Caribbean Transitional Energy Conference

WHY CAYMAN? WHY NOW?

Caribbean economies suffer from some of the highest electricity prices in the world. Despite their abundance of renewable energy sources, Cayman has a relatively low level of renewable energy penetration; the economy continues to spend a large proportion of its GDP on imported fossil fuels.

The Caribbean Transitional Energy Conference (CTEC) is about building our resilience as a small nation, about diversifying our energy sector and the way that we do business.

It is about ensuring sustainable social and economic growth through strong leadership, recognising the threat of climate change and the vulnerability of islands across the world and voicing our commitment to take the measures that we can take now. More

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But are these concerns really justified, or do they rely on outdated assumptions about the grid and about electricity markets?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

 

 

© Climate War Room

San Diego Vows to Move Entirely to Renewable Energy in 20 Years

Last weekend, representatives of 195 countries reached a landmark accord in Paris to lower planet-warming greenhouse gas emissions. On Tuesday, local leaders in San Diego committed to making a city-size dent in the problem.

With a unanimous City Council vote, San Diego, the country’s eighth-largest city, became the largest American municipality to transition to using 100 percent renewable energy, including wind and solar power. In the wake of the Paris accord, environmental groups hailed the move as both substantive and symbolic.

Other big cities, including New York and San Francisco, have said they intend to use more renewable energy, but San Diego is the first of them to make the pledge legally binding. Under the ordinance, it has committed to completing its transition and cutting its greenhouse gas emissions in half by 2035.

The steps to get there may include transferring some control of power management to the city from the local utility. Officials said they would also shift half of the city’s fleet to electric vehicles by 2020 and recycle 98 percent of the methane produced by sewage and water treatment plants.

The mayor, Kevin L. Faulconer, said San Diego’s ocean, sunshine and other environmental attributes were “in our fabric, our DNA, who we are.”

The City Council is controlled by Democrats, but Mr. Faulconer is a Republican. He sold the plan to a conservative business base in part by saying that transforming the electric grid would drive the economy and create jobs.

“It’s not a partisan issue at all,” he said. “It’s about putting a marker down. It’s the right thing to do.”

Many details have yet to be determined, including how the new power sources will be delivered and managed. But the mayor said the key first step was to commit to a goal — to “make sure we set it and hold to it.”

The San Diego ordinance has been years in the making. But Nicole Capretz, an author of an earlier draft and now an environmental advocate, characterized it as a concrete step in the direction set by world leaders in Paris.

“We’re responding to that call,” Ms. Capretz said. “It’s up to cities to blaze new trails. We’re just laying out the pathway for how to get these massive reductions worldwide.”

Under the Paris accord, nations offered general, nonbinding plans to reduce their carbon emissions.

Officials in the United States envision reaching the nation’s goals mainly through higher fuel-economy standards for cars and a move to cleaner sources of electrical power, something states could help oversee.

This is where the actions of a city like San Diego fit in. As the city moves to renewable energy, the State of California can begin to build its bank of carbon reductions and contribute to global goals.

Evan Gillespie, director of the Sierra Club’s clean energy campaign in California, estimated that San Diego’s plan would lead to an annual reduction of seven million metric tons of greenhouse gases, a contribution to California’s broader effort to reduce greenhouse gas emissions by 80 percent by 2050.

Those targets are California’s own — passed by a state government that is seen as one of the most ambitious on climate change, and that is as influential as many countries given its size — and not set by the federal government.

Ms. Capretz, who wrote a version of the plan for Mr. Faulconer’s predecessor, said that much of the earlier version remained in the measure adopted Tuesday.

Echoing the mayor, she said she expected that much of the renewable energy would come from solar power. “We’re sunny in San Diego, so we’re counting on a lot of homegrown solar on rooftops and parking lots,” she said.

Mr. Gillespie said San Diego had laid down a challenge to other cities. “We need others to see this and say, ‘Game on,’ ” he added. “We need places like Los Angeles, like San Francisco and New York, to step up.” More

 

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Paris climate deal prompts call for action in Cayman

The Cayman Islands must set more aggressive targets on increasing renewable energy and reducing carbon dioxide emissions in the light of the Paris agreement on climate change, green energy advocates have said.

The Paris climate deal, hailed as an historic feat of international diplomacy, established a commitment from 195 countries to contain planet-warming carbon emissions.

Cayman, as a British territory, was not involved in the talks and is not a direct signatory to the agreement, which set a goal of reducing global temperature rises to less than 2C. The final submissions to the agreement are not enforceable and carry no consequences.

However. James Whittaker, president of the Cayman Renewable Energy Association, said the Paris accord represents a “paradigm shift” in the international approach to climate change and suggested Cayman would have to get on board.

Tim Austin, deputy director of the Department of Environment, said the National Conservation Council is also pushing for clearer and more ambitious targets.

A draft national energy policy, published in 2013, sets a goal that 13.5 percent of electricity sold should be generated from renewable sources by 2030. It also targets a 19 percent reduction in greenhouse gas emissions compared to a “business as usual scenario.”

Mr. Whittaker said the Paris agreement, referred to as COP 21, represents an international consensus that far more radical action is needed. He said Cayman’s targets on renewable energy are among the least ambitious of any country.

While Cayman’s net contribution to climate change is negligible, the territory is among the highest producers of carbon emissions per capita in the world, according to Mr. Austin.

Mr. Whittaker, added, “I believe COP 21 sets ambitious climate change benchmarks globally and it clearly suggests that Cayman must take a more aggressive approach to adopting renewable energy and reducing our carbon emissions. This is something CREA have been telling the government for some time now. That said, it still doesn’t appear the decision-makers in government are yet paying attention to the critical issues of renewable energy and carbon reduction.”

He added, “I am cautiously optimistic that the government will finally wake up and realize that this paradigm shift is happening all over the world for a reason and will start to ensure it happens in Cayman soon.”

Mr. Austin said the Cayman Islands could request to be included in commitments coming out of the agreement.

“At the moment, the U.K. does not push out those climate agreements to its territories, but this could potentially change with Cayman’s recent request to the U.K. government to include Cayman in its second commitment period to the Kyoto Protocol (2013-2020).

“The National Conservation Council is currently working on a climate change policy and would like to see clearer, more ambitious targets, in line with what the U.K. has signed up to.”

He said the Paris summit represents a significant milestone in gaining an international consensus that something needs to be done to curb the amounts of CO2 going into the atmosphere and limit the consequences of global warming.

Mr. Austin said the ambitious targets set in Paris were driven, in part, by small-island states concerned about the consequences of climate change.

Tim Austin - DOE

In 2009, the Maldives, one of the flattest countries on Earth, held a Cabinet meeting underwater in scuba gear as a stunt to generate publicity for the consequences of not acting on the issue.

Cayman’s position is less grave, but Mr. Austin warns that with the majority of Cayman’s population and major infrastructure located a short distance from the coastline, increasing storm intensity and flood risk present a potentially significant challenge.

He said the impact of climate change is already evident on coral reefs around Cayman.

Mr. Whittaker said Cayman’s size should not stop it from doing its part.

“While our aggregate emissions are small compared to large economies, we emit a lot of carbon per capita on this little island. I believe it’s a hypocritical and shortsighted position to just let the rest of the world handle it when we are expecting others to do things we are not willing to do ourselves.

“We need to show leadership here, regionally and globally. If we expect the world to change we have to be part of that change.” More

 

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A Fossil Fuel Free World is Possible: How to Power a Warming Earth Without Oil, Coal and Nuclear

"There’s all sorts of, kind of, false beliefs about renewable energy, but things have changed. Wind is, right now, not only one of the fastest — between wind and solar — are the fastest growing new sources of electric power in the United States, but wind is actually the cheapest form of electricity by far in the U.S. today.

Floating Offshore Wind Turbines

The unsubsidized cost without the subsidies is about 3.7 to five cents per kilowatt hour. Subsidies are another 1.5 cents to drop those costs per kilowatt hour. That compares with natural gas which is six to eight cents per kilowatt hour. So wind is one half the cost of natural gas. Utility scale solar is about the same as natural gas now; it’s also around six to eight cents per kilowatt-hour unsubsidized."

Well, it turns out that people today can actually control their own power in their own homes. You can put solar panels — I mean wind turbines may be only in a few locations in your back yard, but you can combine solar panels on your roof top with batteries and Tesla has a new battery pack that you can put in your garage that can — where you can store electricity during the day that from the solar, and then use it — use that electricity when there are peak times of electricity because that is when the price is much higher. But people can do other things. They can weatherize their home, they can use energy efficient appliances. There are a lot of things that people can do to reduce energy use and go towards 100 percent renewable energy. Using heat pumps instead of gas heaters. Getting electric cars instead of gasoline cars. More

 

 

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