Sunday, January 31, 2016

3 Ways Wind and Solar Can Continue To Grow In a 21st-Century Grid

Earlier this year, MIT researchers were the latest in a series of analysts to raise alarm about the perceived limitations of solar PV’s continued growth. In short, these analysts propose that variable renewables will depress wholesale prices when they run, thereby limiting their own economic success.

These concerns have garnered coverage in other venues (including Vox, Greentech Media, and The Financial Times), leading observers to suggest that the future prospects for renewables may be dim.

But are these concerns really justified, or do they rely on outdated assumptions about the grid and about electricity markets? We argue that these critiques, assuming a static grid and unchanging market mechanisms, can be used to make any innovation look bad. However, more integrative assessments of a least-cost, clean, and reliable power system of the future will factor in high fractions of variable renewables, along with more-efficient markets (and usage) and new technologies to integrate these resources seamlessly and resiliently.

In this article, we argue that falling wholesale prices is a good problem to have, and that concerns about economic limitations ignore remedies available from supply-side evolution, demand-side resources, and updated market mechanisms. As the world gathers in Paris for COP21, these messages are as important as ever for charting and pursuing a low-carbon clean-energy pathway.

Understanding the "Problems"

There has been increasing concern that variable renewables such as wind and solar may face an upper limit to adoption in the U.S. grid. The argument is that large amounts of variable renewables will create excess supply concentrated at the particular times of day when they produce. The notorious "duck curve" is an example of this—the duck-like shape of a particular, daily demand curve modeled for California’s grid when the production of large amounts of solar photovoltaics (PV) is netted out.

Critics argue that this technical characteristic of variable renewables, specifically PV—a daily generation pattern that is not perfectly matched with load—can have economic consequences for all forms of generators, especially the renewable resources themselves. Large amounts of renewable resources can sell a glut of power when it’s available, offsetting production from higher-marginal-cost resources (like gas-fired power plants). Since power prices are generally set by the resources with the highest marginal cost that clear in the market, additional generation from renewables tends to lower market prices.

This "merit order effect" often decreases revenues for fossil generators. This impact has been particularly dramatic in Europe, where generation from costly-to-run thermal plants during the daily solar peak was formerly very profitable for fossil generation owners. PV has decreased energy prices so much there that the top 10 EU utilities lost half their market capitalization. However, the merit order effect also means that variable renewables themselves may also earn lower profits as their adoption rises. A common conclusion is that variable renewables can play only a modest role in power production, marginalized by declining wholesale value at higher adoption levels.

The Other Half of the Thought Experiment: Three Factors That Can Accelerate Renewable Energy Adoption

Analysts who have put forth these arguments have elaborated only the first half of a microeconomics thought experiment. The problems they hypothesize hinge upon the laws of supply and demand, but omit important aspects of both, drastically overstating the perceived "problems." Let’s see how.

1) Supply is changing holistically, not incrementally

Many of these thought experiments consider adding just a single supply resource (often solar PV) without considering many of the other supply-side changes happening at the same time. In reality, solar PV, wind, and natural gas are all joining the supply mix in a big way at the same time; the first two are often complementary and the third is dispatchable, so together, they can do a lot to mitigate the "duck curve" often portrayed.

At the same time, retirements of uneconomic assets will provide a countervailing buoyancy to wholesale prices. For example, even though old, dirty plants often have low production costs, they may exit the market anyway due to high costs of compliance upgrades or other fixed costs that erode their profits. The resulting less-abundant supply can cause the marginal supply curve to contract in quantity, leading to higher prices and higher profits for renewables and remaining fossil generators—unless demand drops too, as it’s doing in the industrialized world.

2) Demand is increasingly flexible, not fixed

Analysts arguing that renewables’ variability will limit their growth often assume perfectly efficient wholesale markets, but unchanged retail markets and fixed demand profiles. This incomplete and asymmetrical treatment ignores the emerging capability to harness the demand side of the equation. For example, people like and respond to time-varying pricing programs, and these programs are starting to roll out at scale. The electricity demand of many appliances including electric water heaters and electric vehicles is inherently flexible without disrupting the service provided. Furthermore, new business models (from both utilities and third parties) are driving this convenient flexibility by providing seamless solutions, unobtrusively, conveniently, and without requiring customers to become part-time energy traders.

These factors together increase flexibility of demand, an important low-cost resource, and enable what is the most natural response to changing prices in an efficient market where consumers find ways to use and benefit from cheap electricity from wind and solar. In other words, as renewables reduce energy prices during certain times of day, demand flexibility allows customers to shift demand to those times, which will both reduce energy prices at other (peak) times and raise the price paid to renewables during times when they produce the most.

3) Storage makes renewables dispatchable, not variable

Diverse supply and flexible demand will play a big role in easing renewable integration concerns but, to the extent that issues remain, the continuing decline in battery prices and the range of values available from batteries means that remaining variability issues can probably be addressed at modest incremental costs. At the retail level, this can lead to increasing self-balancing of distributed generation (we’ve already seen this in Germany and Australia, and it may affect utility business models in the U.S.). At the wholesale level, as variable resources begin to saturate the market, high-priced hours will incentivize developers to begin to look at storage. Already, storage is seen as a near-term replacement for peaking generation, and batteries installed for peaking capacity can also be used to smooth the economic impact of renewables on power prices.

Storage is already a common feature of concentrating solar power (via molten salt), and becoming an increasingly common feature of solar PV. For example, the all-renewable winning bids in the latest Chilean auction for unsubsidized electricity included not just solar power as low as $65/MWh in the daytime, but also nighttime solar power—via thermal or electrical storage—for $97/MWh at night. With storage, variable renewables become dispatchable, and dispatchable renewables do not have nearly the same merit order effect as variable ones. To be sure, our recent demonstration that 13 kinds of benefits of behind-the-meter distributed storage can make batteries cost-effective does not necessarily make them competitive with the many other ways to achieve grid flexibility, but similar reasoning suggests an abundant range of options for averting the problems that narrowly constrained models imply.

Whole-System Thinking Illuminates a Path Towards Least-Cost Outcomes

Analysts arguing that renewables will economically limit their own continuing adoption generally leave out the considerations listed above—and more importantly, these arguments are built on incremental thinking, assuming that today’s grid and markets are fixed and only one thing changes (e.g., PV or wind-energy market share). A more holistic, integrative, and accurate analysis would start with the ultimate objectives (reliable, resilient, and least-cost energy services), and promote a whole-system design to get there promptly.

With this perspective in mind, the characteristics of renewable energy that have caused so much hand-wringing—variable output and near-zero marginal costs of production—simply add to the list of design considerations for a market design that rewards efficient investment. Given supply diversity, demand flexibility, and emerging technologies like storage, variable renewables are unlikely to face any practical limit to growth even under current grid paradigms and market structures.

Nothing Sacred About Existing Markets

But even if renewables do face adoption limits in current markets, there is no reason we have to keep these markets the way they are. Wholesale power markets are largely a product of historical coincidence, formed out of the paradigms of the last century in which thermal power plants competed only with each other. Modern market design that reflects the realities and changing resource mix of the 21st century grid, being pioneered in Germany already, can go a long way towards aligning incentives for least-cost resource mixes. Particularly, incorporating behind-the-meter distributed energy resources and flexible loads into energy markets—as is being done in California and New York—can bring new capabilities and a refined level of control to the grid.

An Integration Challenge?

Evolving supply, flexible demand, storage, and updated markets can remove the limits to increasing renewable energy on the grid. In a later post, we will highlight how these same levers can address the common concerns—and misunderstandings—about "integration costs" of renewable energy. For example, a much-hyped recent paper claims that high-penetration renewables must incur steeply rising integration costs. But that turns out to be an artifact of extremely restrictive assumptions in the models used, combined with an assertion that competitive harm to thermal-plant incumbents is an economic cost of the renewables that beat them.

Renewables Are Here To Stay

The "problems" with renewables often brought up by analysts may be real in isolation, but are overstated when the full range of options is considered. Indeed, these are good problems to have: they’re the natural forces of supply and demand acting to send signals to market participants to diversify resource choice, incentivize demand flexibility, and invest in storage and other emerging technologies. Arguments against wind and solar PV conclude that these resources will need greater subsidies to survive in the "duck curve" era. But instead, we can tap the latent power of supply diversity, demand flexibility, storage, and market design to level the playing field for all resources, rather than clinging to the premises of the 20th century grid. Protecting the old system is far inferior to enabling the new one so that innovation can flourish, entrepreneurs can thrive, and all options can compete fully and fairly. Source

 

 

Saturday, January 30, 2016

Small Island States and the Paris Agreement

Islands predominated in the Paris COP negotiations.[1] From metaphor to moral compass to declarations of kinship—like President Obama’s— the small island developing states’ vulnerability, dignity, and ambitions served as a rudder.

I’m an island boy” — President Barack Obama

Among other significant provisions discussed below, the response of the Agreement and the decision text—the latter a supporting though not legally binding document—and to demands for capacity building and efficient, simplified procedures for accessing financial resources directly addressed small islands’ concerns. And so the closing movements of the meetings offered congratulatory and hortatory words from island representatives, including a spontaneous, harmonized chorus of Bob Marley’s Three Little Birds stressing the refrain, “Every little thing is gonna be alright."[2]

Small island states representatives are, however, clear-eyed about the potential of the Paris Agreement and understand that it is but a foothold in a much, much steeper journey. In Paris they were represented primarily by the Alliance of Small Island States (AOSIS) negotiating bloc, a coalition of small island and low-lying coastal countries that share similar development challenges and concerns about the environment, especially their vulnerability to the adverse effects of global climate change. AOSIS, with 44 members and observers from all regions of the world, works as a negotiating voice for small island developing states (SIDS).

The small islands representatives demanded a number of elements, including a long-term temperature goal of “well below 1.5 degrees” Celsius above pre-industrial levels, an indicative pathway to achieve it, an international mechanism on Loss and Damage due to climate-related events, and scaled-up, reliable financial resources above the $100 billion per year by 2020 already promised by developed countries to developing nations, particularly the most vulnerable.[3]

1.5˚C to stay alive

Beginning with the 2009 COP15 meetings in Copenhagen, SIDS and particularly the atoll nations noted the existential threat of a 2˚C ceiling on temperature rise. The calls for 1.5 to stay alive were, however, largely relegated to the tense hallways of Copenhagen’s Bella Center six years ago. The 2015 final decision text and Paris Agreement, in contrast, emphasize the urgent need to hold increased global average temperature to “well below 2˚ C above pre-industrial levels” and to pursue efforts to limit the temperature increase to 1.5˚ C.

This is palpable progress, meeting in part a demand of island states, but is not supported by the remainder of the text. While the Agreement calls for global peaking of emissions “as soon as possible,” it does not require complete decarbonization of global economies, opting instead for a balance between anthropogenic emissions by sources and removals by sinks. The absence of the decarbonization mandate makes the 1.5˚ C goal almost entirely illusory. Settling on and supporting a1.5˚C ceiling will be a critical next step in future decision-making. More

 

Friday, January 29, 2016

Decades-long heatwaves may hit Europe as climate change bites

Buckle up. Europe is in for a bumpy ride as climate change gathers pace.

The continent could in future swing between climate extremes, including bursts of super-heatwaves that last for decades, according to an analysis of temperature data from the past 2000 years.

The study, which used tree ring data and other proxies for temperature, is the most detailed look at historical temperatures ever conducted for any continent.

“We now have a detailed picture of how summer temperatures have changed over Europe for more than 2000 years,” says Jürg Luterbacher at the University of Giessen, Germany, one of 45 researchers from 13 countries involved in the study.” More

 

 

Tuesday, January 26, 2016

WEF: 2016 Year of Implementation on Climate Change, SDGs

23 January 2016: The World Economic Forum's (WEF) Annual Meeting convened under the theme, 'Mastering the Fourth Industrial Revolution,' with the aim of building a shared understanding of current changes and shaping a collective future that places humans at the center.


Participants reflected that 2016 must be a year of implementation on climate change and the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs).


The WEF Annual Meeting addressed, among other topics: climate change; environmental protection and resource scarcity; food security and agriculture; inclusive, sustainable growth and security; employment, skills and human capital; and gender parity. It also showcased the private sector's role in achieving the SDGs. The event brought together over 40 Heads of State and government with 2,500 leaders from UN agencies, business and civil society.


'The New Climate and Development Imperative' session addressed the implications of the Paris Agreement and the SDGs, drivers for action for development and climate targets, and the role of technology in improving ambition over time. Speaking at the session, UN Secretary-General Ban Ki-moon stressed that “The SDGs and climate change must go together.” He outlined five steps forward: conversion of national climate plans into bankable investment strategies and projects; financing for developing countries to use low-carbon sources to meet high energy demands; increased attention and resources for climate resilience; increased climate actions at all levels, including public-private partnerships; and ratification of the Paris Agreement. Also addressing the session, Norway's Prime Minister, Erna Solberg, stated that “We will never manage to reach climate targets if we don't create social fairness in the world.”


Another session on 'A New Climate for Doing Business' reflected on the opportunities and responsibilities for business, entrepreneurship and innovation as a result of the Paris Agreement. Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), highlighted the potential for change in developing countries, which she said “represent our biggest opportunity to support…growth in a clean, predictable and safe way.” Observing that the world needs US$5.5 trillion per year to meet the Paris Agreement commitments, Stuart Gulliver, HSBC Holdings, expressed confidence that “there is enough money in the private sector to do this.” Panelists shared their companies' efforts to, inter alia: transition from fossil fuels to renewable energy; advocate for a new climate economy; and put a price on carbon for internal operations and supply chains.


In a keynote speech delivered at the Global Goals Dinner, UN General Assembly (UNGA) President Mogens Lykketoft called for a “focus on getting off to the best start possible” in achieving the SDGs. He underlined the importance of signals that “those with power and privilege will live up to their responsibilities” to achieve the Goals and ensure the SDGs gain traction. Lykketoft explained that he will host a high-level meeting in April to showcase implementation. He asked world leaders to come prepared to share their country plans to achieve the Goals and called upon the private sector to align their business practices with the Goals, including on issues such as the environment and taxation.


At a Global Compact event, Ban underscored the business community's “enormous power to create decent jobs, open access to education and basic services, unlock energy solutions and end discrimination…[and] drive global progress.” He stressed 2016 as critical in “turning global promises into reality,” calling on governments to “take the lead with decisive steps” and business to “provide essential solutions and resources that put our world on a more sustainable path.” Ban welcomed the Global Compact's steps to translate the SDGs into action and innovation, highlighting the potential of its 85 Global Compact Local Networks to further mobilize action.


“There is no business case for enduring poverty,” observed Unilever CEO Paul Polman at WEF press conference. He called for tackling poverty, inequality and environmental challenges, saying “every business will benefit from operating in a more equitable, resilient world if we achieve the SDGs.” Polman and former UN Deputy Secretary General Mark Malloch-Brown launched The Global Commission on Business and Sustainable Development, which aims to articulate the economic case for businesses to engage in the SDGs. The Commission will present a report in 2017 that: analyzes how business models can align profitability with social purpose; maps financial tools for aligning economic and social returns; shows how collaboration among governments, international organizations, civil society and the private sector can build a future where businesses can promote job creation and inclusive, sustainable growth; and examines the risks to business performance and stability from not addressing the SDGs.


In a blog post on the WEF, Paul Ladd, Director of the UN Research Institute for Social Development (UNRISD), suggests three ways for business leaders to commit to the SDGs and increase resilience to future shocks. Ladd describes the positive feedback loops between technology and taxes while cautioning that advances in technology can exacerbate inequalities and the politics of tax reform “are slow and difficult.” He highlights universal social protection as critical in supporting people through their active working lives and beyond, including ensuring a minimum level of income to support socially acceptable standards of living, access to essential services and opportunities for lifelong education and training.


On business and growth, participants called for a new model of growth beyond a country's Gross Domestic Product (GDP). Economist Joseph Stiglitz stressed, “What we measure informs what we do. And if we're measuring the wrong thing, we're going to do the wrong thing.” Similarly, MIT professor Erik Brynjolfsson said GDP does not measure “how well we are all doing” but “counts the things that we're buying and selling.”


On gender equality, a panel convened on 'Progress Towards Parity.' Sheryl Sanberg, Facebook, described the “toddler wage gap,” saying gender inequality starts very young. Actress Emma Watson observed that full female participation in the workforce would be “the single biggest stimulus to the economy” and stressed that the world will never achieve gender equality unless everyone—women and men, girls and boys, are involved.


“Women are chronically under-represented in leadership roles and in formal employment overall,” UN Women Executive Director Phumzile Mlambo-Ngcuka said at the launch of the inaugural ‘HeforShe Parity Report,' which finds that the proportion of senior leadership roles held by women ranges from 11 to 33% among the world's ten leading companies. The report presents data on gender diversity in the workforce, including data on board membership, leadership roles and new hires among ten companies.


Sessions also convened on, inter alia: financing and operationalizing the SDGs; the global science outlook; and regional and national economic outlooks. Briefings took place on WEF Issue Briefs, including on the plastics economy, the gender gap and jobs. Ban appointed 17 SDG Advocates and launched a panel on women's economic empowerment. More


WEF 46 took place in Davos, Switzerland, from 20-23 January 2016. [UN Secretary-General Statement] [WEF Press Release on A New Climate for Doing Business] [UNFCCC Executive Secretary Reflection on WEF] [UNGA President Statement at Global Goals Dinner] [UN Press Release 20 January/ on Global Compact] [WEF News on Gender Parity] [WEF Press Release on Watson Statement] [Sandberg Statement] [UN Women Press Release 22 January] [UN Women Executive Director Statement] [WEF Recap] [WEF Press Release on Commission Launch] [IISD RS Story on Launch of SDG Advocates]


 

Grenada hosting inaugural Caribbean Waste to Energy conference

A four-day inaugural Caribbean Waste to Energy Conference and Exposition began here on Wednesday with Prime Minister Dr Keith Mitchell indicating that Grenada is fully committed to working towards a zero-waste economy.

PM Dr. Keith Mitchell

He told delegates attending the conference, which is intended to improve understanding that effectively managed waste can be a renewable resource, that it was necessary for the island to develop such a policy, which will provide the framework for sustainable management of waste in the region.

“We recognise that waste is a valuable resource, an important source of energy, and that the current waste management practices are resulting in an economy and citizenry that are more vulnerable to the impacts of climate change,” Prime Minister Mitchell said.

“A critical issue is that in the majority of Caribbean countries, imported petroleum is the chief source of primary commercial energy, while vast renewable energy resources remain to be developed.”

The conference is being held under the theme ‘Energy Services From Waste: The Development of a Regional Integrated Organic Waste Management Sector, and is being organised to promote improved management of waste for environmental protection and strengthening coastal resilience to climate change impacts.

Mitchell said that while global oil prices are now at their lowest levels in over a decade, high and generally unpredictable oil prices have consistently retarded the competitiveness of regional goods and services.

Scarce foreign exchange earnings that are being spent by our countries to pay for energy imports could be otherwise directed to alleviating poverty, adapting to climate change and sea level rise, or finance other critical interventions which are necessary for building our social, economic and climate resilience; thus increasing our ability to recover and respond which is the cornerstone of sustainable development,” he suggested. More

 

Monday, January 25, 2016

Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS) Baseline Report and Assessment

Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS) Baseline Report and Assessment

http://www.worldwatch.org/cserms/baseline-report

The Caribbean region stands at a crossroads, faced with several critical challenges associated with the generation, distribution, and use of energy. Despite the availability of tremendous domestic renewable energy resources, the region remains disproportionately dependent on imported fossil fuels, which exposes it to volatile oil prices, limits economic development, and degrades local natural resources. This ongoing import dependence also fails to establish a precedent for global action to mitigate the long-term consequences of climate change, which pose a particularly acute threat to small-island states and low-lying coastal nations.

While onerous, these shared challenges are far outweighed by the region’s tremendous potential for sustainable energy solutions. By acting on this potential, the Caribbean can assume a leading role in the global effort to combat climate change while promoting sustainable regional economic and societal development. Representing a geographically, culturally, and economically diverse cross-section of the region, the Caribbean Community (CARICOM) provides the ideal platform to construct the legislative and regulatory frameworks necessary to achieve this transition.

CARICOM represents 15 diverse member states: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. Although these states vary widely, they face many common energy challenges.

CARICOM has already begun to play a crucial role in the regional transition to sustainable energy. Recognizing the need to develop a coordinated regional approach to expedite uptake of renewable energy and energy efficiency solutions in the Caribbean, CARICOM adopted its regional Energy Policy in 2013 after a decade in development. The policy charts a new climate-compatible development path that harnesses domestic renewable energy resources, minimizes environmental damage, and spurs social opportunity, economic growth, and innovation.

To translate these intentions into action, the CARICOM Secretariat commissioned the Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS), designed to build on existing efforts in the region and to provide CARICOM member states with a coherent strategy for transitioning to sustainable energy. In this C-SERMS Baseline Assessment and Report, the Worldwatch Institute provides an analysis of the region’s current energy and energy policy situation, evaluates regional potential for renewable energy and energy efficiency solutions, and recommends regional targets for energy sector transformation in the short, medium, and long terms.

Download Report: http://www.worldwatch.org/system/files/C-SERMS_Baseline_10.29.2015.pdf

 

 

Saturday, January 9, 2016

Swapping national debt for action on climate change could be the solution we've been looking for

Last month’s global agreement on climate change was a remarkable gift to the world and to future generations.

One hundred and eighty-eight countries have submitted Intended Nationally Determined Contributions, setting out what they are prepared to do to reduce emissions and build climate resilience. Developed country governments have reaffirmed their commitment to raise $100 billion a year for climate action, with small and vulnerable countries first on the list for assistance. As the Prime Minister of Tuvalu - a Pacific nation threatened by catastrophic sea level rises - said during the Paris summit: "If you save Tuvalu, you save the world."

Now the New Year has arrived and it’s time to act on these resolutions. A rapid and sustained flow of climate finance for the vulnerable developing countries is central to managing the climate challenge. Thus far the flow of climate financing has been less than satisfactory. This must change. Climate financing should not lead to a reduction in traditional official development assistance.

That’s why global warming was a top priority of Commonwealth leaders at their recent meeting in Malta. Their Statement on Climate Change provided timely, important political impetus to the Paris Conference. And they generated some good ideas to free up funds for climate action.

Here’s one: swapping national debt for climate change action. Many vulnerable countries are so burdened by debt they simply can’t afford to address global warming. Jamaica, for example, is struggling with a public debt to GDP ratio of 140 per cent. For the Seychelles, it’s 65 per cent. Think what could happen if countries like these lowered their burden by taking action on climate change: they could expand marine protected areas, strengthen coastal defences, reform fisheries policies, promote water conservation, manage coastal zones, invest in renewable energy and create institutions to advance their plans — working their way out of debt at the same time.

The Commonwealth’s proposal for a Multilateral Debt Swap for Climate Action has been recognized by the United Nations as a promising option to address the twin challenges of unsustainable debt and climate change. Swaps could be supported by the Climate Finance Access Hub that’s just been launched by the Commonwealth to help small and vulnerable countries access climate finance and build institutional capacity.

It doesn’t end there. The Paris agreement has given markets the clear signal they need to scale up investments that will generate low-emission, climate-resilient development. With the ambitious results emanating from Paris, what was once unthinkable is now unstoppable. The private sector is already investing increasingly in a low-emission future. Climate solutions are increasingly affordable and available, and many more are poised to come, especially after the success of Paris. More