Category Archives: Smart Grid

The cheapest way to cut climate pollution? Energy efficiency

This blog post was co-authored by Kate Zerrenner, an EDF project manager and expert on energy efficiency and climate change.

On June 2, the U.S. Environmental Protection Agency made a historic announcement that will change how we make, move and use electricity for generations to come.

For the first time in history, the government proposed limits on the amount of carbon pollution American fossil-fueled power plants are allowed to spew into the atmosphere.

There are two clear winners to comply with the plan while maintaining commitment to electric reliability and affordability: energy efficiency and demand response.

We’re already seeing pushback from some of our nation’s big polluter states, such as West Virginia and Texas. But the truth is that while the proposed limits on carbon are strong, they’re also flexible.

In fact, the EPA has laid out a whole menu of options in its Clean Power Plan – from power plant upgrades, to switching from coal to natural gas and adopting more renewable energy resources. States can choose from these and other strategies as they develop their own plans to meet the new standards. Read More »

Also posted in Clean Energy, Climate, Energy, Energy Efficiency | 1 Response, comments now closed

Nest’s Promising Results for Reducing Peak Electricity Demand

Back in January when Google announced it would spend $3.2 billion to purchase Nest, EDF knew this was a company to watch. The results of three new reports, released today, confirm that controllable thermostats like the Nest Learning Thermostat are both customer-friendly and useful for energy system planners. Moreover, the reports signal that smart devices, such as those Nest manufactures, have potential for generating marked savings for utility customers.

The reports analyze 2012-2013 energy use data gathered from four major utilities across the U.S. that offer Nest energy services programs: Austin Energy, Reliant Energy, Green Mountain Energy, and Southern California Edison.

The first report evaluates the results of Rush Hour Rewards, a demand response service that changes the temperature of the homes of Nest users during energy “rush hours”, or times when demand on the grid is highest. The second examines Seasonal Savings, a program that runs for three weeks and slowly modifies the temperature according to the customer’s behavior (which this smart thermostat is able to ‘learn’ via its built-in motion sensor and understanding of its owner’s temperature preferences). Both operate during times of heavy usage, namely winter and summer. The third report analyzes home energy data of Nest customers more broadly, comparing energy use before and after the installation of a Nest Thermostat. Read More »

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Connecticut’s Green Bank Uses PACE to Accelerate Commercial Solar, California Expected to Follow

rp_Brad-Copithorne-Photo1-200x300.jpgUp to now, the most popular and cost effective forms of financing solar projects have been leases and Power Purchase Agreements (‘PPAs’), which allow homeowners to install solar photovoltaic (PV) systems on their property and purchase power from the system’s output via a financial arrangement with a third-party developer who owns, operates, and maintains the solar panels.

Unfortunately, these creative financing mechanisms have not generally been available for commercial property owners. The only exceptions were buildings owned (or leased for a very long time) by investment-grade entities such as Google, Walmart, or a state or local government. Most small or medium businesses, office buildings, shopping centers, and apartment buildings could not access financing for money-saving solar projects as investors have been wary of extending 20-year solar financings for most commercial properties.

Fortunately, our good friends at Connecticut’s Green Bank (CEFIA) have created the first solar leasing investment fund that uses Property Assessed Clean Energy (PACE) to provide investors assurance that they will be repaid. The ‘CEFIA structure’ allows commercial property owners to sign a lease or PPA in the same manner and terms as their investment-grade brethren. The only difference is that payments are linked to the property tax bill and survive foreclosures. Since the taxman almost always gets paid, this structure allows investors to consider a much wider range of commercial credits. Read More »

Also posted in Clean Energy, Energy, Energy Efficiency | 2 Responses, comments now closed

Demand Response: People, not New Power Plants, are Driving the Clean Energy Future

Clean energy resources, like wind, solar, and energy efficiency, have certain key advantages over traditional, fossil fuel-based resources: they don’t require expensive, polluting fuels or large capital investment, consume little to no water, generate negligible carbon emissions, and are easily scalable. To take full advantage of low-carbon, renewable energy sources, we need a power grid with enough flexibility to harness clean energy when it is available and abundant. That’s where demand response, a people-driven solution, comes in.

On a hot summer day, for example, electricity use rapidly increases as people turn on air conditioners to avoid the heat of the late afternoon. A decade ago, the grid operator’s only option is to turn on another fossil fuel power plant to meet the increased need for electricity. But, at any given time, there are thousands of light switches left on, idle water heaters, cycling swimming pool pumps, and forgotten thermostats that people could temporarily turn off or down, if only they were offered the right incentive. If asked, people can adjust their power usage in exchange for a financial reward. We call this “demand response,” and it is increasingly helping to balance the flow of electricity with our energy needs at a given moment.

Demand response diverts money that would generally go to a fossil fuel power plant to homeowners and businesses instead. In this scenario, a utility or demand response provider sends a message for participants to reduce electricity use at key times in exchange for a credit or rebate on their utility bill, in addition to the cost savings they will earn through conservation. Of course, participants always have the option to opt-out with the tap of a button on their smart phone or thermostat. Read More »

Also posted in Clean Energy, Energy Efficiency | 1 Response, comments now closed

LA Better Building Challenge Partners with EDF’s Investor Confidence Project to Accelerate Citywide Energy Efficiency Goals

By Matt Golden, Senior Energy Finance Consultant

Source: LA Better Buildings Challenge

Environmental Defense Fund’s Investor Confidence ProjectSM (ICP) is pleased to announce a partnership with the Los Angeles Better Buildings Challenge to help develop a more robust marketplace for energy efficiency retrofits in the city. Los Angeles has set a goal of achieving 20% energy savings across 30 million square feet of existing buildings by 2020 as part of the Better Buildings Challenge, a national leadership initiative sponsored by the U.S. Department of Energy. If achieved, it is estimated that this 20% reduction in energy costs will create over 7,000 high-quality local jobs, and avert annual carbon emissions equivalent to taking more than 18,000 cars off the road.

The LA Better Buildings Challenge will be promoting the ICP Protocols through its network of building owners and industry stakeholders to help bring even greater transparency and accountability to the energy efficiency market by introducing a system of standardization in the way commercial building retrofits are developed, funded, and managed. The ICP framework assembles best practices and existing technical standards into a set of protocols that define a clear roadmap for developing projects, determining savings estimates, and documenting and verifying results.

David Hodgins, Executive Director of the LA Better Buildings Challenge, describes how the partnership with ICP will help the project meet its goal. The mission of the LA Better Buildings Challenge is to support our partners in achieving a minimum of 20% savings by 2020, and to get there we need to have a clear path. We are excited to partner with ICP, which offers our partners a best-practice approach to developing, underwriting, and measuring the impact of their resource efficiency projects,” he said. Read More »

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CPUC Singing the Right Tune on SONGS, But Southern California Still Needs to Harmonize to Achieve a Clean Energy Future

rp_Navarro_Lauren.jpgLast week, the California Public Utility Commission (CPUC) finalized an important decision for Southern California’s energy supply following the closure of the San Onofre Nuclear Generating Station (SONGS). The plan emphasizes increased reliance on clean energy in this part of the state – an important step towards a fully realized low-carbon future.

The decision authorized San Diego Gas and Electric and Southern California Edison to procure at least 550 megawatts (MW) of ‘preferred resources,’ which include renewable energy, demand response (a tool that’s used by utilities to reward people who use less electricity during times of “critical,” peak electricity demand), energy efficiency, at least 50 MW of energy storage, and up to 1,000 MW of these resources altogether.

That’s a major step forward, as utilities across the country traditionally rely on large fossil fuel plants to meet regional demand.

However, the CPUC also authorized the procurement of 1,000 MW of power from natural gas generation, demonstrating that Southern California still has a ways to go to reach its clean energy potential.

Read More »

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California on Course to Give Power to the People

Jamie Fine PhotoIn a report issued by the Energy Division at the California Public Utilities Commission (CPUC), experts demonstrated their commitment to the transition toward greener electricity rates in the Golden State. This is good news for two reasons: It will give customers more control of their utility bills and it keeps the state on course to cut pollution.

Today, most Californians are frozen by energy bills that are hard to understand and even more difficult to keep under control.  Fortunately, recommendations from the CPUC released Monday will put the power in the hands of customers by transitioning to rates that vary with the time of energy use.

These “time-variant rates” (TVR) can cut pollution by giving customers tools to directly influence how much money is spent on the least-efficient, most-expensive, and most-polluting power plants.   Critically, it’s also a way to avoid ever-growing, system-wide peak demand that leads to the building of additional power plants, known as “peaker plants” as they are specifically designed to serve customers at times of peak demand.

Because peak power plants run so few hours a day and are so inefficient, EDF estimates that if half of consumers participate in time-variant rates, California would save nearly $500 million annually.

The savings – from avoiding costly enhancements to grid infrastructure – will mean lower bills for customers and cleaner air for all.  The CPUC report affirms EDF’s analysis that total system costs will be reduced with wide-spread participation in time-variant rates, estimating that peak demand – and the associated costs of peaker plants – would be reduced by 12%.

As required by law, the rate reform proposal sets expectations that adequate protections be put in place for vulnerable customers.  The law also requires that people will always be able to choose their rate structure, but most will find that participating in time-variant rates will lower their bills with little or no effort to change their daily patterns.

The next step is for the CPUC and utilities to implement these recommendations and to put customers on the path to more cost- and environmentally-friendly rates.  With robust plans for education, outreach and enabling technologies (like programmable thermostats) to help customers reap the benefits of greener electricity prices,  time-variant rates can become another shining example of California’s commitment to innovation, the environment, and its people.

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At a Key Moment for Energy, California Should Seize Demand Response

Traditionally, if an area’s population grows — or it loses a power plant — it needs more energy. But California and some other states can approach it differently and reduce the use of fossil fuels.

Instead of asking, How can we add more energy?” the real question becomes “How can we reduce demand?”

Two words: Demand Response (DR).

DR is an incentive that has been proven to work on the East Coast and elsewhere, encouraging energy users who voluntarily participate to reduce their electricity usage temporarily when demand could outpace supply.

Recently, the California Energy Commission’s Integrated Energy Policy Report (IEPR) Draft recognized DR as a technology with a high potential to maximize energy efficiency. This report comes at an important time for the state, when greenhouse gas emissions from large facilities have increased in California after decreasing the previous years, in large part due to the closing of the San Onofre Nuclear Generating Station (SONGS) power plant.

In our recently submitted comments, EDF commended the Commission on thinking big on demand response, a cutting edge load management technology that can lower wholesale energy prices when they are highest, dramatically minimize system costs, and reduce air pollution and greenhouse gas emissions.

In their report the Commission also acknowledged that while DR is a great tool if used well, there still “has been little progress towards increasing the amount of DR used in the state.”  The Commission included several recommendations to bolster DR going forward, which EDF supports and will advocate for.

We also made suggestions for how the Commission could maximize the use of DR in California, including:

Time of Use (TOU) tariffs allow customers to pay prices for energy that depend on both when and how much they use. By giving customers the option to save money for reducing their energy use at peak times, older, less efficient peaker plants aren’t used as much and the overall system costs go down dramatically. If half of Southern California Edison’s ratepayers adopted its voluntary TOU program, this would replace the need for two thirds of the San Onofre generating capacity.

  • Set clear and ambitious goals for demand response in the state

The Commission should set ambitious benchmarks in regard to demand response capacity.

  • Foster consumer adoption of innovative demand response technology

Modern technology allows for automated thermostats, ‘set it and forget it’, and other options for easy to use systems that allow interested electricity customers to quickly and consistently respond and reduce energy use when demand is high and the grid is stressed. The Commission should plan to increase consumer uptake of these technologies.

  • Support new technologies and quick scaling up of pilot projects

Demand response opportunities exist on a broad scale in California.  Innovative ideas like charging electric cars when solar power is abundant to help maximize the benefits from renewables are still being developed. The Commission should encourage and support these new technologies, and look for successful pilots that are both cost-effective and fully scalable.

  • Establish effective enforcement mechanisms

By putting in place proper monitoring and enforcement mechanisms, the Commission will help ensure expected environmental benefits.

 The Commission’s IEPR is a great step forward, and comes at a key moment for managing California’s energy system. We urge the Commission to continue its work with other stakeholders to increase this momentum, and to utilize its authority – such as appliance and buildings standards and electricity forecasting – to help implement the state’s vision for demand response.

Also posted in Energy, General | Comments closed

Setting the PACE on Clean Energy Finance

I spend most of my time working to establish On-Bill Repayment programs that allow property owners to use their utility bill to repay loans for cost-saving energy efficiency or renewable energy upgrades.  Many of my colleagues work on a similar program known as Property Assessed Clean Energy (“PACE”), which uses the property tax bill for repayment.  Since both utility and property tax bills are usually paid, both PACE and OBR are expected to lower the cost and increase the availability of financing for clean energy projects.

Last week, I was invited to attend a meeting of the leading PACE program administrators, property owners and other market participants in the country — and was pleasantly surprised to learn how much progress is being made.

Connecticut launched their program in January and is expected to close $20 million of PACE transactions for commercial properties by year end.  The Toledo, Ohio area expects to have executed $18 million of commercial transactions by the end of 2013.  Sonoma County, with a population of less than 500,000, has already completed $64 million of financings for residential and commercial properties.  In late 2012, CaliforniaFIRST launched a PACE program for commercial properties that has already received 130 applications.

We also heard from the head of Keep PACE in Texas who recently sponsored legislation to enable PACE in the state.  PACE, like OBR, uses private funding to allow property owners to voluntarily retrofit their properties.  This makes the program popular with many conservatives and the legislation was able to pass with a unanimous vote from the Texas House of Representatives in May.

Historically, most of the PACE transactions have gone toward financing energy efficiency improvements.  As I wrote in May, Connecticut has set up their PACE program to include financing solar projects as well – using financing structures (leases and power purchase agreements) that tend to provide the lowest-cost solutions for building owners.  Last week, I learned that CaliforniaFIRST and other California-based PACE programs may now be able to offer the same solution for commercial property owners across the state.  This could dramatically increase the availability of financing for solar projects in commercial properties.

Most solar deals are financed over 20 years.  For properties with good credit, this works well as solar photovoltaic (PV) panels have a long lifespan and solar generation can be predicted accurately.  Most government buildings tend to have good credit and can usually finance solar with no money down.  Unfortunately, unless a commercial property is owned or leased by a highly-rated company, the property does not normally qualify for financing.

PACE programs can put an obligation onto the property tax bill that survives all changes in ownership and allows most properties to qualify for credit.  I am hopeful that PACE will be a game changer for solar installations for commercial properties in California. Ultimately, these improvements will save property owners money by reducing their energy consumption, put Californians to work and lower harmful pollution in the process.

Also posted in Clean Energy, Energy Efficiency, On-Bill Repayment | 2 Responses, comments now closed

Keeping it Clean: California Should Use Clean Resources to Integrate Renewables

As the 8th largest economy in the world, California remains a global leader in clean tech investment, innovation and adoption of landmark climate and energy policies. What defines our success?  Our ability to try things first, set the bar high, and get policies right.

California’s Renewable Portfolio Standard (RPS) is a perfect example of that bold, pioneering spirit. Passed in 2011, the RPS required that 33% of electricity come from renewables by 2020 – a lofty benchmark, even by California’s standards. Along with self-generation and solar rooftop programs, California is successfully adding solar, wind, and other distributed generation to its resource portfolio.

In fact, renewables are successfully becoming a large part of daytime energy production, the California Independent Systems Operator (CAISO) – the organization in charge of balancing the statewide grid – is concerned over how to make up for that energy when the sun goes down while evening energy demand spikes.  The question is: How can the CAISO reliably integrate renewables?

The CAISO is currently figuring out how to address this need for “flexible” power and will have a draft decision out on October 2nd.  Just like people prefer to take routes they know well when they drive, the CAISO is most comfortable with what they know: familiar fossil fuels. Using clean resources and demand response instead is new territory for them that will require careful orienteering.

Yet getting comfortable with the new, cleaner terrain means a less polluting, less expensive, more resilient energy future.  California passed the RPS to reduce fossil fuel consumption — and the pollution that comes with it.  If fossil fuels become the main method by which renewables are integrated, they could eliminate the emissions benefits of renewables entirely, while consumers may pay more than necessary to integrate renewable energy.

There are clean options that have been proven to work in grid operations, such as demand response – the voluntary reduction of electricity use by customers who are paid to do so when called upon.  By reducing demand at key times, demand response lowers the need for electricity production and saves money in the process. (This is an area where California can learn from East Coast states that are robustly using demand response in their electricity markets.)

EDF has actively engaged CAISO on the need for “flexible” power, and knows they are working hard to figure out how to use demand response and other clean options to integrate renewables. We have also asked CAISO to utilize existing, clean resources and to revisit this framework every few years to make sure it is as clean as it can be – all to make sure that California has time to get it right.

Leading the way isn’t always easy, but if successful, California and CAISO will show they can utilize proven resources like demand response to keep California’s energy policies clean and cost-effective, while readying the grid for high levels of renewable resources.

Also posted in Clean Energy | Comments closed