The same technology underlying the efficiency of bitcoin transactions and largely responsible for the online currency’s success could be the key to developing a smarter energy grid. Blockchain, a shared, encrypted ledger maintained by a network of computers, gives bitcoin transactions their unique peer-to-peer quality, making the entire system decentralized without a central repository or single administrator. While the electricity grid still relies on centralized plants generating power sent over long distances, blockchain technology could help modernize the system, making it easier for smaller, distributed networks to connect to the grid and exchange power locally.
This year is proving to be the year of investing in innovative energy technology. Mercom Capital Group reports that in the first half of 2017, over $1 billion in venture capital and private equity funding has been invested in battery storage, smart grid and energy efficiency companies worldwide, exceeding the first-half funding benchmarks in 2014, 2015, and 2016.
Mercom Capital Group, a global clean energy communications and consulting firm, surveyed the combined venture capital funding (including private equity and corporate venture capital) and mergers & acquisitions across 89 companies in three separate sectors – Battery Storage, Smart Grid, and Energy Efficiency. Total investments in these areas amounted to $1.03 billion across the first half of 2017, a marked 25% jump from $807 million in the first half of 2016.
In a headline grabbing move, last week President Obama rejected the Keystone XL Pipeline, ending a seven year waiting period. The pipeline would have carried 800,000 barrels of oil each day from Canada’s tar sands to refineries on the Gulf Coast. After he reviewed comments and studies on Keystone from seven federal agencies, Obama killed the project because he did not believe it would make a meaningful long term contribution to the domestic economy, reduce gas prices, or increase American energy security.
Meanwhile, ahead of the Paris climate summit, the private sector is stepping up efforts to help the nation meet its clean energy goals. On November 2, Goldman Sachs announced a goal of arranging financing or investments in $150 billion worth of clean energy projects by 2025 in an effort to harness market based solutions to address climate change. This new target is nearly four times the $40 billion goal Goldman set in 2012. The investment bank is taking the cause to its own operations as it pledged to spend $2 billion to make its operations more environmentally friendly. For more on the latest energy happenings, read this week’s update from ML Strategies.
Tom Burton, Chair of Mintz Levin’s Energy Technology Practice, has published a weekly installment providing insight into the challenges and possible solutions that, if implemented, promise a bright future as clean energy moves America forward. In this series, Tom included one challenge per week and the potential solution(s). This is the sixth and final installment of the series. Click to read Part I, Part II, Part III, Part IV, and Part V.
The Problem: Renewables Intermittent Power Generation
Renewable energy sources are intermittent in nature, depending on when the sun shines and the wind blows. Because of this, suppliers face “ramp up” and “ramp down” issues.
- Ramping up: Renewable supply is typically lowest during the evening, while at this time demand spikes as people return home from work. The California Independent System Operator (ISO) developed a “duck curve” to describe how massive amounts of customer-sited PV systems could cause problems to the state’s supply-demand balance on its electricity grid. The ISO worries that the “neck” of the duck curve, situated where consumers come home and turn their electricity on as the sun sets, could overwhelm the state’s available generating capacity.
- Ramping down: Generation is highest in the middle of the day as demand troughs. This creates an overgeneration risk where grid operators often have to ask renewable suppliers to reduce production so as not to overwhelm transmission lines. In Vermont, Green Mountain Power has, on several occasions, had to cut back the power it sends to the grid because the operator told them it was overloading capacity. Compounding the issue is that it is more difficult to synchronize wind’s fluctuating power flow with a system built for the steadier electric stream of fossil fuel plants. This comes with financial consequences – for example, cutbacks cost the Vermont Electric Cooperative $1.5 million in 2013.
A widespread, cost effective method is necessary to smooth out the duck curve and deliver clean power at all hours of the day.
On Wednesday, September 23, the Northeast Electrochemical Energy Storage Cluster and North Shore InnoVentures co-hosted the 2015 Clean Energy Storage Finance Forum at the Massachusetts Clean Energy Center (MassCEC). The event kicked off with storage company pitches moderated by Tom Kinneman, Vice President and COO of North Shore InnoVentures. Afterward, Tibor Toth, MassCEC’s Managing Director of Investments, moderated a panel that featured Judith Judson, Commissioner of the Massachusetts Department of Energy Resources, Betty Watson, SolarCity’s Deputy Director of Policy and Electricity markets, and Bill Bullock, Director of Business Development at NRG. The panel was an exclusive opportunity for major energy stakeholders to discuss the future of storage. Read below for some key takeaways!
Tom Burton, Chair of Mintz Levin’s Energy Technology Practice, will publish a weekly installment providing insight into the challenges and possible solutions that, if implemented, promise a bright future as clean energy moves America forward. In this series, Tom will include one challenge per week and the potential solution(s). This is the fifth installment of the series. Click to read Part I, Part II, Part III, and Part IV.
The Problem: To DG or Not to DG – That’s The Question
The rapid growth of distributed generation (DG) over the past two years is expected to continue: as of 2013, the U.S. installed one PV solar system every four minutes – in 2016, this is expected to drop to every minute and twenty seconds.
However, as DG customers take advantage of net metering and similar policies that reduce and even zero out their bills, utilities argue that these programs cause them to buy electricity at retail prices even when they don’t need it. Further, utilities say, customers on DG are not paying their share of the costs for lines and transmission. This causes revenue erosion, reduced shareholder returns, and a cost shift to non-DG customers who subsidize their neighbor’s use of electricity when their solar systems don’t provide enough power.
- According to The Boston Globe, Massachusetts pays more per kWh of solar energy than anywhere else in the nation because projects are reimbursed at a rate that far exceeds the value they provide to the electricity system.
- In California, without changes to current practices, by 2020 $1.1 billion in costs would shift from DG to non-DG.
There must be a balance between encouraging DG and keeping utilities functioning.
Tom Burton, Chair of Mintz Levin’s Energy Technology Practice, will publish a weekly installment providing insight into the challenges and possible solutions that, if implemented, promise a bright future as clean energy moves America forward. In this series, Tom will include one challenge per week and the potential solution(s). This is the second installment of the series. To read Part 1, click here.
The Problem: Supply and Demand Geographic Mismatch
Because much of America’s renewable energy supply is inland and demand is on the coasts (about 52% of the U.S. population is coastal), demand cannot meet supply without extensive transmission networks. For instance, about 60% of the nation’s wind energy is produced inland – Texas alone accounts for 25%. However, states and localities have many different rules regarding the siting of these lines, making project development complex. While the Federal Power Act (FPA) grants the Federal Energy Regulatory Commission (FERC) authority to regulate electricity transmission in interstate commerce as well as the sale of electricity for resale, it reserves all other authorities to the states.
- Recently, the D.C. Circuit Court of Appeals used the FPA to invalidate a FERC Order encouraging demand response because states have jurisdiction over interstate transmission.
- In 2014, Ohio enacted a bill to revise the setback distance to a minimum of 1,125 feet from the nearest property line. Several proposed wind farms were immediately off the table, and had the Blue Creek Wind Farm not been grandfathered in, only 12 of its 152 turbines would have been able to be built. The case shows that the complicated nature of regulations has implications for renewable energy development beyond transmission alone.
- CapX2020 was a Minnesota project involving several utilities that wanted to expand transmission for wind development. It took over 11 years to complete, in part due to a state law known as “Buy the Farm,” which allows landowners to require utilities purchase their entire property outright. CapX required negotiations with over 2,000 landowners, about 100 of whom requested buy the farm and have negotiated over many years. If this continues, renewables will truly “buy the farm.”
Obviously, the rules need to change, but how?
This week, the House had hearings on several energy policy issues, including the crude oil export ban, the electric grid, and a broad bipartisan energy package. Also in D.C., President Obama continues his busy fall climate agenda as he prepares for Pope Francis’ visit, which will partly center on the Pope’s environmentally focused encyclical Laudato Si.
The Department of Energy also had two exciting announcements this week. On September 10, the DOE released its second Quadrennial Technology Review, outlining the energy world’s broad research and development challenges. It emphasizes current technological developments in several areas, such as fuel cells and water use, that are crucial to the country’s energy future. The Department also awarded $6.5 million to seven organizations to advance low environmental impact hydropower technologies. For a full report on the week in Washington, read the latest update from ML Strategies.
In late July, the Federal Energy Regulatory Commission (FERC) issued a ruling to help ISO-New England more effectively manage congestion on its grid due to growing renewable energy generation. Due to the intermittent nature of renewable generation, operators nationwide cannot predict when transmission lines might get overloaded. This can cause generators of renewable power to have to curtail their supply through a cumbersome and inefficient manual system. ISO-NE, having experienced this issue firsthand, appealed to the FERC for approval to upgrade from a manual dispatch to electronic management for wind and hydropower resources. In its ruling, FERC granted ISO-NE permission to use a modified electronic dispatch method called DNE Dispatch Points for wind and hydro resources classified as Intermittent Power Resources – those above 5MW. FERC required ISO-NE to submit a compliance filing within 30 days, with proposed tariff revisions effective April 2016. For implications and analysis on this change, read on!
This week in Washington was filled with long awaited energy and climate developments. The Obama Administration revealed the final Clean Power Plan after a lengthy rulemaking and comment process. Congress was also active as the Senate Energy and Natural Resources Committee approved its bipartisan broad energy package and the House moved on its own broad legislation. Read more on these and other pieces of energy and climate news from ML Strategies.