AOC And Colbert Talk Debates And Climate
AOC thinks the climate crisis needs more attention. From The Late Show With Stephen Colbert via YouTube
Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...
THINGS-TO-THINK-ABOUT THURSDAY, August 22:
AOC thinks the climate crisis needs more attention. From The Late Show With Stephen Colbert via YouTube
Oregon’s Republican Senators left the state to avoid voting on a bill that will prepare the state for the climate crisis. What will history say about this? From CNN via YouTube
Wind is a fertilizer for growing farm revenues. From American Wind Energy Association via YouTube
The chart that defines our warming world
Jonathon Amos, 21 June 2019 (BBC News)
“…[Reading University Professor Ed Hawkins’ #ShowYourStripes is intended] to communicate the issues around climate change…and to start conversations that might lead to solutions…People have been turning these patterns into wearable garments - ties, dresses, jumpers, and leggings. Someone in Minnesota in the US has even painted their Tesla electric car in the stripes…[The stripes] highlight some interesting features that might otherwise be missed in a different rendering of global data…[T]he regions do not warm in unison…
…[For 1940s Europe,] there is a strong band of blue compared with the rest of the world…This is quite a well-studied period that was probably linked to a large El Niño event - the climate cycle associated with shifting pressure patterns and a weakening of the trade winds in the Pacific...The world warmed, apart from Europe which had a deep cold spell. And it probably had an impact on the outcome of WWII. The harsh winters at the time frustrated Hitler's armies as they invaded the Soviet Union.” click here for more
These Three Forces Are Shaping The Future Of Global Energy
John McKenna, June 24, 2019 (Forbes)
"The world is moving toward an era of vastly improved energy choices…[This new era is] characterized by renewables such as wind power, digital technologies like artificial intelligence (AI) and, in particular, the expansion of liquefied natural gas (LNG) around the world…By liquefying its vast shale gas reserves, the United States has become a net exporter of LNG and could become a net energy exporter overall as soon as 2020…[The shift to natural gas and renewables is partly driven by concerns about climate change and the energy industry’s carbon emissions…But it is also driven by price…Low electricity prices are even attracting oil-rich nations like Saudi Arabia to invest in renewables…
…[O]ffshore wind is] spreading from Europe to countries including the U.S., Taiwan, Vietnam and Japan…[O]ffshore wind is able to offer a scale no other renewables projects can match, with projects reaching into the gigawatts…Winds at sea are also a far more reliable and constant source of power when compared with other renewables…As technology has developed [to deliver 10 MW turbines], costs have come down…Generating more energy per turbine improves project economics…[The changes being wrought by new digital technologies and autonomous intelligence are being used] to improve the operation and maintenance of [all types of energy] facilities…” click here for more
Floating wind farms just became a serious business
Michael J. Coren, June 22, 2019 (Quartz)
“…[Scotland’s 5-turbine, 30 MW Hywind project is the world’s largest floating wind installation and the first floating wind project to win a long-term power purchase agreement. The] Danish energy-trading firm Danske Commodities announced it will buy all of Hywind Scotland’s power over 20 years…Over a stormy three-month period from November 2018 to January 2019, the turbines survived extreme conditions while churning out 65% of their maximum capacity as a North Atlantic hurricane sent swells topping 27 ft. That production capacity compares to 36.9% for wind turbines in the US (almost all of them on land) and 45.8% for Danish offshore wind over a comparable 12-month period ending in February 2018. Hywind even beat out the average capacity of fossil fuel plants.
Over the course of a year, it’s capable of generating 135 GWh of clean electricity, sufficient for 20,000 Scottish homes…Norwegian oil firm Equinor (formerly Statoil) pivoted its [offshore] drilling expertise into offshore wind. It spent eight years testing a floating turbine prototype off Norway, and is now one of the world’s largest offshore wind companies, as well as the primary backer of Hywind…Equinor is now projecting massive expansion for floating wind—13 GW globally by 2030—as costs decline steeply. Wind power favors going further offshore, which yields faster and more consistent winds. That translates to exponentially more power…Europe has 50 floating wind projects (pdf) in different stages of development…” click here for more
People Are Wearing Data Charts to Visualize the Climate Crisis; Broadcast meteorologists, scientists, and activists are participating in the #ShowYourStripes project on Friday to show how the climate crisis affects their countries.
Becky Ferreira, June 21, 2019 (Vice)
“…[Ed Hawkins, a climate scientist at the University of Reading, is] the lead scientist behind #ShowYourStripes, an interactive tool that enables users to generate colorful graphics representing over a century of temperature measurements. Colder years are color-coded blue, while hotter ones are red…Last year’s incarnation of the #ShowYourStripes project was limited to global temperature measurements, but this newly-launched version can make charts for most nations on Earth, individual American states, and select cities such as Stockholm and Oxford…
Some climate scientists have also adapted the format to make their own provincial or municipal climate charts…While all the graphics show a warming trend, there is a lot of variation in the temperature profiles depicted in each region. Nations in the Middle East show a dramatic recent warming spike, for instance, while the southeastern US states have more of a mixed palette…[Hawkins sees his effort as a way to] enable people to start conversations about climate change…” click here for more
Renewable Energy Curtailment 101: The Problem That’s Actually Not a Problem At All
Mark Specht, June 25, 2019 (Union of Concerned Scientists)
“…[I]n the spring and early summer, abundant sunshine, blustery winds, and rushing rivers all coalesce…[with mild temperatures and low electricity use in California to cause] times when there is more electricity available than we can possibly use…[This leads to the] purposeful reduction in renewable electricity output…[Curtailment of renewable energy has been on the rise over the past few years in the California Independent System Operator (CAISO) service territory, but is still only] a couple percent of all the renewable energy generated…[System-wide oversupply] occurs when, on a large scale, there is simply not enough demand for all the renewable electricity that is available…[Local transmission constraints cause curtailment] when there is so much renewable electricity in a local area that there is insufficient transmission infrastructure to deliver that electricity to a place where it could be used…
[I]n the first five months of 2019, just over half of all [California] curtailment occurred due to local transmission constraints…[and] roughly three-fifths of all curtailment in 2018 was due to local transmission constraints…[It does not make economic sense to build all the infrastructure (e.g. transmission lines or energy storage) that would be required to utilize every last drop of renewable electricity…[The CAISO has eight ways to] put excess renewable electricity to good use…[A]ny of the CAISO’s eight solutions could help address system curtailment…but they won’t do much to alleviate local curtailment unless those technologies are deployed in the local area…[C]urtailment isn’t a problem, [but addressed smartly, it can be] an opportunity…” click here for more
Renewable Energy Makes Waves In Oregon
Jes Burns, June 21, 2019 (National Public Radio/Science Friday)
“…Oregon State University has submitted a final license application for a wave energy testing facility with the Federal Energy Regulatory Commission. If built, it would be the largest of its kind in the United States…Oregon’s potential to use the motion of the waves to generate electricity is very high. But nationally, the development of wave energy has lagged behind other green energy sources…Part of the delay is the time and expense involved in permitting new technology…
[Oregon State University’s PacWave South Project 6 miles off the Oregon Coast would allow developers] to by-pass the permitting and just pay the University to test their wave energy converters…The ultimate goal is to speed up the development of this largely-untapped source of clean energy…The FERC permitting process, while the most involved, is one of many state and federal approval needed for the project to move forward…PacWave South is partially funded by the U.S. Department of Energy. DOE says the goal is to have the test facility operational by 2022.” click here for more
An emerging push for time-of-use rates sparks new debates about customer and grid impacts; Momentum is building behind time-of-use rates, but longstanding doubts about whether they are fair remain unresolved, threatening new efforts.
Herman K. Trabish, Jan. 28, 2019 (Utility Dive)
Editor’s note: Since this story ran, California’s new rate rollout began and calls for time varying rates are increasing across the country.
Pilot programs have shown smartly designed residential time-of-use (TOU) and other time varying rate structures can effectively shift power consumption away from peak demand and drive significant savings for both customers and utilities. But concerns about whether such rate structures are good for all customers remain. And doubts about whether they can be designed and implemented both fairly and effectively are emerging.
Traditional electricity rates for residential customers include a small fixed charge and a charge for each kWh of electricity they use. As energy efficiency (EE) and customer-owned distributed generation (DG) grow, residential customers use fewer kWh and utility revenues drop, making it harder to cover their costs.
A new idea is to vary the price of kWhs, making the price higher for residential customers during peak demand, and lower at other times, allowing for more precisely pricing kWhs at what they cost.
With today's flat per-kWh rates, "customers who use the grid more during peak demand are underpaying for the costs of meeting that demand," Brattle Group Principal Ahmad Faruqui told Utility Dive. "Customers who use the same kWhs during off-peak times pay the same bill and are subsidizing the others. TOU rates can redress that inequity."
Three big questions about TOU rates have delayed large-scale implementation: Can well-designed TOU rates save customers money and reduce utilities' peak demand? Will customers be able to negotiate the differences between peak and off-peak prices? What about customers with limited flexibility and special needs? The answers to all three have so far come from limited pilot programs.
And if those answers are helpful to utilities and their customers, many will want to know why it has taken so long to put them to work. The short answer is that resolving consumer advocates' doubts about fairness and utility planners' doubts about rate design is complicated… click here for more
Draft Results: Future of Natural Gas Distribution in California
June 6, 2019 (Energy + Environmental Economics via California Energy Commission)
This project evaluates gas customer implications and health impacts of a low-carbon future in California
• What are the economy-wide costs of achieving a lowcarbon future? What strategies are available to reduce the consumer cost impacts of decarbonizing buildings, and make the transition more equitable?
• What are the health implications of different electrification and decarbonization strategies? …
Using renewable natural gas (RNG) to decarbonize buildings—with foreseeable technology—is an expensive strategy
• The high cost of RNG would likely encourage economic electrification for some
Replacing gas equipment with electric equipment upon burnout lowers the societal cost of achieving California’s climate policy goals
Gas demand decreases in all of the GHG mitigation scenarios. As gas demand falls, average costs for remaining customers increase
• Absent policy intervention, low-income customers who are less able to electrify may face a disproportionate share of those costs
A gas transition strategy is needed to reduce the costs of the gas system and protect consumers. Such a strategy could include:
• Reducing gas system expenditures (i.e. via targeted retirements of gas pipelines)
• Changes to gas rates & rate design
• Recovery of gas system costs from electric ratepayers or from other funds
Building electrification improves air quality and health outcomes in urban centers
Technology Options to Decarbonize the Natural Gas System
Methods to evaluate the costs of renewable natural gas technologies
Renewable natural gas (RNG) is a term used to encompass: Biomethane, climate neutral hydrogen, and synthetic natural gas (SNG)
UCI estimated production efficiency, levelized capital costs, and variable O&M costs over time for each biomass feedstock type (e.g. manure, wood waste, etc.) for RNG production
Costs are a function of:
• Industry learning rate and global installed capacity
• Electrolysis technology
• Load factor
• For SNG, the CO2 source
Developed assumptions about global installed capacity of RNG technologies
Applied learning rate assumptions to develop cost trajectories over time
Biomethane is an important resource in all scenarios, but feedstocks are limited…Hydrogen and SNG are less constrained by feedstock potential, but face other challenges…Base case and low cost assumptions for hydrogen and SNG are evaluated…
California Economy-wide Decarbonization Scenarios
There is insufficient low-cost RNG to fully decarbonize the pipeline without electrification
Expensive RNG would likely be needed to decarbonize gas demand without electrification, even with aggressive technology learning and use of best-case out of state resources to produce hydrogen and SNG
Analysis focuses on three key scenarios
1. Current Policy Reference Does not meet 2030 or 2050 economy-wide GHG goals
• Reflects SB 350, consistent w/ a “zero-carbon retail sales” interpretation of SB 100
2. High Building Electrification Achieves economy-wide 40% reduction in GHGs by 2030 & 80% by 2050
• High electrification of buildings (50% heat pump sales by 2030, 100% by 2040) and light-duty vehicles
• Pipeline biomethane (along with liquid biofuels) mostly serves industry & CNG trucks; remaining fossil budget used in transportation and industry
3. No Building Electrification Achieves economy-wide 40% reduction in GHGs by 2030 & 80% by 2050 \
• No electrification in buildings, high electrification of light-duty vehicles
• In addition to using all available biomethane, adds hydrogen and SNG in the pipeline and more ZEV trucks than high electrification scenario
• Pipeline gas blend remains 56% fossil in 2050, so a large share of the 2050 emissions budget is in buildings
Gas throughput declines in all scenarios: Gas use in buildings is a key difference…
Building electrification projected to lower economywide cost
Use of hydrogen and SNG drive cost increases post-2030 in No Building Electrification Scenario, with a wide range reflecting uncertainty in SNG cost
Costs in the High Building Electrification scenario stabilize as other mitigation costs (e.g., renewables, electric vehicles) continue to decline post-2030
Transfer payments (e.g. LCFS, cap-and-trade) do not increase the total societal cost
Remaining emissions in 2050 and implications for net-zero GHG emissions
Both scenarios would require additional GHG mitigation measures throughout the economy to achieve net-zero GHG emissions
• The High Building Electrification decarbonizes buildings more completely by 2050 and has more low-cost options remaining in transportation and industry.
• Using SNG to reduce building sector emissions to the same level as the “Building Electrification” scenario would require more DAC
• $4 - $9/therm à an additional cost of $11 - $24 Billion/year in 2050
Implications for Natural Gas Customers
California’s current energy cost challenge
Natural gas costs are increasing
• Following the San Bruno explosion and Aliso Canyon gas leak, gas utilities in the state are in the midst of safety driven expenditures, markedly increasing their costs
Electricity costs are increasing
• Electric utilities expect increases in cost due to wildfire liability and to harden their systems against wildfire risks
The extent and duration of increases remain uncertain
The structure of gas utility revenue requirement today
E3 estimates that California natural gas utilities collect $7.5B in revenues per year
• E3 developed a gas utility revenue requirement tool estimating gas rates through 2050 under different scenarios Ê These revenues cover both ongoing operations and maintenance (O&M) costs, as well as pay for infrastructure replacement and expansion
• O&M costs are just over half the revenues of gas utilities.
• Costs related to capital investments are just under half of gas utility revenues.
The costs of commodity gas are tracked separately from the utility revenue requirement and are a pass-through expense
Current Policy Reference scenario gas system costs are uncertain, but will likely increase over time
By 2050, gas system costs would be substantially higher even in a “Reference” scenario due to capital cost escalation and continued safety enhancements and system reinvestments
Statewide gas utility revenue requirement and commodity cost in 2019 and 2050
Today, delivery costs are the majority of residential gas bills.
By 2050, gas distribution costs may be larger than today, even in a future with high building electrification and gas infrastructure retirement
By 2050, gas system costs are substantially higher in the No Building Electrification scenario than the High Building Electrification scenario due to 1) higher throughput and 2) more expensive commodity costs
Average residential utility bills
Low-income gas consumers would likely need rate protection and/or transition assistance if large numbers of customers opt for economic electrification
Post-2030, mixed-fuel homes always have higher bills than all-electric homes
This scenario assumes no economic electrification. Gas rates and bills would increase further than shown here if customers choose to electrify
Thought experiment: electric rates
How high would electric rates have to increase for mixed-fuel and all electric customer bills to be equal in 2050 in the No Building Electrification Scenario?
In 2050, electric rates would need to be $0.55/kWh to reach a break-even utility bill with mixed-fuel customers. This would impose significant affordability challenges on all California customers High electric rates would reduce the economic advantages of electrification in both the transportation and buildings sectors
Examples of a Gas Transition Strategy…Air Quality Analysis…
• Technological strategies to reach 2050 carbon goals attain notable co-benefits to air quality and human health – Impacts vary by season, source, and region
• Reductions from MDV/HDV attain important benefits – Widespread benefits to ozone and secondary PM2.5 in summer from NOx reductions
• Building electrification has important impacts in densely populated urban areas – Impacts on secondary PM2.5 in winter from NOx reductions from NG appliances
• Integrate and assess the potential impacts of biorefineries – Results presented here do not account for emission impacts of renewable fuel production
• Develop methodological framework for contextualizing results through impacts to disadvantaged communities – Integration of results from CMAQ and BenMAP with CalEnviroScreen 3.0
• Develop and asses scenario considering potential emission impacts from hydrogen/NG blending – End-use impacts could be positive or negative…
Dodging And Denying in D.C. Mike Pence dodges climate change questions as Agriculture Department buries new scientific studies; "We will always follow the science on that in this administration," Pence says of climate change
Matthew Rozsa, June 24, 2019 (Salon)
Vice President Mike Pence avoided pointed questions about climate change during an interview on Sunday [with CNN's Jake Tapper], even as [the current administration] continues to suppress studies about the severity of the climate crisis…[Pence said the administration would follow science but will not pursue the Obama administration’s] Clean Power Plan…
…[Pence argued the natural gas expansion and clean coal technology, which cause more greenhouse gas emissions than New Energy, are the better approaches to the climate crisis but the White House] has refused to publicize dozens of government-funded studies, which reveal the long-term effects of man-made climate change as compiled by scientists at the Department of Agriculture…” click here for more
Tyler Crowe, Jason Hall, And John Bromels, June 23, 2019 (The Motley Fool)
“…[Motley Fool contributors picked three stocks as] worth buying today…TerraForm Power (NASDAQ:TERP)… wasn't in great shape when Brookfield Renewable Partners, a subsidiary of Brookfield Asset Management, took a majority stake…Thanks to Brookfield's expertise, [solar and wind project owner] TerraForm has made several operational and financial changes that have set it up for outperformance…[It is on track to] make good on its projected annual dividend increases of 5% to 8% through 2022…[SolarEdge Technologies (NASDAQ:SEDG)] makes a living mainly supplying solar panel power-management components, like inverters and power optimizers. These key parts are the go-between pieces that convert power from panels so that your home and the power grid can use it, and also maximize and balance the power that panels generate…
SolarEdge is recognized by panel makers and independent installers as a go-to partner…and its market share continues to grow…[R]ecently, management took a bold step to build a more diversified business in segments that overlap its strength in solar -- specifically, energy storage systems, and electric vehicle powertrain and recharging systems…[Brookfield Renewable Partners(NYSE:BEP)] is a major player in solar, wind, and hydroelectric power…eschews chasing high-valuation, low-return projects for growth's sake and instead focuses on special value situations…The deal to acquire a portion of TerraForm Power was a great example…” click here for more
Evaluation of Utility Ownership and Regulatory Models for Hawaii
June 2019 (London Economics International, et. al.)
The Hawaii Department of Business, Economic Development and Tourism (“DBEDT”), through House Bill 1700 (Act 124), was directed by the legislature to conduct a “study to evaluate the alternative utility and regulatory models,”1 (the “Study”) and “the ability of each model to: achieve state energy goals; maximize customer cost savings; enable a competitive distribution system in which independent agents can trade and combine evolving services to meet customer needs; and eliminate or reduce conflicts of interest in energy resource planning, delivery, and regulation.”2Through a competitive procurement process,3 London Economics International LLC (“LEI”) was awarded the contract for the conduct of the Study in March 2017.
The goal of the Study was to review and perform a thorough assessment of alternative models, laying out the pros and cons of each with respect to State policy objectives so that it could be used as a guide. As there is no single model that is best suited to achieve all objectives, the Study findings can help the legislature and stakeholders weigh alternatives as opposed to prescribe specific utility ownership and regulatory models to be implemented. The detailed discussions of analyses provided in individual task reports, which are summarized in this final report, are intended to provide enough information to assess how changes in assumptions and market conditions could impact the Study’s analyses and assessments.
The scope of work is divided into four parts, namely: (i) ownership models; (ii) regulatory models; (iii) additional analyses; and (iv) final report (Figure 1). The evaluation of potential utility ownership and regulatory models was performed through separate analyses but using a similar process and methodology. The Project Team additionally examined whether changes in the rate design could provide the same benefits as changes in the ownership or regulatory models and assessed the advantages and disadvantages of managing the State’s electricity sector with each county operating independently versus having a multi-county model.
1.1 Initial evaluation of ownership and regulatory models The Project Team initially performed a review of eight utility ownership structures (Figure 2) and six regulatory models (Figure 3). Sections 4.1 and 5.1 provide a more detailed discussion of these models. The Project Team conducted high-level analyses to evaluate each model’s pros and cons, financial, legal, and operational feasibility, the achievement of the state’s policy objectives, and potential stranded costs with the change in the model. It is emphasized that there can be wide variations even within ownership and regulatory structures.
The Project Team has described the models in the Study in a way that encompasses the most common forms. However, each model can be further customized to meet the needs of the State of Hawaii or the individual Hawaiian Islands.
Input from participants to the community dialogues was also taken into account. Three separate trips to each island (Hawaii, Maui, Lanai, Molokai, Oahu, and Kauai islands) were conducted to solicit stakeholders’ inputs on the Study: June 2017 (to discuss ownership models); July 2018 (to discuss regulatory models); and November 2018 (to present the preliminary findings). The Project Team also met with various stakeholders including representatives from the utilities, the Division of Consumer Advocate, commissioners, legislators, industry players, and non-government organizations. Moreover, an e-mail address4 was set up to collect feedback throughout the Study. All comments that were received were read, reviewed, and considered in the Study. Based on the conversations with the participants in these community discussions and one-on-one meetings, lowering electricity rates is the main (but not only) priority of stakeholders.
The Project Team selected six criteria with which to evaluate the chosen ownership and regulatory models, based on the four policy objectives established by House Bill 1700 (Act 124 of 2016). Figure 4 lists the state policy objectives and the evaluation criteria used to rank the different models.
The Project Team then performed a qualitative evaluation of the eight ownership models described previously with respect to each of the six ranking criteria, assessing how each potential ownership model would help achieve the state policy objectives absent any changes to the regulatory model. The high-level results of this assessment are presented in Figure 5 below and discussed in Section 4.4. The results were used to identify a subset of ownership models for detailed analysis, as further discussed in the next section.
Similarly, the Project Team performed a qualitative evaluation of the six regulatory models described previously with respect to each of the six ranking criteria, again assessing how each potential regulatory model would help achieve the state policy objectives. The high-level results of this assessment are presented in Figure 6 and discussed in detail in Section 5.5. Once again, the results of the analysis were used to identify a subset of regulatory models for detailed analysis, as further discussed in the next section.
1.2 Ownership and regulatory models selected for further study
Based on the high-level analyses, comments received from the community dialogues, one-on-one meetings, and the qualitative evaluation, four ownership models were selected for further analyses in all counties:
• Investor-Owned Utility (“IOU”);
• Cooperative (“co-op”);
• Single Buyer (“SB”) (inside the utility); and
• Single Buyer (“SB”) (outside the utility).
For Hawaii, Honolulu, and Maui counties, the Project Team selected four regulatory models for additional review, namely:
• Status Quo;
• Outcomes-Based Performance-Based Regulation (“PBR”);
• Conventional PBR; and
For Kauai County, the four regulatory models selected for additional review were:
• Status Quo;
• Hawaii Electricity Reliability Administrator (“HERA”);
• Independent Grid Operator (“IGO”); and
• Lighter Public Utilities Commission (“PUC”) Regulation.
The Project Team then conducted a more in-depth review of the selected models. The additional review involved determining the steps, timeline, and legal changes needed to transition to the selected models; the impact of the transition on the revenue requirements of the utilities, relative staffing needs of the Commission, ability to help Distributed Energy Resource (“DER”) integration, and ultimately, average costs to the customers; and understanding the funding mechanisms to transition or establish the models. Figure 8 summarizes the timeline, legal changes, and costs required to implement alternative models in moving to another model and Sections 4.10 to 4.12 (for ownership models) and Sections 5.12 to 5.14 provide a more detailed discussion of these analyses.
Based on the analyses, a regulatory or legal change is needed in most of these models, especially those that require the creation of an independent entity (SB, IGO, and DSPP). Transitioning to a different model also creates additional costs, including acquisition costs,5 regulatory costs, and set up costs.
The Project Team’s analysis results show that a change in ownership model does not necessarily address the first priority or concern of stakeholders, also a core objective of House Bill 1700 (Act 124), which is to lower electricity rates. In fact, a change in ownership model, either to the co-op model or the IOU model in the case of KIUC, would likely raise the average electricity rates relative to Status Quo in all the counties, except in Maui County. A key takeaway is that transitioning ownership models has a cost, regardless of the model, notably because of the cost for the new owner in acquiring assets from the incumbent utility. Figure 9 summarizes the impact on rates from the various ownership and regulatory models in all the counties.
More specifically, for Honolulu and Hawaii counties, a change to the co-op model is projected to increase average rates between 2018 and 2045 by an average of 5% and 8% per year, respectively. This increase is driven primarily by the cost of the purchase of assets of the incumbent utility, assumed to be undertaken through 100% debt financing. As a result, the co-op model is expected to lead to significantly higher debt burden, which would include interest payments. The higher costs of servicing the debt incurred for acquisition coupled with the additional financing needed for planned capital expenditure are expected to outweigh some of the cost reductions from the move to a co-op model in Honolulu and Hawaii counties. On the other hand, for Maui County, a move to the co-op model is projected to decrease electricity rates by an average of 2% per year. The projected decline in electricity rates would be primarily caused by the lower expected acquisition cost relative to the number of customers and forecasted sales, especially compared to Hawaii County.
For Kauai County, a change to the IOU model is projected to increase average rates between 2018 and 2045 by an average of almost 7% per year. Notably, a transition to an IOU model would increase the financing costs since IOUs have a higher weighted average cost of capital than coops based on their cost of debt and their cost of equity.
On the other hand, the analyses showed that regulatory changes are likely to have a more significant impact when it comes to reducing electricity rates. For example, the electricity rates are projected to decrease between an average of 0.5% and 9% per year as a result of regulatory changes, depending on the county (Figure 9). This is primarily driven by strong incentives, such as those typically provided in PBR. PBR models can be designed to incentivize the utility to lower different categories of costs through targeted measures. In addition, it was observed that the benefits of the move to any of the PBR options generally outweigh the costs.
For Kauai County, the Lighter PUC Regulation model results in lowest rates (average of 0.8% per year) because of lower anticipated regulatory costs for the utility. In contrast, the HERA model would increase the electricity rates slightly because it adds incremental expenses without direct financial benefits to the ratepayers. The benefits of HERA are more oriented towards the quality and reliability of service than cost reductions. Meanwhile, the Project Team expected some efficiencies in the IGO model, especially from the transfer of grid operations to a specialized independent entity that manages both utility-scale and distribution level supply resources. However, the overhead costs associated with setting up and operating an additional entity do partially offset cost savings associated with power procurement, especially in a smaller system such as operated by the Kauai Island Utility Cooperative (“KIUC”).
The potential ownership and regulatory models were also evaluated in terms of their impact on DERs, risks to the utility, staffing requirements for the Commission, and potential stranded costs. While these factors informed the selection of the highest rated ownership and regulatory models, the financial impacts discussed above must also be taken into account.
1.3 Additional analyses
The Project Team also performed a high-level qualitative assessment of whether the benefits of ownership and regulatory model changes can be achieved through changes in rate design (Section 7.1). The Project Team evaluated a range of alternative rate designs including tiered rates (inclining and declining block rates), higher fixed charges, and time-varying rates (Time-of-Use (“TOU”) rates, Real-Time Pricing (“RTP”), and Critical Peak Pricing (“CPP”)). Based on a highlevel qualitative evaluation of these alternative rate designs, the Project Team concluded that rate design changes can be effective complementary mechanisms to ownership and regulatory changes and could help achieve some of Hawaii’s state energy goals such as increasing the adoption of DERs and other consumer side resources, lowering peak demand, and encouraging energy conservation. At the same time, rate design is inherently interlinked with ownership and regulatory models and care must be taken to ensure that changes to rate design are consistent with overall policy goals in light of the prevailing ownership and regulatory model.
Finally, the Project Team evaluated the management of the State’s electricity sector with each county operating independently as compared to a multi-county model approach (Section 7.2). The single-county vs. the multi-county models were analyzed from the perspective of the utilities’ management and operations, particularly with regards to how the utilities operate the electricity system from sourcing supply to dispatching resources. The analysis showed that the multicounty model is better positioned to address the State’s priorities. It received a better rating in three out of five criteria, namely, the ability to meet state energy goals, maximize consumer cost savings, and enable a competitive distribution system. In contrast, the single-county model works better in addressing two of the five criteria, namely, conflicts of interest and aligning stakeholder interests. The sixth criteria, transition costs, was not within the scope of the study for assessing single versus multi-county models as it would require a detailed analysis of the costs and policy implications of interconnecting two or more of the island grids, which is outside the scope of this study.
1.4 Key takeaways
Based on the Project Team’s analyses, alternative regulatory models have a greater likelihood of helping to achieve the core policy objectives of House Bill 1700 (Act 124) relative to changes in utility ownership. This conclusion is further supported given that shortcomings of the current ownership models identified in the evaluation can be offset by changes to the regulatory model. For example, the legislature passed the Ratepayer Protection Act (SB 2939) of 2018 to address capital investment bias for investor-owned utilities under the existing regulatory regime.
The Project Team incorporated assumptions for its analyses based on publicly available data and existing studies on future developments of the State’s electric infrastructure. While the actual costs for a specific implementation of alternative models may vary from the chosen assumptions, the Project Team’s approach was selected to leverage data and studies that have been reviewed and approved by the Public Utilities Commission (“PUC”). This report and the supporting analyses provide enough detail to gauge the impact of changes in assumptions on the assessments contained within.
The Project Team concluded that a preferred outcome for the evolution of Hawaii State’s utility business model could include a PBR framework6 and possibly integrate alternative regulatory structures complementary to PBR. These alternative regulatory structures could be incorporated following the initial implementation of a PBR framework in Hawaii State, with decisions on whether, and how, to incorporate them being informed by developments in other jurisdictions which are currently exploring those concepts.
This Report is a summary of the analyses conducted for more than 40 underlying tasks and reports, which contain more background and additional details. These underlying reports are available on the Hawaii State Energy Office website.
The Key Climate Crisis Stat The number with the power to halt the climate crisis
Phil Davies, June 19, 2019 (GreenBiz)
“…[Researchers continue to work at improving the calculation of] the social cost of carbon (SCC), a wonky number that captures the economic burden to society at a given point in the future of a metric ton of carbon dioxide released today…[This calculation] is vital to efforts to mitigate the climate crisis through regulation and market-based solutions such as carbon taxes… Because people typically value a dollar today more than a dollar tomorrow, a discount rate — typically between 2.5 percent and 7 percent annually — is applied to future damages…[A]t an annual discount rate of 3 percent, $100 of climate damages in 2100 is worth about $7 today…Despite the SCC’s growing prevalence as a regulatory tool, the actual value of the social cost of carbon is a matter of intense debate among climate scientists and economists…
Many governments have set the SCC at about $50 per metric ton of CO2 — the "central" estimate (PDF) of a federal interagency working group in 2016. This figure is for emissions in 2020…But cost estimates of harm from CO2 emissions range from as little as $1 per metric ton (a number proposed by the Trump administration) to over $400 per metric ton — the number that emerged from a 2018 study by a team of U.S. and European researchers…[Variables creating uncertainty include] the pace of warming and how rising temperatures will affect human health, agriculture, property, energy systems and other aspects of life…After all the revising and tweaking, the SCC is likely to remain an imperfect measure…But researchers hope to reduce that uncertainty and boost confidence in the SCC as the basis for policy aimed at avoiding the worst consequences of climate change…” click here for more
The New Energy Basics Renewable energy 101: Key terms you need to know
Anmar Frangoul, June 3, 2019 (CNBC)
“The world’s energy mix is changing. Across the world, major companies and countries are turning to renewable sources such as wind, solar and geothermal to green their operations and become more sustainable…The International Energy Agency (IEA) defines biomass as being [organic matter available on a renewable basis, including] waste from industrial sources, or feedstock from plants or animals…Bioenergy is energy produced [from biomass and] represents around 9% of the planet’s primary energy supply…[Geothermal energy is] heat from below the Earth’s surface which can be used to produce renewable energy…
[Hydropower is the flow of water through turbines] producing electricity…[It is] the world’s largest source of renewable electricity…[Solar power is energy from the sun harnessed] through photovoltaic and concentrated solar power systems (CSP)…[Tidal power is energy] produced from the tides of the sea…[Wave power is ocean waves’] kinetic and potential energy…Wind energy is] the atmosphere being unevenly heated by the sun; irregularities of the Earth’s surface; and the Earth’s rotation…[and wind turbines to turn the wind’s kinetic energy] into mechanical power.” click here for more
The impacts of the energy transition are far-reaching. From the International Renewable Energy Agency via YouTube
“Humans are incredibly inventive.” From Bill Gates via YouTube
Ten years ago, wind was the disruptor; now it is the stabilizer. “What’s not to like?” From greenmanbucket via YouTube
Teachers want climate crisis training, poll shows; Survey says teachers feel ill-equipped to educate pupils, as school strikes continue
Matthew Taylor, 21 June 2019 (UK Guardian)
“A growing number of teachers want their pupils to learn more about the climate crisis and are calling for environmental training so they can prepare children for a rapidly changing world, [according to findings from YouGov/OxFam ahead of the latest round of] school climate strikes…[T]he results showed teachers and students agreed there needed to be a radical overhaul of the education system in response to the climate crisis…
More than two-thirds of teachers polled said there should be more teaching in UK schools about climate change, while three-quarters did not feel they had received adequate training to educate students on the subject. Around 70% agreed radical change was needed…School strikes are due to take place [Friday, June 21] in 80 towns and cities in the UK, with tens of thousands of students expected to take part…[U]p to 10,000 climate strike leaders from across Europe will gather in Aachen, Germany, for a pan-European rally…” click here for more
Political inaction on sustainable energy policies to blame for lack of progress on UN climate & development goals; Renewables now supply more than a quarter (26%) of global electricity production but current trends in the sector show that bolder policy decisions are needed across all end-use sectors to make our energy systems sustainable.
18 June 2019 (REN21)
Renewable energy is increasingly powering the world, but erratic policy making is holding the sector back from its potential contribution to cutting carbon pollution and meeting climate and development targets, according to REN21’s Renewables 2019 Global Status Report (GSR)…[It] shows that lack of political will is threatening to derail the crucial UN 2030 Climate and Development Goals…Only 44 governments have implemented carbon pricing policies, covering just 13% of global CO2 emissions…Continued support from governments around the world in the form of subsidies for the fossil fuel industry are propping up dirty energy…
The estimated total global subsidies for fossil fuel consumption were USD 300 billion in 2017, an 11% increase from 2016…Renewables now supply more than a quarter (26%) of global electricity production but the transport, cooling and heating sectors lag far behind in renewables adoption…In the US, city and state-level commitments in support of renewables increased and investment in renewables was at its highest level since 2011…More than 100 cities, ranging from Nairobi, Dar es Salaam, Auckland, Stockholm and Seattle use at least 70% renewable electricity.” click here for more
The global transition to clean energy…Despite all the progress, we’re still struggling to hit the climate emergency brake.
David Roberts, June 18, 2019 (VOX)
“…[T]he planet is warming up, and in response, people are trying to switch to cleaner energy, to heat it up less, or at least more slowly…[but] we’re still moving in the wrong direction [according to REN21’s Renewables 2019 Global Status Report (GSR)]. Global carbon emissions aren’t falling fast enough. In fact, they aren’t falling at all; they were up 1.7 percent in 2018…[and] we’re still pushing in the wrong direction. Globally, subsidies to fossil fuels were up 11 percent between 2016 and 2017, reaching $300 billion a year…[T]he effort to clean up is flagging. Total investment in renewable energy (not including hydropower) was $288.9 billion in 2018 — less than fossil fuel subsidies and an 11 percent decrease from 2017…[Much progress is described below, but] we’re still struggling to get ahold of the emergency brake…
…1) Renewables are pulling ahead in the power sector…2) Solar photovoltaics are leading the power sector charge…3) China is leading the solar PV charge…4) In fact, China is leading all the charges…5) Renewable energy is starting to make a dent in electricity…6) Solar is creating the most jobs…7) But electricity is only part of energy consumption, and not the largest part…8) Transportation is showing signs of rapid movement toward electrification…9) Cities are outpacing countries on clean energy…10) Progress is being slowed by fossil fuel subsidies…11) Energy intensity is declining, but not nearly fast enough…12) Renewables have a long way to go and a short time to get there…[The world’s governments urgently need to] bear down on heating and transportation…which will require policy support at every level…They could start by getting rid of those damn fossil fuel subsidies.” click here for more
Should we mourn the Clean Power Plan? The Clean Power Plan would have made a difference in the Southeast. It would have driven significant emission reductions.
Maggie Shober, June 18, 2019 (Southern Alliance for Clean Energy)
“…[Both the EPA’s Affordable Clean Energy (ACE) regulation and the Obama-era Clean Power Plan (CPP)] regulate CO2 emissions from existing coal and gas power plants, but the similarities stop there…[There] were always questions swirling about whether or not the CPP itself would ever become regulation…[On removing it from future models after the 2016 election, little changed because economics, not the CPP, is] driving coal plants to retire and utilities to invest in wind and solar…Load still is not] recovering to pre-recession growth rates as many utilities expected…The sum of the CPP state targets was 32% below 2005 levels by 2030…[A]t least some parts of the country appear to be on track…[T]he Southeast is not…
[T]he CPP would have made a big difference in the Southeast, and residents of these states will suffer greater health and economic hardships as a result of its repeal…The EPA is tasked with protecting health and welfare, and instead is protecting corporate profits…The proposed ACE would change what’s known as New Source Review (NSR)…[It] ensures that older plants have to be brought up to modern standards instead of operating indefinitely with high pollution levels…[The ACE changes to NSR would lead to older, higher polluting plants] being run more often… and newer, less polluting plants being run less often. That means more smog, heavy metals, and particulate matter that lodges in our lungs and gives our kids asthma…[The ACE] could allow owners to extend the life of these pollution-spewing coal plants…” click here for more
Renewable energy investment in 2018 hit USD 288.9 billion, far exceeding fossil fuel investment; Global investment 11 per cent down compared to 2017, driven in part by falling solar costs
18 June 2019 (United Nations Environment Program)
“Global investment in renewable energy hit USD 288.9 billion in 2018, with the amount spent on new capacity far exceeding the financial backing for new fossil fuel power, according to…REN21’s Renewables 2019 Global Status Report. The numbers show that while investment was 11 per cent down over the previous year, 2018 was the ninth successive year in which it exceeded USD 200 billion and the fifth successive year above USD 250 billion…The dip in investment in 2018 can be partly attributed to falling technology costs in solar photovoltaics, which meant that the required capacity could be secured at a lower cost…[There was] a slowdown in solar power deployment in China…[but] globally, solar was still the largest focus of investment, with USD 139.7 billion in 2018, down 22 per cent. Wind power investment increased two per cent in 2018, to USD 134.1 billion. The other sectors lagged far behind, although investment in biomass and waste-to-energy increased 54 per cent, to USD 8.7 billion…[Investment in new renewable power capacity] was USD 272.3 billion globally in 2018 (excluding large hydro)…[Investment in new coal- and gas-fired generating capacity] was USD 95 billion…
China led investment worldwide for the seventh successive year, at USD 91.2 billion…[but] this was down 37 per cent from 2017’s record number, due to a number of factors including a mid-year change in the government’s feed-in tariff policy, which hit investment in solar power…China also accounted for 32 per cent of the global total investment, followed by Europe at 21 per cent, the United States at 17 per cent, and Asia-Oceania (excluding China and India) at 15 per cent. Smaller shares were seen in India at 5 per cent, the Middle East and Africa at 5 per cent, the Americas (excluding Brazil and the United States) at 3 per cent and Brazil at 1 per cent…If China is excluded, renewable energy investment in the developing world actually increased 6 per cent to USD 61.6 billion, a record high…” click here for more
Sierra Club Commends New York’s Historic, Nation Leading Climate Legislation; Bill puts state on path to achieve 100 percent carbon-free electric sector by 2040 and economy wide
June 19, 2019 (Sierra Club Atlantic Chapter)
“…[T]he New York State Senate passed the strongest climate legislation in the nation as part of a three-way agreement with the Assembly and Governor Andrew Cuomo. The Climate Leadership and Community Protection Act…[is deeply rooted in climate justice, and widely supported and led by frontline community groups, environmental justice organizations, labor, environmental organizations including the Sierra Club…[It sets] the highest standards in the nation by mandating 85 percent greenhouse gas emissions reductions economy-wide by 2050, with incentives to reduce the impact of the last 15 percent; Mandates that New York sources 70 percent of its electricity from renewable sources, like wind and solar, by 2030, and achieves a 100 percent carbon-free electric sector by 2040; Codifies the Governor’s existing clean energy commitments, including a 3 percent utility energy efficiency target, 9 gigawatts of offshore wind, 3 gigawatts of energy storage and 6 gigawatts of distributed solar…
…[It also invests] 35 percent of state climate funds in frontline communities through efficiency, renewable energy, jobs programs and more; Protects disadvantaged communities by requiring an air quality monitoring program and prohibiting carbon offsets for the electric, transportation, and building sectors; Creates a framework by which the Department of Environmental Conservation, in consultation with the climate council and others, must craft regulations to implement emissions reduction targets across the economy, including the electric sector, performance standards for buildings, industry and other sectors, and transportation sector emissions reductions programs, including electrification…” click here for more
Bailout doubt – PG&E faces bankruptcy amid California's 'first climate change-caused emergency'; Stakeholders say few will benefit from bankruptcy, but alternatives have been dubbed "politically too hot to touch."
Herman K. Trabish, Jan. 22, 2019 (Utility Dive)
Editor’s note: PG&E’s bankruptcy has become a way of life in California and the power sector is determined to achieve state goals despite it.
As Pacific Gas and Electric (PG&E), California's biggest electricity provider, filed for bankruptcy at the end of January, the state and the utility laid the groundwork for better options. PG&E wants lawmakers to authorize a financial tool called securitization to raise capital. But many equate that to a bailout for a company they say should not be saved without complete corporate restructuring, considering its safety record. PG&E's preliminary Jan. 14 Securities and Exchange Commission (SEC) filing said bankruptcy is "the only viable option" after its stock value and credit rating plummeted. Settlement talks among the utility, wildfire victims, insurers, ratepayer advocates, power sector stakeholders and lawmakers, including just-inaugurated Gov. Gavin Newsom, were to no avail. PG&E's controversial history of safety violations and the rapidly rising costs from the past two years of wildfires made bankruptcy unavoidable, stakeholders told Utility Dive.
The bankruptcy process, now underway for nearly six months, is unlikely to greatly benefit any of the involved parties. Bankruptcy makes victims' claims subordinate to other utility obligations and is a gamble for PG&E because a bankruptcy court could judge the company harshly, McCallum Group President Patrick McCallum told Utility Dive. McCallum, who barely survived the 2017 Wine Country wildfire, leads a coalition of victims' groups. It is also likely to fail to address the bigger challenge of climate change, Center for Energy Efficiency and Renewable Technologies Executive Director V. John White told Utility Dive. "The wildfire threat has to be treated as California's first climate change-caused emergency, or losses on this scale will keep happening, quite apart from what happens to PG&E." The 2018 Camp Fire was the deadliest and most destructive in California history. It destroyed 18,661 structures and killed 86 people. When it started on Nov. 8, PG&E's stock price was $47.80. A day after the utility filed for bankruptcy, it was $6.19… click here for more
PG&E, SCE, SDG&E pursue subscriptions, time-of-use rates to drive more California EVs; As California regulators call for a more formal transportation electrification framework, the state's utilities are stepping up with pilot programs that address peak demand and rate concerns.
Herman K. Trabish, Jan. 23, 2019 (Utility Dive)
Editor’s note: The huge demand coming from Transportation Electrification can boost the power system or threaten it and these new plans are intended get the benefit and prevent the harm.
Policy-driven, ground-breaking, electric vehicle-specific rate designs from California's top utilities could break down cost barriers to driving electric and support grid stability while protecting ratepayers. In September 2018, California lawmakers enacted Senate Bill (SB) 1000 to advance the state's U.S.-leading transportation electrification effort. In December, the California Public Utilities Commission (CPUC) opened a proceeding to develop a formal transportation electrification framework. SB 1000 ordered the CPUC to, within an existing proceeding, consider rate designs that shift the EV charging load away from peak demand and address the demand charges in commercial and industrial (C&I) rates now impeding electric vehicle (EV) growth, CPUC EV Program staffer Carolyn Sisto told Utility Dive. The demand charge in C&I rates has become a barrier to EV growth in the commercial-industrial sector because the disproportionately high spike from charging an EV fleet can make driving electric more expensive than using a traditionally fueled vehicle.
The commission was already working toward the transportation electrification objectives in SB 1000, but in the new rulemaking, the CPUC directs the state's IOUs' focus to those objectives as well, said Sisto. In 2017, the CPUC approved a San Diego Gas and Electric (SDG&E) trial rate to shift residential EV charging as well as a new Southern California Edison (SCE) EV-specific rate to address demand charges. A precedent-setting Pacific Gas and Electric (PG&E) demand charge solution would create a new rate class to address C&I customers' EV load. Like the SCE and SDG&E rates, it proposes time varying pricing that acts as a signal to shift usage. Uniquely, it replaces the demand charge with a monthly subscription charge, which is a hybrid version of the energy subscription concept introduced by Navigant Director Lon Huber… click here for more
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