent storage, too much solar can become a challenge, when supply exceeds demand. In California, “We started to see so much solar going onto the grid that our ability to use it was diminishing,” Weisz said. 

In extreme cases, that can mean curtailing output: switching off the excess power flowing from solar farms. Storage can put that excess output to good use, flowing it back onto the grid when needed. “It’s in California’s best interest to be sure we’re using as much of those electrons as we can,” she said. “More batteries will help eliminate curtailment.” 

It’s no secret that the cost of solar energy has plummeted. In an October analysis of the levelized cost of energy — a measure that blends the full cost to finance, build and fuel an energy system over time — investment bank Lazard calculated that large-scale grid solar beats all fossil fuel options on cost, even absent any subsidies. Even rooftop solar, installed on homes or commercial buildings, is close to par with power from conventional sources such as natural gas peaker plants, coal and nuclear. 

Meanwhile, battery costs have followed a similar downward path. Average market prices for battery packs plunged by 87 percent in real terms in the decade to 2019, reports Bloomberg New Energy Finance (BNEF).

MCE commercial battery storage project in partnership with Tesla and the College of Marin. The installation is estimated to save the college $10,000 per month on electricity bills. Courtesy of MCE.

Yet even as prices continue to fall, making these systems accessible to more consumers and businesses, concerns persist about equal access. Weisz noted that even as prices for combined systems fall, the market is following in the footsteps of early solar, when panels were installed first by wealthy customers but lower-income customers couldn’t afford the systems. 

As a not-for-profit dedicated to community energy services, MCE has tapped state subsidy programs, grants and other funding sources to extend the benefit of solar plus storage. “We don’t want to replicate the same patterns of disenfranchising our lower-income customers,” Weisz said. 

For its part, Sunrun has pioneered a pricing strategy that often results in power prices below the grid average, thereby reducing customers’ long-term costs. For instance, to minimize both installation costs and monthly fees, Sunrun’s most popular plan, BrightSave Monthly, leases panels to homeowners for $0 down, paid for via a long-term, stable price. 

With wildfires emerging as a nearly year-round threat to western states, the resilience that solar plus storage offers is growing in importance. Sunrun’s systems have grown increasingly responsive to remote management. When grid conditions grow unstable, Sunrun’s systems can island themselves and call on a reserve portion of the battery to support critical needs. 

Panels recharge batteries during the day, which can then discharge at night, even when blackouts can stretch from hours to days or even weeks. “During the wildfires last year, we had a customer on uninterrupted power for over 142 consecutive hours,” or nearly six days, Norbeck said. 

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Originally published in Greenbiz.com.

Ensia

Can smarter storage solve our energy woes? | Ensia

Notrees Windpower Project battery storage unit

A new generation of technology focuses on supplying a midsize dollop of power exactly when and where it’s needed most.

Largely out of sight, tucked into building basements and stashed in garages, a new generation of energy storage technology is poised to help our aging grid not only avoid outages, but enable vast new flows of renewable power, all while saving some serious money. Call it the smart storage revolution.

California is ground zero for this trend. Across the Golden State, costs for electric power are high, renewables are multiplying, and key grid links are overloaded. But rather than rely on longstanding industry practice to fix grid problems by building more power plants or transmission lines, California regulators are encouraging customers and utilities to innovate.

At two InterContinental Hotels in the Bay Area, new storage technology is helping to reconcile these many challenges. The hotels’ secret weapon is a pair of fridge-sized boxes loaded with lithium-ion (Li-ion) batteries. Day to day, they’re able to cut the hotels’ electricity costs by up to 15 percent.

They do so by taking advantage of California’s complex power pricing regime. Smart software recharges the batteries when power is cheap, typically at night. When rates head up, the system seamlessly switches part or all of the hotels’ load to the batteries, thereby avoiding the need to purchase power at the costliest times, explains Salim Khan, CEO of Stem, the Millbrae, Calif.–based startup that built the systems.

Stem energy storage units

New storage technology at two InterContinental Hotels in the Bay Area cuts the hotels’ electricity costs. Photo courtesy of Stem.

The technology helps the broader grid, too, by reducing the risk of outages. Grid gurus call it “peak shaving.” It’s a nifty trick in which stored energy displaces active generation during key moments. On the hottest days, even a tiny sliver of this kind of savings can make the difference between a blackout and business as usual.

For now, the InterContinental Hotels’ storage units are an exception, but they’re set to become a rule. In February, California became the first state to order investment in smart grid storage, initially calling for 50 megawatts (MW) in the Los Angeles basin area.

The rule doesn’t detail what kind of storage to deploy. Rather, it aims to spark more market innovations, like Stem’s, that improve grid performance while saving money. “This is a huge signal to the market that storage is ready to play” on par with conventional power plants, says Janice Lin, executive director of the California Energy Storage Alliance.

Goldilocks Storage

To be sure, storing electricity isn’t anything new. Cell phones, e-readers and laptops, all integral to daily life, let us use a little of the grid’s generation on the go.

Storage is well established at the macro scale, too. A little-known backbone of the U.S. grid is more than 20,000 MW — equal to the capacity of some 22 nuclear power plants — of “pumped hydro” storage. Scattered at scores of remote sites around the U.S., these systems comprise some 99 percent of today’s storage capacity.

At night, utilities use low-cost energy to pump water from a lower reservoir uphill to a higher basin. The next day, as demand peaks, the water is sent back downhill to generate power. Think of pumped hydro as the biggest battery we have. It’s capable of delivering city-sized volumes of power for hours in a row. That’s why grid operators are pushing to install thousands more megawatts of capacity.

But, as California is finding, on today’s grid, the sweet spot for smart storage is at scales somewhere between these two extremes. Much bigger than handheld phone batteries, but smaller than gargantuan lakes of hydropower, smarter storage solutions can be an ideal fit for critical niches where a midsize dollop of power, supplied for minutes or hours, is all that’s needed.

Sharing California’s Problems

California’s problems aren’t unique. Similar problems are surfacing across the U.S.

Transmission constraints. L.A.’s biggest problem isn’t inadequate supply of power — most of the time there’s enough juice available from regional generators. The real problem is funneling all that power through aged transmission lines that can’t handle the load.

In most markets installing new transmission cables, or even upgrading existing lines, is a no-go. As populations have grown, the cost of new grid links has skyrocketed; likewise, public patience with big construction projects is scant. New York City and Long Island face similar transmission constraints.

Storage offers a tidy solution. At night, utilities can use existing transmission lines to fill up batteries positioned near demand hot spots. Later, if demand peaks beyond power lines’ ability, batteries can fill in the necessary excess. “Energy storage helps you do more with less infrastructure,” says Bill Acker, executive director of NY-BEST, an energy storage technology consortium based in Albany, N.Y.

Waste and reliability. To meet peak levels of demand, the grid has been massively overbuilt. The Electric Power Research Institute estimates that one-quarter of all high-voltage distribution lines and about one-tenth of all power plants are used, on average, just 5 percent of the time, or 33 hours per month.

That means hundreds of billions of dollars in assets go unused the vast majority of the time. Utilities are recognizing that carefully targeted storage can cost-effectively replace these least-used assets, says Haresh Kamath, program manager for energy storage at EPRI.

“We’re not using most of our assets most of the time,” says Johannes Rittershausen, managing director of Convergent Energy + Power, a developer of energy storage assets. “The challenge is to find ways to address infrastructure needs most efficiently and at the least cost to end users. A well-designed energy storage project can do just that by taking advantage of slack capacity in targeted locations.

“The U.S. grid will require massive investment over the coming decades as infrastructure ages and our society’s peak electricity demand continues to grow,” he adds.

Renewables’ risks. As a rule of thumb, grid experts believe that when intermittent power sources such as wind and solar surpass 20 percent, grid instability soars. And where that threshold once seemed remote, it is routinely being surpassed in many regions.

Storage boosts the value of renewables in two ways: by stepping in to provide power when renewable output drops off, and by mopping up excess output when solar or wind power exceed demand.

In February of this year, wind output set a record in Texas, briefly cranking out more than 28 percent of the power demands of the Electric Reliability Council of Texas, which manages the flow of about 85 percent of the state’s electric power. California’s goals for renewables are the nation’s highest, with a mandate to hit 33 percent by 2020. Roughly 20 more states, home to the majority of the U.S. population, have set goals of 20 percent or more.

Storage boosts the value of renewables in two ways: by stepping in to provide power when renewable output drops off, and by mopping up excess output when solar or wind power exceed demand.

“For the first time, the growth of renewables means we’re facing unpredictable supply,” says Lin. Demand will also grow less predictable as more electric vehicles come on line. “Plus it’s hard to find locations for new plants or transmission lines,” Lin adds. “Storage speaks to all these problems.”

Top Contenders

A menagerie of exotic new storage technologies — including thermal storage, flywheels and compressed air storage — are developing fast, but haven’t yet achieved commercial-scale viability. For now, advanced battery-based storage is the hottest of the grid’s newcomers, thanks to rapid declines in the price of Li-ion batteries.

Serendipitously, a key impetus for this trend started in the auto sector, where rising sales of battery-packed hybrids and electric vehicles are driving carmakers’ appetites for advanced Li-ion batteries. This is spurring new manufacturing capacity, driving prices down globally. Driven largely by rising demand from car companies, industry and utilities, the global Li-ion market is slated to double over the next four years, to around $24 billion, according to a recent Frost & Sullivan report.

As prices fall, Li-ion batteries are finding new niches. For now, at around $2,000 per kilowatt-hour, battery backup remains too costly for most applications. But they do pencil out for deep-pocketed utilities in key situations, where their ability to deliver large pulses of power is highly valued.

In January, for example, Duke Energy completed a 36 MW energy storage system at its Notrees Windpower Project in West Texas. Designed and installed by Austin-based Xtreme Power with funding from the U.S. Department of Energy, the $44-million system is the world’s largest wind-linked storage unit, made up of thousands Li-ion battery cells.

According to financial service company UBS, the cost of storage dropped by 40 percent over the past two years, and analysts expect the slide to continue, or even accelerate. At around $500 per kWh, EPRI estimates more than 40,000 MW of potential demand will enter the market. At that price point, residential-scale battery backup may become a reality. Pilot trials of such household-scale backup appliances are underway near Sacramento, Calif.

Installed in the garages of 15 solar-powered homes, Li-ion battery packs the size of small file cabinets hold enough juice to supply a few hours of power. The systems are designed to let the homes go off grid during periods of peak demand, saving homeowners money while reducing stress on the network.

And at $250 per kWh, consulting firm McKinsey & Co. predictsautomakers will be able to build electric vehicles that would be competitively priced in comparison to conventional cars, but with much lower fuel costs. With an eye on a future where there’s a Chevy Volt, Nissan Leaf or the like in every garage, utilities and carmakers are beginning to test vehicle-to-grid systems where EVs’ big battery packs are enlisted to back up the grid.

Powering Ahead

Innovative startups and companies from outside the utility sector are leading the shift towards smart storage. It’s not that utilities won’t play a big role here, but historically they tend to follow, says GreenTech Media smart grid analyst Zach Pollock. “Utilities’ adoption of nascent technologies is typically constrained by cautious regulators, conservative cultures and long budget cycles.”

And maybe that’s okay. Smart storage offers a rare opportunity, says Rittershausen. “We can do a project that makes a profit, saves the consumer money and reduces inefficiency,” he adds. “If this is done right it makes sense for investors, end users and utilities too.”

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Check out the original story here: http://ensia.com/features/can-smarter-storage-solve-our-energy-woes/?viewAll=1

 

GreenBiz

How to jump-start the vehicle-based smart grid | GreenBiz

The triple tragedy that struck Japan in March 2011 is already remaking global energy markets. In the wake of earthquake, tsunami and nuclear disaster, public outrage over the meltdown delayed or derailed nuclear energy’s promised renaissance in many markets.

Yet if Japan’s tragedy hastened the demise of one energy technology, it may have jumpstarted another. In the year since, as Japan struggled to cope with crippling shortages of electric capacity, a handful of automakers have brought to market appliances that convert electric vehicle batteries into systems that can provide backup power to homes and help support the teetering grid.

In April, Mitsubishi Motors unveiled a portable adaptor, the MiEV power Box. For roughly $1,800, the appliance lets owners of MiEV electric cars plug in, and draw up to 1.5 kilowatts. A month later, Nissan followed suit with its Leaf to Home, a $7,000 device that, drawing power from a Leaf EV, can power a typical Japanese home for up to two days. Toyota too is demonstrating a similar system linked to its plug-in Prius hybrid in 10 homes and plans to launch a commercial version next year, if all goes well.

For the thousands of Americans suffering through power problems this summer—due to a punishing heat wave and storms in the mid-Atlantic—the appeal of these technologies is surely tantalizing. The case for EVs would sure seem more compelling if consumers knew the Chevy Volt or Nissan Leaf in their garage could also power their homes during an outage.

In fact, vehicle to grid, or V2G, has emerged as a sort of holy green grail. All manner of energy gurus — from Google.org to Rocky Mountain Institute-founder Amory Lovins to the DOE to Wired magazine — have recognized V2G as a grand solution to many of the problems that bedevil our grid and transportation fleet.

The promised benefits go well beyond household backup. As consumers buy more EVs, the combined stock of batteries offers utilities a low-cost path to grid-scale storage—why pay for grid batteries, if utilities can “borrow” EVs to perform the same trick? In turn, cheaper storage capacity paves the way for more solar panels and windmills by making it easier to store their notoriously variable output. And since utilities today pay for the sorts of storage services EVs might deliver, V2G systems could earn cash payments for EV owners, thereby lowering the cost of EVs and boosting their sales.

Yet despite Japan’s new systems, a comprehensive V2G solution remains years off. “[They are] a good first step, but they essentially turn the car into an expensive backup generator. There’s still a big leap to V2G,” says Ted Hesser, Energy Smart Technologies analyst at Bloomberg New Energy Finance.

In Japan, those new systems can support the grid indirectly, by feeding power back to the households and reducing their pull from the grid. But for now, they cannot link to the grid: by regulation, they’re strictly vehicle-to-home, or V2H, Ali Izadinajafabadi, a Tokyo-based analyst for Bloomberg New Energy Finance wrote in an email.

To make the leap from V2H to V2G will require navigating a thicket of barriers, including funding investment needs, upgrades to grid software, and creating cooperation between industry players who, so far, haven’t been eager to play.

The first of these barriers is a simple lack of standardization for two-way EV connections. It took big automakers years to agree on technical standards on how one-way charging plugs would be built. The effort didn’t account for two-way flow of power. Already dogged by high-costs and reliability concerns over EVs, carmakers are wary of imperiling warranty terms, or adding to the material and engineering costs to create two-way plugs that might not ever be used.

“It’s not that it can’t be done,” says Mark Duvall, Director of Transportation Research at EPRI, the utility industry’s policy research arm. “The automakers, utilities and the others involved have had a lot of other challenges to solve first.”

The Japan solution, Duvall explains, cleverly works around this barrier by offloading the technology necessary to manage the power flow out of the car into a standalone device. Both the Nissan and Mitsubishi systems tap into the EV batteries through high-power, 440-volt direct-current connections, which remain rare in the U.S.

Then there’s the closely related problem of the lack of a smart grid. For V2G networks to deliver grid-scale benefits, they will have to be connected into advanced systems able to communicate to vast numbers of EVs, in real time, to orchestrate hundreds of small power sources so that they behave as a single sizeable resource that can be tapped by grid mangers such as PJM. Those systems are taking shape, “But they’re not there yet,” says Bloomberg’s Hesser.

Another scale problem: there aren’t yet enough EVs on the market to make big V2G plays of interest to utilities. Sales have been steady, but slow. Pike Research recently postponed until 2018 the year in which it projects EVs will hit 1 million in the U.S. Until they reach a critical number, they’re too thinly dispersed, and too few in number to provide megawatt-scale storage and other power services that interest utilities, adds Hesser.

Lastly, however appealing they look on paper, the economics of V2G networks remain less than compelling for EV owners, especially if early systems run as high as Nissan’s $7,000 unit in Japan.

Last year, NRG Energy unveiled a pilot program called eV2g. Targeting commercial fleets, the company estimates that each vehicle would net $440 per year, Erica Gieswrites in Forbes.com.

A 2010 study by CMU looked at consumer (not fleet) V2G. The researchers used market information on the value of the sorts of near-, medium-, and long-term energy storage services V2G networks could provide and estimated the total annual value for an individual EV owner at not more than $250.

These guesses also underestimate the costs utilities face to market these programs as well. “You have to convince consumers to adopt this very new way of owning a vehicle,” says Hesser. As we’ve seen with EVs, “That takes a massive amount of marketing and education.”

What then will it take to get V2G off the ground here? Progress will continue, to be sure. Writing in the New York Times Wheels blog, green car guru Jim Motavalli reports that Nissan and Mitsubishi are both evaluating the option of adapting their V2H systems to the U.S. Meanwhile, pilot scale V2G efforts, run by the DOE, NRG and others are ongoing — but they involve only tens or hundreds of vehicles.

Such projects won’t get to commercial scale anytime soon. For V2G to link up millions of vehicles, and fulfill its green promise, Hesser believes the industry will have to push the technology, rather than wait for consumers to pull it. “For V2G to work, it means lining up the interests of vehicle owners, carmakers, smart grid players,” he says. “There’s just too many players for this to happen anytime soon on its own.”

He likens the challenge to the conundrum facing energy-efficient appliances. In that market, the value of energy savings were too low, or spread out, to motivate consumers. So the DOE stepped in to establish efficiency and technology standards that have delivered huge aggregate energy savings.

Specialized commercial fleets also show early V2G promise. An MIT study cited by CleanTechnica.com suggests that fleets may offer a sweeter spot for V2G deployments, at least early on. Trucks or buses, after all, require bigger battery packs. And because they park in the same area, they offer big battery capacity in a single location, making them easier to orchestrate. The study estimates earnings potential of up to $1,700 per truck.

Very high prices for energy could jump start V2G, too. Consider Nuvve — to date, the leading commercial scale V2G effort in the world. Started in 2011, the company is based in Denmark where, importantly, electricity rates are roughly four times higher than in the U.S. Plus, a third of electric power comes from variable renewable sources such as wind, so storage services are paid at a high rate.

Based on business plans mapped out by Zachary Shahan at CleanTechnica.com, EV owners in Nuvve’s network will be able to rake in up to $10,000 from V2G services over a vehicle’s lifetime.Finally, there’s the hard-to-price appeal of backup for blackouts. The U.S., luckily, hasn’t faced power problems as dire as Japan’s. But if blackouts multiply, necessity may spur V2G invention here too.

GreenBiz

Cheap natural gas drives manufacturers, energy companies to shift gears | GreenBiz

Last week, Joe Nocera reminded me of how disconnected and angry the debate over fracking — the process of injecting fluids into deep, dense rock formations to fracture them and release natural gas — has grown. At The New York Times Energy for Tomorrow conference, Nocera moderated a series of panels that were focused on a broad variety of energy issues, but repeatedly returned to the hot button issue of fracking.

In a rhetorical question, he asked if the tradeoff in environmental harm and public health one we just have to accept. The answer is no, of course. But, as Nocera added, the fact is that fracking is already happening in a very big way. For those not following this issue, he’s an op-ed columnist for the Times who supports fracking as an innovation that, done responsibly, can lead to game-changing new supplies of energy, job growth and economic expansion.

Nocera’s position crystalizes much of the debate around this energy technology. His writing has drawn ire, especially in greater New York City and its hinterlands, where proposals to drill for natural gas in the city’s upstate watershed have sparked enough protest to turn the Hudson Valley into the epicenter of national anti-fracking efforts.

There’s good reason for alarm. ProPublica, a nonprofit investigative journalism entity has — in my opinion — amassed the best work documenting the environmental harm done by fracking. Here are just a few of the key environmental harms associated with the practice:

These issues make a strong case against the practice, and explain why Nocera’s “develop responsibly” position is controversial. The mixed reactions to his endorsement of the practice highlight the schisms dividing interest groups, coming between neighbors who are fighting over whether to frack or not and between national environmental groups who disagree about the environmental pluses and minuses of the practice.

For example, Nocera draws some of his analysis from work done by the Environmental Defense Fund, which is also pushing for tightly regulated fracking. Nocera’s approach has drawn heavy fire from climate activists such as Bill McKibben, a writer and scholar who backs a moratorium, arguing the risks of fracking are simply too high, as well as from Joseph Romm, a former Clinton-era energy official and now an influential climate commentator at Climate Progress.

Putting aside the fight over whether fracking should extend into new areas, Nocera’s talk drew my attention to a facet of fracking that gets less attention. Away from the main boxing ring where the issue is being fought out, large-scale industrial investment is rapidly reorganizing based on the long-term promise of low-cost gas. In short, industry is betting that fracking is here to say. Here’s where fracking already is impacting industry:

Power generation

The fracking binge has already altered the outlook for the U.S. power and manufacturing sectors. More than the rise of renewables, cheap natural gas has paved the way for the retirement of more than 100 coal-fired powered plants, too aged to meet federal clean air rules.

Efforts to build new coal plants are constrained too. Because natural gas power plants are cheaper to build and fuel, the natural gas boom has radically lowered the count of new coal-fired plants being proposed. According to data tracked by the National Energy Technology Lab and Sierra Club, plans for more than 160 coal plants have been shelved in recent years, partly due to natural gas’ cost advantage, as well as soft growth of demand for power.

“Natural gas has done more than other legislative initiative to push coal out of the equation,” said panelist Michael Levi, a senior fellow for energy and the environment at the center for foreign aaffairs, and by my reckoning, one the smartest observers out there on this issue.

Manufacturing

Cheap natural gas is rewriting the rules for other manufacturers too. Less than a decade ago, natural-gas-reliant manufacturers were decamping from the U.S., transplanting operations to the Arabian Gulf, Latin America and other gas-rich regions.

Now many are returning. Makers of chemicals, fertilizer and pharmaceuticals, all of which use natural gas as both an energy source and a raw material are returning stateside, lured by natural gas for under $2.50 per thousand cubic feet, less than fifth of the price in Europe or East Asia.

As Jim Motavalli reports in The New York Times, Nucor, which uses natural gas to make steel, is building a $750-million facility in Louisiana, just eight years after shutting down a similar plant in the same state and shipping it to Trinidad, to tap the island’s recently-developed natural gas supplies.

The cost advantage provided by cheap natural gas is even sharper for companies that use methane as a raw material — to make plastics, for example. Kevin Swift, chief economist at the American Chemistry Council, tells the Times that because European chemicals companies use oil-based raw materials derived to make plastics, the U.S. has a 50-to-1 advantage. “‘Shale gas’ is really driving this,” he says. “A million [British thermal units] of natural gas that might cost $11 in Europe and $14 in South Korea is $2.25 in the U.S. Partly because of that, chemical producers have plans to expand ethylene capacity in the U.S. by more than 25 percent between now and 2017.”

Add up the impact of investments like these and high rates of shale gas recovery could result in a million new manufacturing jobs by 2025, according to a 2011 PricewaterhouseCoopers study cited by Motavalli.

Transportation

Compared to current petroleum prices, natural gas costs $1.50 per gallon equivalent, nearly two-thirds less than current pump prices for gasoline or diesel. Large fleets of heavy-duty vehicles — from buses to garbage trucks to delivery vehicles — have been among the earliest converts. One-quarter to a half of Navistar’s new vehicle sales in these markets opt for natural gas.

Long-distance highway trucking may be the next to switch. Speaking with the Times, Navistar chief executive Dan Ustian, predicts that natural gas could capture up to a fifth of sales of highway tractor-trailers within a year.

The need for on-road refueling infrastructure remains a constraint. There simply aren’t many publicly accessible natural gas refueling sites. The count is under 1,000, less than 1 percent the number of gas stations. Last month, GE and natural gas producer Chesapeake Energy inked a joint venture to build 250 natural gas refueling points around the country.

Policy

Industry is clearly digging in even as environmental opposition gains momentum. Complicating the politics of this debate is that fracking is an intensely regional issue. State-level cultural perceptions of energy vary, for instance. Some families in Texas welcome gas rigs in their backyards, while some landowners in New York are suing to prevent nearby drilling.

Geology is different everywhere too, of course. So what was done safely in Oklahoma may not be replicable in Pennsylvania. “Local conditions matter significantly,” said Mark Brownstein, a panelist at the Times event and chief counsel for the Environmental Defense Fund’s energy program.

These polarizations have driven the debate to unproductive levels of ire, the panelists at the NYT event argued. “This is the perfectly dysfunctional fight,” said Levi, from the Council on Foreign Affairs. “There are environmentalists who believe this cannot be done safely. And there are those in the industry who say regulations will destroy their business.” The loudest voices amount to an all-or-nothing proposition, Levi added, which makes the process of brokering a solution to the fracking question very difficult.

There is a web of substantial existing regulation covering fracking, Brownstein explained, including the Clean Air Act, and the Clean Water Act. “The fundamental question is whether they are sufficient,” he said, and how to improve them if not. Another weak link he pointed to is variations in state level rules and enforcement of well construction, where one poorly built well, after all, can do enormous environmental damage.

Indeed, pointing to these weakest links, Levi made a case for the role of federal regulation. If one state underinvests or underenforces, a single disaster could stir up a far-reaching political backlash that could ultimately slow or halt development.

Some state-level policies, such as Texas’ tough disclosure rules on what frackers inject into the ground, can be cut and pasted to other state or national rules. New York State’s rules are also shaping up to be a benchmark in this respect. And some rules, such as the “Halliburton exception,” which excluded fracking from Clean Water Act standards for what is injected into wells, can only be fixed by an act of Congress.

With the scale of fracking rising, the stakes to get regulation right are growing — and making the fight harder to resolve. Some in the industry are beginning to welcome tougher regulation, recognizing that it could help level the playing field. If tougher regulations could ensure fracking can be done safely, but added 10 or 20 percent to unit cost of gas, the fuel remains cheap, Levi pointed out. “If I were a fracker, I’d rather have 20 cents extra charge” than the environmental and political risks facing the energy today, he said.

Check out Nocera, Levi, Brownstein and others here at The New York Times Energy for Tomorrow conference.

New York Times

Utilities Turn to Mergers as Demand for Power Slows | New York Times

The slowdown is spurring a fresh cycle of deal-making among publicly traded utilities. Not unlike the wave of consolidation that came after deregulation in the 1990s, major electricity players are looking to get bigger to protect their bottom lines.

So far this year, utilities in the United States have announced mergers and acquisitions with a total value of $44 billion. That compares with $30 billion in all of 2010, according to Thomson Reuters.

A Progress Energy nuclear plant in New Hill, N.C.  The utility’s merger with Duke Energy is pending.

If approved, Duke’s Energy’s $26 billion deal in January to buy Progress Energy would create the country’s largest utility. The combined company would own power plants with 57 gigawatts of capacity, generate $22.7 billion in revenue and serve 7.1 million customers across six states.

The surge of deals “marks the acceleration of a long-awaited consolidation of the U.S. electric utility industry,” said Todd A. Shipman, credit analyst of utilities and infrastructure ratings at Standard & Poor’s.

By his take, today’s deal-making will pick up from the previous era of consolidation. Since deregulation, the industry has shrunk to roughly 50 publicly traded companies, from 100. That number could be halved to 25 in as little as five years, Mr. Shipman said.

While the usual financial pressures to fortify balance sheets and improve credit quality are once again pushing mergers and acquisitions, environmental dynamics are playing a bigger role than in the past. Utilities — facing pending regulation on greenhouse gas emissions and renewed enforcement of older rules on air pollution — must reckon with the rising costs of compliance.

The added expenses come just as growth in electricity demand is being crimped by efficiency gains. Electricity usage increased 0.5 percent a year on average for the decade that ended 2010, down from 2.4 percent a year during the 1990s, according to the Energy Information Administration.

The anemic figures represent the tail end of a six-decade deceleration of electricity demand. The rate peaked in the 1950s, at 9.8 percent a year, during a period of supercharged industrial growth and home construction.

Customers’ plans reflect a secular shift. Nine out of 10 businesses and 70 percent of consumers have set specific goals to lower their electricity costs, according to a recent study by the Deloitte Center for Energy Solutions with the Harrison Group, a research services firm. Nearly a third of companies polled have goals to self-generate electricity, whether through solar panels, reuse of wasted heat or other methods.

Utilities are adjusting to the new reality. With customers tapering their electricity use, Consolidated Edison is deferring the installation of transformers and other costly capital equipment in New York, said Rebecca Craft, the company’s director of energy efficiency and demand management. Con Ed trimmed its outlook for how much the city’s appetite for power will grow in the coming decade to 1 percent a year, from 1.7 percent.

“Practically every utility today is thinking about flattened growth of demand for energy,” said Gregory E. Aliff, a vice chairman of energy and resources at Deloitte.

“In the last wave of utility mergers, it was more offensive — companies were seeking growth,” he said. “Today is different: the industry is more on the defensive. Companies face a question of how to grow, and consolidation is a way to grow earnings.”

New environmental regulations are only heightening the growth challenge. The industry faces potentially sizable bills to meet a raft of air pollution rules being pushed by the White House.

Utilities with a big reliance on coal face the steepest emissions penalties. American Electric Power, which derives about 85 percent of its power from coal, recently estimated the new rules could cost $6 billion to $8 billion in coming years. The money would pay for adding filters to power plant smokestacks, closing coal-fired generators and switching to lower-emission natural gas generators.

Some merger-minded utilities are shedding assets to lower their exposure to such rules. As part of its $7.9 billion deal to buy Constellation Energy, Exelon plans to sell a batch of coal-fired plants. While coal fuels 12 percent of their current generation, the companies aim to halve that share after the merger.

A.E.P., Duke and Exelon declined to comment.

Unlike in previous periods of consolidation, regulators seem more willing to approve deals, given the sluggish economy and job market. Previously, the process could drag on for years, but recent mergers have been moving along more quickly.

This month Connecticut regulators effectively approved Northeast Utilities’ tie-up with NStar, despite opposition from the state’s attorney general. When the $6.9 billion deal including debt was announced last October, the companies pledged that “no broad-based, corporatewide layoffs or early retirements are planned.”

Said Mr. Shipman of S.&P., “In most of these deals, executives have been careful to emphasize that jobs will be spared, rather than cut.”

DealBook - A Financial News Service of The New York Times

Copyright 2011 The New York Times Company

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