In this February 2012 file photo, a Duke Energy employee works on power lines in Charlotte, N.C. Utilities have a long track record of using technology demonstration pilots to better understand new innovations, test their ability to solve problems, and gauge customer and stakeholder interest (Chuck Burton/AP/File)
How utilities can turn pilots into partnerships
Utilities find themselves in unfamiliar positions as they chart their course in areas such as alternative fuel vehicles, smart grid, and distributed generation. In this last piece of our four-part series (See Part I by Mat McDermid, Finding the Regulated Utility Role in a Shifting Energy Landscape; Part II by Sam Shrank, How Behavioral Science Can Increase Energy Efficiency Adoption; and Part III by Jill Bunting and Raphael Tehranian, How Utilities Can Better Source Innovation), we discuss how partnerships with individual large customers to test new offerings, alongside traditional pilots, can help utilities find solid ground. Partnerships can both demonstrate to regulators that customers benefit from utility involvement in these areas and help utilities scope their ideal role.
Utilities have a long and successful track record of using technology demonstration pilots to better understand new innovations, test their ability to solve problems, provide increased or new benefits, and gauge customer and stakeholder interest. In a changing business environment, however, expanding into more customer-centric pilots would greatly help utilities position themselves to protect and expand their market standing.
Customer-centric energy partnerships of this type cover a broad spectrum, but there are a few required elements. First, they must begin with the selection of a customer partner, not a technology or utility offering. Second, the customer’s goals should determine the expanded or new offering, or most likely suite of offerings, included. Third, rather than lasting for a predetermined and usually short amount of time, they are meant to be merely the beginning of an ongoing relationship.
These partnerships allow utilities to learn more about customers and their needs, create new regulatory advocates among their customer base, and expand their remit in emerging service areas. In working with utilities to foster partnerships of this type, we have learned much about how this can be done. ( Continue… )
President Barack Obama looks at solar panels at Nellis Air Force Base in Las Vegas, Nev., in this May 2009 file photo. Rapier correctly predicted President Obama's reelection. (Charles Dharapak/AP/File)
Energy predictions from last year: Did they come true?
In my list of Top 10 Energy Related Stories of 2011, I made five predictions for 2012. Those predictions were:
- President Obama will easily win reelection, which means that energy policies will likely continue along the current trajectory.
- The Keystone Pipeline project will be approved (although that decision may still slide into 2013).
- Natural gas prices will remain low, averaging below $5/MMBTU for the year.
- Oil prices — both West Texas Intermediate and Brent — will average above $100/barrel in 2012.
- We will look back on the fact that Newt Gingrich was once the leading Republican contender for president and have a good laugh about it.
I never doubted for a second that Obama would win reelection, for reasons I have discussed on a number of occasions. The reason really boiled down to the weakness in the Republican field. Every contender had major baggage that I felt would keep some of the base from voting for that candidate. I believe this is indeed what happened, so the major swing states all went Obama’s way. Newt Gingrich is a prime example of the problem with the Republican field. Indeed, with all of his baggage, the fact that he led the pack for the nomination when I made these predictions boggles the mind.
The Keystone Pipeline has not yet been approved, but many energy analysts and observers do believe that it will be approved in 2013.
Natural gas prices did indeed average below $5/MMBTU for the year. In fact, they averaged below $4/MMBTU for the year. ( Continue… )
A labourer rests inside the wagon of a coal train as he takes a break from shovelling coal at a coal yard on the outskirts of Jammu, Kashmir in this May 2012 file photo. With loose policies governing greenhouse gas emissions, developing nations are more likely to turn to coal as a cheap fuel source, according to Consumer Energy Report. (Mukesh Gupta/Reuters/File)
Coal on the rise as developing nations seek cheap fuel
A report issued by the International Energy Agency (IEA) suggests that coal will surpass oil as the world’s most popular fuel source within 10 years, threatening to inject more greenhouse gases into the air than ever before if policy changes don’t follow the warning.
The boost in coal use is due to extreme growth in emerging markets like China and India, countries that require cheap fuel sources for electricity production in order to support their quickly growing infrastructures and populations. At current rates of growth, the IEA says that it expects that coal consumption will rise to 4.32 billion tonnes of oil equivalent versus 4.4 billions tonnes of oil per year worldwide within only four years; with that trend continuing, coal would quickly overtake oil as the world’s fuel source of choice. (Read More: Global Carbon Dioxide Emissions — Facts and Figures)
The IEA is the energy advisory arm of the Organization for Economic Cooperation and Development (OECD), a group that oversees the economic activities of 34 industrialized nations, including Canada and the United States.
With loose policies governing greenhouse gas emissions, developing nations are more likely to turn to coal as a cheap fuel source, despite it being the worst source of pollutants among fossil fuels, the IEA says. As the United States focuses more on shale gas reserves, India is expected to become the second largest coal consumer in 2017, ranking only behind China.
For its part, ever-growing China will remain the world’s largest coal consumer, accounting for more than half of global consumption, for the foreseeable future, with the IEA predicting an increase in Chinese demand for coal of 3.7 percent per year, dropping to 2 percent per year in the case of an unexpected slowdown of the world’s most quickly expanding economy. (Read More: How Much Oil Does the World Produce?)
Ending its report with the tagline “China is coal, coal is China,” the IEA sees that country as determining the course of the global coal market over the next five years.
This chart shows that by 2030 world output of oil and other liquid fuels from current fields is expected to drop to 43 million barrels per day. While hydraulic fracturing has allowed us to recover oil from previously inaccessible deposits, it has not allowed us to grow oil supplies worldwide, Cobb writes. (Glen Sweetnam/US Energy Information Administration)
The one chart about oil's future everyone should see
When people read about a long-term forecast of world oil supply--say, out to 2030--they often believe that the forecasters are merely incorporating our knowledge of existing fields and figuring out how much oil can be extracted from them over the forecast period. Nothing could be further from the truth. Much of the forecast supply has not yet been discovered or has no demonstrated technology which can extract or produce it economically. In other words, such forecasts are merely guesses based on the slimmest of evidence.
Perhaps the best ever illustration of this comes from a 2009 presentation made by Glen Sweetnam, a U.S. Energy Information Administration (EIA) official. The EIA is the statistical arm of the U.S. Department of Energy. The following chart from that presentation will upend any notion that we know exactly where all the oil we need to meet expected demand will come from.
The chart shows that by 2030 world output of oil and other liquid fuels from current fields is expected to drop to 43 million barrels per day (mbpd), some 62 million barrels below projected demand of 105 mbpd. (Though prepared in 2009, the chart takes into account known projects expected to be producing by 2012.) This drop is consistent with the observed decline in the worldwide rate of production from existing fields of about 4 percent per year. Certainly, there will be more projects identified in the 18 years ahead. And, many people will say that we already have a large new resource of tight oil (often mistakenly referred to as shale oil) which can be extracted through hydraulic fracturing or fracking. But even if the optimists are correct--and there can be no guarantee that they will be--this source of oil will only add 3 to 4 million barrels of daily production. What Sweetnam's chart tells us is that we must find and bring into production the equivalent of five new Saudi Arabias between now and 2030 in order to meet expected demand even if the volume of tight oil reaches its maximum projected output. (The Saudis currently produce about 11.7 mbpd of oil and other liquids.) ( Continue… )
SolarCity COO Peter Rive, Chairman Elon Musk and SolarCity CEO Lyndon Rive celebrate the company’s IPO at the NASDAQ Stock Market last Thursday. 'We are building thousands of little power plants on peoples’ roofs,' Rive told the Monitor. (Mark Von Holden/AP Images for SolarCity)
SolarCity: Why all the buzz behind cleantech's latest IPO?
SolarCity, a San Mateo, California-based solar energy company, calmed anxious investors last week when its discounted IPO surged on Wall Street. In a telephone interview with The Christian Science Monitor, SolarCity CEO Lyndon Rive outlined the company's holistic approach to solar power, to which he attributes the success. Though it's often depicted as a solar installer, SolarCity is just like any other energy company, Mr. Rive said – except the power plant is on your roof:
Question: After a rocky start last week, SolarCity shares soared 50 percent in its Wall Street debut. To what do you attribute the turnaround?
Answer: It just comes down to the fundamentals of the business. The product is super simplistic. It’s just cheaper, cleaner electricity ... Most people when given the option of paying more for dirty power or less for clean power will take paying less for clean power. There was tremendous headwind against the solar industry. I personally underestimated how deep the scars go and the amount of money the investors have lost ... In order to get the interest level to the high demand we had, we had to give a significant discount so that the investors knew there was no risk.
The energy industry has been around for a very long time of course, but it’s all centralized creation of energy. You create the energy at a centralized location and then you use transmission and distribution to get it to your house. Never before has there been an energy company that creates energy at the place where it’s needed. So these two concepts are disparate and haven’t been seen by investors.
There were good arguments on both sides to pull the IPO because the $8 number was just too low. But then Elon Musk, our chairman, reached out to a few of the institutional investors and started discussing the options with them. If the closest category is so new and no one has done this, you need to build the investor confidence. ( Continue… )
Michael Bishop poses in this December 2012 file photo, with a pair of flags flying in protest of the planned Keystone XL pipeline, near the entrance to his property south of Douglass, Texas, which is directly in the path of the project. The stretch of pipeline that connects the American network with the bitumen source in the Canadian oil sands is still awaiting approval from the American government. (Andrew D. Brosig/The Daily Sentinel/AP/File)
Keystone XL oil pipeline hits snag in Texas
Even as a decision from President Barack Obama about its future, the Keystone XL Pipeline has hit another snag in construction thanks to an oil-savvy landowner in Texas.
A judge in the southern state has ordered that TransCanada Corp., the company behind the building of the continent-spanning oil pipeline, must stop work on a stretch of the line that will run beneath property owned by Michael Bishop for two weeks, due to that man’s challenge of the pipeline’s intentions. (Read More: Obama Under Increasing Pressure to Make Keystone XL Decision)
While the documents Bishop signed allowing TransCanada to use his property for the line specifies that the pipes can carry crude oil, there is no mention of bitumen, the semi-solid form of petroleum that originates in Canada’s oil sands. Bitumen must be diluted or heated in order to liquify it for transport, requiring different pressure levels than the simple transport of liquid crude – something that Bishop says is not mentioned in the contract he signed with the company.
For its part, TransCanada suggests that the temporary restraining order issued by the judge is not a long-term concern. ( Continue… )
This February 2012 file photo, shows Midwest Generation's Crawford Generating Station, a coal-fired power plant, in Chicago. In September, Midwest Generation, a subsidiary of Edison Mission Energy, closed two plants on Chicago's southwest side under pressure from environmental groups. (M. Spencer Green/AP/File)
Edison Mission Energy files for bankruptcy. Is natural gas to blame?
Edison Mission Energy, the power generation arm of Edison International, voluntarily filed for Chapter 11 bankruptcy protection Monday. The Santa Ana, Calif.-based holding company reported $5.13 billion in assets and $5.1 billion in debt in its filing with the US Bankruptcy Court. Midwest Generation, a Chicago-based subsidiary, was also included in the filing.
The company's financial woes reflect the obstacles coal faces in a energy market increasingly dominated by cheap natural gas and a shift towards renewables.
"Like other independent power generators, EME has been challenged by depressed energy and capacity prices and high fuel costs affecting its coal-fired facilities, combined with pending debt maturities and the need to retrofit its coal-fired facilities to comply with environmental regulations," read the company's press release.
In September, Midwest Generation, which operates a fleet of coal-fired plants in Illinois, closed two plants on Chicago's southwest side under pressure from environmental groups. ( Continue… )
Brazilian President Luiz Inacio Lula da Silva holds up his hands which are covered with oil during a ceremony at Petrobras 50, a ship-shaped floating production vessel near Rio de Janeiro in this April 2006 file photo. A vast majority of so-called fossil fuel subsidies are really governments keeping fuel prices artificially low for consumers, Rapier writes. (Bruno Domingos/Reuters/File )
Petrobras feels the downside of fossil fuel subsidies
Petrobras: A Case Where ‘Fossil Fuel Subsidies’ are Bad for an Oil Company
When most people hear the phrase “fossil fuel subsidies” it conjures up images of governments giving their hard-earned tax dollars to already highly profitable oil companies. That’s what they have been conditioned to think by certain activists and politicians, and quite naturally this image evokes outrage.
On more than one occasion, I have pointed out that the vast majority of these so-called fossil fuel subsidies are really governments keeping fuel prices artificially low for consumers. This is a subsidy because consumers aren’t paying the true price of the fossil fuel, and the amount of the subsidy is the difference between what consumers pay and the market price. In most cases, the primary beneficiary of the subsidy is the consumer, and the secondary beneficiary is the fossil fuel company who gets to sell more product than they otherwise might.
In oil producing countries, the government is typically the entity providing the subsidy. They do this by giving up revenue. For example, in Venezuela consumers can buy gasoline for pennies a gallon. The state-owned oil company Petróleos de Venezuela, S.A. sells gasoline at well below the cost to make it, and the loss of revenue to the government is the amount of the fossil fuel subsidy to the consumer. ( Continue… )
An employee carries a solar panel as he works at a production line at a solar company workshop in Yongkang, Zhejiang province in this February 2012 file photo. Global climate change adds an economic, moral, and social element to why governments must aggressively act on energy innovation. (Stringer/Reuters/File)
Amid energy crisis, a need to define and promote innovation
Innovation is Central to Making Clean Energy Cheap
The United States and the world face an urgent imperative to transform its energy system by developing and deploying low or zero-carbon technologies on a dramatic scale. And while developed regions like the United States and Europe might be willing to change their consumption patterns and businesses to incorporate clean energy (though not significantly), developing nations can’t afford to pay the necessary premium for this access. And they shouldn’t have to, as they try to gain access to energy of any kind. As such, the only way the entireglobal energy system can transition to clean energy is if its cost is lower and its performance is equal to or greater than cheap fossil fuels like natural gas, coal, and oil.
Unfortunately, today’s clean energy technologies like wind, solar, electric vehicles, smart grids, and energy storage are more expensive and oftentimes performance-limited compared to their fossil competitors. Solar and wind power are intermittent without energy storage and still require significant advances in energy conversion efficiency. Electric vehicles are up to double the cost of comparable gasoline powered cars, and significant infrastructure build-out like smart grids, charging infrastructure, and transmission lines are barriers to rapid deployment as well. (Read More: An Introduction to Fueling Innovation)
Without a doubt today’s clean energy technologies have made dramatic progress and innovations have propelled a doubling of renewable energy in less than 5 years, but much more is needed. Today’s technologies won’t be able to propel the world to deep reductions in global carbon emissions, but improving on today’s technologies and developing new designs can. ( Continue… )
In this 2011 file photo, exhaust rises from smokestacks in front of piles of coal at NRG Energy's W.A. Parish Electric Generating Station in Thompsons, Texas. On Friday, the US Environmental Protection Agency issued stricter standards for soot pollution. (David J. Phillip/AP/File)
EPA squelches soot. First step in a deluge of regulations?
The US Environmental Protection Agency (EPA) introduced new standards Friday that aim to reduce the amount of soot released into the air by 20 percent.
The annual health standard will be lowered from 15 micrograms of fine-particle pollution per cubic meter down to 12.
The move may have broader implications, as well. Energy companies and environmental activists are watching closely to see if the new standard is the beginning of many bold environmental moves by President Obama in his second term. The administration has been tight-lipped on the subject.
“These standards are fulfilling the promise of the Clean Air Act. We will save lives and reduce the burden of illness in our communities, and families across the country will benefit from the simple fact of being able to breathe cleaner air,” said EPA Administrator Lisa P. Jackson in a statement. ( Continue… )
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