RENEWABLE ENERGY IN AN ALL-OF-THE-ABOVE WORLD; TREIA 2013 CONFERENCE

Tuesday, November 12: Natural Gas and Renewables -- The Romeo and Juliet of New Energy? Would it be a tragedy not to marry them?

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Wednesday, November 13: What Does an All-of-the-Above National Energy Policy Mean? Texas renewables developers talk about the future of solar, wind, and natural gas.

Natural Gas and Renewables -- The Romeo and Juliet of New Energy? Would it be a tragedy not to marry them?

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The talk in Texas is about using its newly discovered shale gas abundance and its growing renewables capacity synergistically. But is natural gas a bridge to renewables or an environmental sin?

“Sooner or later, oil and gas fields will exhaust and the cheapness will be gone. Renewables are an investment in the future,” former San Antonio Mayor Phil Hardberger told renewables and natural gas advocates at the Texas Renewable Energy Industries Association 2013 conference, Renewable Energy in an All-of-the-Above World.

In the wake of Hurricane Sandy, the impacts of the Fukushima nuclear disaster, China’s ongoing air-megeddon, and the current killer typhoon in the Philippines, the synergy is important, said keynoter Dan Reicher, a former advisor to Presidents Obama and Clinton and the Executive Director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford. “There are big opportunities in the dramatic price drops of natural gas and solar.”

The IEA predicts the world will, by 2035, spend $38 trillion on energy infrastructure, Reicher said. “We can do it well or we can do it poorly but if we do it well we can do well by the future.”

The energy technology pipeline runs from research and development to deployment and there over 10,000 firms in the U.S. working on it, Reicher said. The lowest hanging fruit is energy efficiency and companies like Hara, Silver Springs Network, and Itron continue to advance it by joining energy technology and internet technology. “Where ET meets IT,” Reicher said, “knowledge is less power.”

The ability to develop shale gas sources has turned up massive new supplies all over the country and turned natural gas into energy’s bridge to the 21st century, Reicher said. “Natural gas and renewables can be very important to one another because natural gas can firm up the variability of renewables and renewables can firm up natural gas’s price volatility. Adding energy efficiency and storage technology could produce a sustainable technology base.”

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There are two places in the energy technology pipeline where capital is vital. But crucial financial supports like wind’s PTC and solar’s ITC have not been consistent and many supports that could be consistent like a price on emissions have not been politically viable, Reicher explained. “If you don’t have large amounts of capital, you don’t get this stuff built.”

Funding is vital to get proven technology across the “valley of death” and show it can be deployed at scale. Fracking technology took 65 years and enormous amounts of private and federal investment to get across the valley of death, Reicher said. Financing is also vital in the last stage of development when the technology is deployed at scale. But the cost of capital at that stage can be prohibitively high.

The solution Reicher continues to tout is making the Master Limited Partnerships (MLPs) and Real Estate Investment Trusts long available to other energy industries available to renewables and energy efficiency.

Senate sponsors of a bill that would open MLPs to renewables recently hosted a high level meeting with representatives of the oil and gas and renewables industries, Reicher confided to GTM after his presentation. The oil and gas people, knowing how renewables and natural gas compliment and offset the risks of one another, said their confidence in the MLP as an investment vehicle makes them ready to invest in renewable energy MLPs. There was also talk, Reicher said, of hybrid natural gas-renewables MLPs.

“Are natural gas and renewables friends, enemies, or frenemies?” National Renewable Energy Laboratory Joint Institute for Strategic Energy Analysis (JISEA) Director Doug Arent asked. The risks of a theoretical natural gas project and a theoretical renewable project, Arent explained in answer to his own question, address one another’s “variability and points of failure and become points of complementarity and mutual support.”

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In 2013, there were 480 gigawatts of renewable capacity globally, keynoter and National Renewable Energy Laboratory (NREL) Director Dan Arvizu said. “The renewable energy industries are real and happening today. The question is no longer how much can you have? The question is, how much do you want?”

But despite a 2012 NREL study that showed the U.S. could get 80 percent or more of its needs from renewables in 2050 with today’s technology, Arvizu said, natural gas is the good news story in the U.S. and Europe and Asia are salivating at access to abundant and affordable gas.

“The new frontiers are integration and scaling up,” Arvizu explained. “The high penetration of renewables requires system wide flexibility and a new operating paradigm. That paradigm includes variable supply as well as variable load, increased distributed generation, the joining of multiple balancing areas, and changing roles for utilities, consumers, investors, power producers, technology vendors, and regulators.”

Environmentalists’ concerns about methane are “very scary,” Arvizu said. And the re-emergence of natural gas may cause frustration for renewables advocates. But natural gas firms the grid for renewables. And a recent MIT study showed the U.S. must certainly get away from the carbon emissions produced from burning natural gas by 2040.

“Much depends on reducing risk,” Arvizu said, “so that development is the result of private sector pull instead of policy push. That is already happening in solar and wind.”

“We have a very messed up, mixed up, not well thought out policy,” observed Texas State Senator Kip Averitt, “but it would be a tragedy like Romeo and Juliet not to marry the synergies of natural gas and renewables.”

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What Does an All-of-the-Above National Energy Policy Mean? Texas renewables developers talk about the future of solar, wind, and natural gas.

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The abundance of natural gas in Texas and across the U.S. has renewables developers thinking about where they fit into the energy mix.

“Based on statements from President Obama and his administration, 'all of the above' is the de facto U.S. national energy policy -- but that means many different things to different people,” Texas Renewable Energy Industries Association co-founder and Executive Director Russel Smith said at TREIA’s Renewable Energy in an All-of-the-Above World conference.

“To some, it’s accusatory, and means, ‘You guys in renewable energy get all the attention.’ It can be the oil and gas industry saying, ‘Pay attention to us,’” Smith said to the audience of renewables and natural gas developers and advocates. “For others, it’s congratulatory, and means ‘Renewable energy is now a player.’ The question is what effect an all-of-the-above national energy policy will have on renewables.”

“I thought 'all of the above' meant 'all the energy above the ground surface!'” interrupted Austin Energy executive and TREIA co-founder Michael Osborne.

OCI Solar CEO Antony Dorazio picked up on the joke. “'All of the above' means ‘I want votes from all of the above.'” OCI Solar, a vertically integrated solar manufacturing and EPC services provider, has announced plans to employ 800 people to carry out contracts with San Antonio municipal utility CPS Energy for the installation of 400 megawatts of PV capacity by 2016.

“The status quo is not always bad,” Dorazio went on. “Renewables have grown tremendously in the last decade. But to keep the status quo, all the programs and incentives have to stay in place.”

“Yes, it means, ‘I don’t want to tick anybody off; I want all their votes,’ agreed Andrew McCalla, President and founder of Meridian Solar, Inc., a PV components, design, and installation company that has built some 450 projects since 1999 and recently decommissioned its residential unit to focus entirely on commercial and industrial projects.

“In addition to the de facto energy policy,” McCalla said, “we have a de facto ‘Everything that’s playing keeps playing' policy. But not on a level playing field." Renewables cannot get that level playing field, he explained, because of vested interests.

“At scale -- and we are a long way from getting there -- renewables are a threat to utilities. A threat to a 100-year-old business model that burns stuff, runs it through wires, and sells it,” McCalla said. “Utilities once called renewables ‘dangerous’ to the grid. Now they are creating obstacles to interconnection and net metering. And they are starting to talk about stranded assets, which is the latest red herring. I don’t know what they’ve got after this one. Clearly, renewable technologies work and are helpful, not just to the transmission system but to society in general.”

“There are stranded assets,” Dorazio, a former utility executive, answered. “The utilities make investments for 25 years and they get their return back from ratepayers, but if the growth of distributed generation cuts that return short, they do have stranded assets. Their next excuse will be the smart grid. The smart grid is going to cost money. Who is going to pay for it? Will it be the power producers? The ratepayers? It is going to be a whole different system, and somebody will have to pay for it."

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“For us, the realistic meaning of 'all of the above' means there is a place for all the generation sources,” said Patrick Woodson of E.ON, a global utility based in Europe that owns all types of resources and has built eighteen wind projects in Texas and 1,800 megawatts of U.S. wind capacity.

“We all know we have to have baseload generation. We all know that renewables are already playing an important part in the mix,” Woodson said. “But the lack of clarity on what that mix ought to be is the real problem. We need to have a real discussion of what mix we should push for. It might be a different mix in different regions. There is room in this country for a host of generation sources. Wind, solar, and natural gas are really complementary technologies that can push each other. But there are places where coal and nuclear make sense. That may not be a popular thing to say. We need to look at this on a holistic basis, and we are just not doing that right now. For us, there is a great discussion still to be had. There can be a plan that really can include 'all of the above' if we do it right.”

“It is going to take a blended solution to meet our power needs,” said Joel Hart, president of Hydro-Star Energy. Hydro-Star is an independent, community-scale wind developer. Earlier at the conference, Hart had described a man who was watching a wind turbine being built in Pampa, Texas and remarked that it was “'the first time anybody ever drilled up in this town.'”

“If renewable energy is here to stay, we have to take the good with the bad and be able and willing to compete,” Hart said. “We just want equitable and fair access and, even with 'all of the above,' I think we’ll do fine.”

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