Monthly Archives: July 2012

Big Data – Launch Pad For Big Ideas

Source: TechCrunch

When the internet came along, it transformed our relationship to big data – unleashing innovation, markets and, yes, funny dog videos at a global scale.  “Big data” is all the rage these days in the energy sector, as investors, utilities and consumers wake up to what smart use of data can do for them.

A few weeks ago, I posted about Clean Heat – a project in which organizing data about buildings attracted nearly $100 million to finance upgrades to cleaner heating systems.  If we can cut soot pollution from heating oil in New York City 50% by 2013 with the power of open data  … what opportunities might be out there at even bigger scales?

This week, EDF teamed up with the White House, Google and HonestBuildings to pull together a “data jam” at Google’s New York City headquarters in the impossibly hip meatpacking district of Manhattan.  Todd Park, U.S. Chief Technology Officer, kicked of a brainstorm among  tech entrepreneurs, energy experts, finance whizzes, web designers and government agencies, to answer this question:  if government makes its energy data open and computer-friendly, what could entrepreneurs invent to “improve energy outcomes for families and businesses?”

For six hours, we divided up into teams and jammed on this question, inspired by the extraordinary public data sets squirreled away in federal, state and city agencies on topics from energy efficiency to power plant pollution, electricity markets, transportation and health.   The jam session generated at least ten great ideas, ranging from consumer energy apps to ways to save money on your commute.  Teams are coalescing around these ideas – and similar ideas developed earlier this year at a similar data jam at Stanford.   The goal is to turn the most promising ones into prototypes over the next 90 days. 

Whether any of these ideas make it to market, it’s too early to tell.  But if this group can generate so many prototype-worthy ideas in one afternoon, imagine what could happen if consumers, students, entrepreneurs, businesses and families across the country were empowered to harness “big data” to find the best ways to save money, cut pollution and improve quality of life?   

It worked for the internet.  It worked for smart phones.  Now let’s see if it can work for energy and pollution.  I’m hoping to be back in 90 days to tell you about the great idea the folks in my sub-group are developing to increase investor confidence in energy efficiency.  Stay tuned.

Posted in Grid Modernization, New York / Read 3 Responses

European Power From U.S. Forests: Two New Reports Offer Pathways To Sustainability

European utilities are using trees grown in the United States to make electricity. Well, not the whole tree. But lots of the tree is used to make the little wood pellets that are then shipped across the ocean, mostly to the Netherlands, United Kingdom, Denmark and Belgium. It is these wood pellets that are burned with coal or in stand alone biomass boilers to produce energy. This video explains the journey from forestlands to power plants.

Why is Europe able to make electricity from U.S. trees when domestic utilities are cancelling wood biomass projects? Answer: Europe has a strong renewable energy policy.

The EU Renewable Energy Directive passed in 2009 sets a target for EU member countries to collectively achieve 20% of energy from renewable sources by 2020. Many utilities are increasing the use of biomass as a low-cost means of producing renewable energy. But Europe doesn’t have enough forest or agricultural land to meet the increasing demand. To fill that gap, European utilities are importing wood pellets – a form of chipped and compressed wood – from North America and increasingly from the Southern United States. The growing demand for U.S. wood biomass is raising questions about the sustainability of the country’s forest resources.

Two reports from Environmental Defense Fund, in conjunction with colleagues at Pinchot Institute and University of Toronto, examine economic, environmental and public health impacts from the expanding wood pellet market. European Power from U.S. Forests documents how the EU policy is shaping the transatlantic trade in wood biomass. For the U.S. export market to benefit from the large potential capacity for pellet production, producers in the U.S. will need to meet or exceed EU sustainability standards. Some type of forest management or pellet supply chain is likely to be required.

Pathways to Sustainability evaluates the programs and practices that fall under the EU biomass requirements for wood pellets, concluding that few of the pathways completely meet the standards. EDF proposes a new approach to recognize the various ways landowners and biomass producers on both sides of the Atlantic can meet their environmental objectives.

Sustainability will remain a pivotal issue as EU member countries, the European Commission and various stakeholders seek to harmonize sustainability requirements. European bioenergy companies often view biomass sustainability as the largest unquantified risk in their supply chains. Developing sustainable pathways sooner, rather than later, will reduce economic risk and encourage market development for wood pellets in the U.S. and Europe.

A webinar will be held July 17, 2012 at 12 pm EST. Please join Will McDow (EDF), Brian Kittler (Pinchot Institute) and Jamie Joudrey (University of Toronto) for a discussion of E.U. policies, the growing demand for wood pellet exports and options to meet Europe’s sustainability requirements.

Posted in North Carolina, Renewable Energy / Comments are closed

Electric Utilities – An Industry In Transition

The recent merger of Duke Energy and Progress Energy represents yet another turning point for the electric utility sector, with significant implications for public health and the environment.  Duke’s six-state footprint – Florida, Indiana, Kentucky, Ohio, North Carolina and South Carolina – offers it an opportunity to lead the way on clean energy deployment.  The question is: Will the new Duke Energy – now the largest utility in the country – harness its size and scale to accelerate investments in energy efficiency and renewable energy, or stay anchored to the past?  EDF’s partnerships with Wal-Mart, FedEx and McDonalds have shown that when large companies are motivated, they are a powerful force for change.  But change doesn’t come easily.  It requires vision, leadership and a constant willingness to innovate.

This is true not just for Duke Energy, but for electric utilities around the country.  Over the past two years, four of the five largest investor-owned utilities have experienced a merger or change in the CEO role – AEP, Duke, Exelon and Southern Co.  The steps taken by these companies and their leadership will have a profound impact on our antiquated electric utility grid, human health and the environment.  The most visionary utility companies will do three things exceedingly well: 

1.       Get out ahead of environmental regulation

In 2002, Duke Energy supported efforts to tackle power plant pollution in North Carolina by supporting the “Clean Smokestacks Act.”  Xcel Energy followed a similar model in Colorado and endorsed the “Clean Air Clean Jobs Act.”  These landmark laws significantly accelerated clean-up of the dirtiest power plants in those two states and made it possible for the utilities to recover the costs of their investments.  It also enabled Duke and Excel to take early steps to modernize their fleets and prepare for future federal clean air requirements.  As a result of early actions, both companies are well-positioned for EPA’s recent Clean Air Rules – unlike the utility giant AEP, which continues to delay critical human health protections.  The world’s most successful companies skate to where the puck is headed, not to where it is, and are more competitive as a result.

2.       Treat efficiency and smart grid investments as new revenue centers, not side projects

The fact is that most electric utilities still see energy efficiency investments as side projects separate from their core business – generating power.  Without state building codes or energy efficiency standards in place, utility investment in energy efficiency remains low.  The reason is simple.  Even in states with decoupled rate structures in place, building nuclear plants is more profitable than energy efficiency projects.  Large generating plants require a large investment with a guaranteed rate of return over a long project lifetime.  In comparison, energy efficiency projects are generally small, often have an uncertain return and a short project life.  EDF is working with leading energy companies and regulators to craft new incentive models that make efficiency investments attractive, but utility companies must be willing to fundamentally alter their business models.      

3.       See competition as opportunity

Even in highly regulated markets, new market entrants and competitors are beginning to change the face of utilities with strong monopoly power.  The costs of solar panels have dropped by over a third in the past few years, making solar energy cost competitive with retail electricity prices in many parts of the country.  Companies like SolarCity are even financing and then leasing solar systems to home owners, enabling cash-strapped customers to reduce their dependence on the grid.  Hundreds of companies now exist to help all kinds of customers reduce their energy bills and dependence on electric utilities.  (I should know – I just insulated my attic and crawl space – and am already benefitting from lower electric bills.) 

Utility companies that help bring energy efficiency and renewable energy to market can retain ownership of environmental attributes (like renewable energy credits) and earn new revenue streams.  Otherwise, those benefits are likely to go to third parties or customers.  Smart utilities recognize the threat that this small, yet growing base of companies provides to their business model, and aim to bring technologies and services to market faster than new competitors.  Rather than trying to delay the inevitable, savvy utility leaders make their companies part of the solution – and profit from doing so.  Companies like San Antonio’s CPS Energy are making this idea a reality through partnerships with a wide range of service providers.

The next generation of electric utilities and their leaders must run their businesses differently than their predecessors or risk being left behind.  Just like the once monopoly-oriented telecom industry, those companies that are willing to adapt and transition to this new energy paradigm will prosper and be well rewarded.

Posted in Climate, Energy Efficiency, Grid Modernization, North Carolina, Utility Business Models / Read 1 Response

Do Shale Gas Activities Play A Role In Rising Ozone Levels?

This commentary was originally posted on the EDF Texas Clean Air Matters Blog.

Source: AFP

As we continue seeking relief from rising temperatures this month, it’s also time to be on the watch for ozone alerts. The annual Texas smog season – April 1 through October – already appears to be in full swing this year with numerous counties around the state exceeding health-based ozone concentrations many times since March.

Just last week, the Houston Chronicle highlighted the magnitude of ozone exceedances that the area hasn’t seen since 2003. Additionally, the month of May was the nation’s “smoggiest” in the past five years according to a recent report released by Clean Air Watch. Texas ranked second, surpassed only by California, for the most Code Red and Code Orange days so far in 2012, with 18 days and 27 days respectively.

Ozone-forming pollution is emitted by cars, refineries and various industrial plants. As more Texans begin to see shale gas drilling rigs pop up around them, many are asking the question: Could emissions from natural gas and oil operations significantly contribute to ground-level ozone? The answer is an unequivocal yes.

The Role of Natural Gas and Oil in Rising Ozone Levels

While burning natural gas produces less smog-forming pollution than coal combustion but more than renewable energy generation, much of the equipment used in the drilling, production, processing and transporting of natural gas and oil produces significant amounts of such pollution. This equipment releases volatile organic compounds (VOCs) and oxides of nitrogen (NOx), which combine in the presence of sunlight to form ground-level ozone or “smog.” According to the state of Colorado, natural gas and oil operations were the largest source of ozone-forming pollution, VOCs and NOx in 2008.

The Texas Commission on Environmental Quality has reported that storage tanks used in the exploration and production of natural gas and oil are the largest source of VOCs in the Barnett Shale. Recently, there have been additional concerns that San Antonio may not meet federal ozone standards due to Eagle Ford Shale development. Peter Bella, natural resources director at the Alamo Area Council of Governments, told the Houston Chronicle that the city is “right on the edge of nonattainment.”

Ozone concentrations comparable to those recorded in some of the most heavily polluted U.S. cities have been measured in rural parts of Wyoming and Utah, where little other industrial activity occurs:

It’s important to note, however, that ozone monitoring does not exist in many oil and gas development areas, so we don’t know the full extent of the potential problem. For instance, though the Texas Commission on Environmental Quality has committed to start monitoring in the Eagle Ford, there is not currently sufficient monitoring to characterize ozone problems in the area.

Protection of Human Health

As natural gas and oil development expands into new regions, adverse air impacts are likely to follow, absent sufficient emissions controls. It is crucial for states to have strong standards in place, especially for a state such as Texas, which experienced exponential production increases in a short period time. The Eagle Ford Shale alone saw a 432 percent increase in natural gas production from 2010 to 2011.

We are happy to report that EPA recently finalized clean air measures that will serve as an important first step in reducing harmful pollution discharged from a variety of oil and natural gas activities. In fact, last month, EDF President Fred Krupp testified before the U.S. Senate in support of these new clean air standards, which will result in significant reductions in smog-forming pollutants and hazardous air pollutants like benzene, a known carcinogen. As a co-benefit, the standards will also reduce methane, a potent climate forcer.

In his testimony, he said “these common sense measures are a win-win: they reduce pollution, conserve valuable domestic energy resources, and in some cases, actually save producers money.” He added that it was “critical that we build on these clean air measures if our nation is to fulfill the President’s promise in his State of the Union to develop natural gas without putting the health and safety of our citizens at risk.”

While mounting evidence continues to link natural gas drilling with rising ozone levels, it is important to remember why we should care in the first place:

  • Ozone has been linked to a host of maladies, including premature mortality, heart failure, increased hospital admissions and emergency room visits for respiratory causes among children and adults with pre-existing respiratory disease, such as asthma and inflammation of the lung, and possible long-term damage to the lungs.
  • Children, the elderly, and people with existing respiratory conditions are the most at risk from ozone pollution.
  • Ozone also damages crops and ecosystems. Ozone is one of the most phytotoxic air pollutants – causing damage to vegetation in national parks and wilderness areas, especially in mountain regions and to valuable crops.
  • Ozone pollution also contributes to climate change. According to the Intergovernmental Panel on Climate Change (IPCC), ozone is the third-largest contributor to climate change after carbon dioxide and methane.

In the end, we’re talking about the protection of human health as well as our entire planet. Continue to visit this blog for updates on rising ozone levels in our state, as well as other vital information related to Texas air quality.

Posted in Climate, Natural Gas, Texas / Tagged | Read 2 Responses

A Dynamic Approach To California Energy Use

This commentary was originally posted on the EDF California Dream 2.0 Blog.

Californians are poised for a more functional, data-driven model for setting the prices people pay for electricity.  The new model will make the massive differences in costs of providing electricity during the course of a typical day more evident to us as energy users, thereby inspiring more efficient use of electricity resources.

The California Public Utilities Commission (CPUC) started a rulemaking to examine if the current rate structure for residential energy users is fair and equitable across customer classes and if it:

  • supports statewide-energy goals;
  • facilitating technologies that enable customers to better manage their usage and bills;
  • enables conservation and efficiency on the customer side of the meter; and
  • increases the reliance on non-fossil based generation to reduce overall greenhouse gas emissions.

We know already that the short answer is “no”, so CPUC is eyeing a transition to time variant (“dynamic”) rates.  According to Pacific Gas & Electric (PG&E), with time variant, or what is often referred to as “time-of-use”, pricing – rates “will be higher during summer weekday afternoons when electric demand is higher, typically noon to 6 p.m., May through October. In return you’ll pay lower rates at all other times. This means that when you use energy is just as important as how much you use.” 

EDF’s Energy team has been, and will continue to be, closely involved in the CPUC’s rulemaking, which will examine several facets of the current system.  EDF has also been involved in the related smart grid proceedings, such as the deployment of smart grid infrastructure – which provides the ability to both measure energy use in real time and inform customers about the costs (and environmental impacts) of their choices to use electricity at different times of the day.  This Advanced Metering Infrastructure (AMI) enables a smoother transition to dynamic rates for residential consumers.

EDF is very encouraged that the CPUC is considering  time variant pricing because it will help consumers to be more thoughtful about their energy usage, particularly at times when demand is peaking and pushing electricity supply sources to their limits.  This type of rate structure can encourage conservation and reduce peak demand while providing customers with more choices that can ultimately lower their monthly bills.  For example, allowing consumers to see how much they can save on their electric bills by reducing their energy use during peak hours will encourage a shift of energy-intensive activities, such as washing and drying clothing and dishes, to off-peak (and less expensive) times of the day. 

Because a dynamic pricing system will alleviate pressure on the electric grid during peak demand, it will also lead to a more stable, less expensive energy system that is increasingly resilient to extreme weather events.  The economic motivation should also help to create an easy way for consumers to make decisions more efficiently, thereby lowering their electric bills and shrinking their environmental footprints.   

Futhermore, dynamic pricing can help integrate renewables and electric vehicles into the electric grid by allowing utilities to respond to price signals more effectively.  For example, time-of-use rates support electric vehicle charging at times when grid resources aren’t strained, such as late at night or early in the morning when most people are sleeping. 

This new approach will facilitate conservation and energy efficiency, as well as an increase in the use of clean energy sources that avoid harmful greenhouse gas and urban air pollution.   If adopted, the dynamic pricing model can be a common sense approach to saving energy and money, while promoting energy efficiency and a smarter, “greener,” electric grid country-wide.

Posted in California, Energy Efficiency, Grid Modernization, Time of Use / Read 3 Responses

Forecasting Calamity In Texas

(Credit: www.newsinarlington.com)

We’ve already had a spring of record highs, and now a June that is breaking records for electric demand (in June and July), including a peak demand that has already surpassed the projected peak demand for this summer –which we usually don’t hit until August.  Also, in an important decision last week – albeit one that won’t really change much this summer except for wholesale electric prices – the Public Utility Commission (PUC) voted 2-0 to raise the cap on energy bids in the electric market.  Given all of this activity over the past few weeks, one of the most interesting things to see has been the shift of focus from this summer to the next few summers, specifically 2014 and 2015, without stopping to consider why that time frame was chosen as a focus.

It all comes down to one obscure forecast, one that has almost nothing to do with energy: the Moody’s non-farm employment forecast. The energy crunch on the horizon that has everyone worried is a direct result of projected growth in demand in 2014/2015, derived from Moody’s projection that employment will remain fairly level in the near term, followed by a drastic increase in Texas employment around 2014.  Economic forces, in particular low natural gas prices and the need to further reduce pollution, will force some older, inefficient power plants out of the market, but the overwhelming factor is the projected ramp-up in demand in two years.

An important question arises that hasn’t been fully explored: why 2014, could it be later, or even sooner?  Today’s report on Texas Economic Indicators from the Federal Reserve Bank of Dallas has good news: “Texas factory activity surged in June… posting its strongest reading in 15 months,” which is welcome news of continued economic expansion in Texas, but is our electric grid ready to handle this spike in demand?  Tomorrow, the Bureau of Labor and Statistics will release its monthly unemployment numbers, which will have additional relevance for Texas as we struggle to meet electric demand in the face of record temperatures and economically-driven population growth.

The truth is, as with most projections, ERCOT’s planning process involves a little bit of art combined with a lot of analysis, and with every new national and local report on employment indicators the near term risks to our electric grid may shift.  As such, it’s important to realize that the major decisions currently being made at ERCOT and the PUC are largely the result of a single forecast with a highly time-dependent factor.

We won’t know how accurate these forecasts are until after the fact, but the decisions being made in Texas right now will have substantial, long-lasting effects on electric rates and customers.  Those effects haven’t been fully examined by the PUC, as the Houston Chronicle pointed out last week.  Historically the PUC has hesitated to take on clean energy policies purportedly out of concern for their impact on consumer rates, so it’s unclear why that analysis hasn’t been undertaken for such major market changes. 

What is clear is that these changes don’t do much to address real long term issues like water shortages, rising costs associated with fossil fuels and the flexibility to adapt to future economic conditions.  The recent Brattle reports – one showing that demand response is needed to maintain future reliability and another showing that solar power will help reduce electric costs – point to key steps the PUC can take to help customers deal with rising costs the will result from other PUC decisions.

Posted in Demand Response, Texas / Comments are closed