June 26, 2017
ENERGY WATCH #1 by Karel Beckman
The debate over the future energy market just got ugly (in the USA)
June 26, 2017
I think it’s fair to say that among those who are working to create a clean energy future, there are two camps. One believes we can move to a 100% renewables system in a matter of a few decades at acceptable cost, if we really want to – even without nuclear power. The other believes that this is not realistic, and that, although renewables are great, we will need nuclear power and fossil fuels (with CCS) for a long time to come (perhaps forever).
These two camps have just erupted into an open, bitter battle in the U.S.
In the first camp there is Stanford professor Mark Jacobson and associates who claimed, in a paper published in the Proceedings of the National Academy of Sciences (PNAS) in 2015, that the U.S. could meet all its energy needs by 2055 with a combination of solar, wind and hydroelectric power. Jacobson went on to launch the Solutions Project, which is waging a “100% campaign” across the U.S. and indeed the world, “charting pathways to clean, energy renewable energy” and trying to influence policymakers – with some success – to subscribe to the 100% vision.
Last week, however, on 19 June, a large group of prominent researchers from reputable institutions like Carnegie Mellon, the Carnegie Institution for Science, the Brookings Institution, the University of California and Jacobson’s own Stanford, published a peer-reviewed rebuttal in the same journal PNAS.
As MIT Technology Review puts it, it is a sharp critique, claiming the original paper “contained modeling errors and implausible assumptions that could distort public policy and spending decisions”.
Technology Review notes that “several of the nearly two dozen researchers say they were driven to act because the original authors declined to publish what they viewed as necessary corrections, and the findings were influencing state and federal policy proposals.”
Their fear is that legislation will mandate goals that can’t be achieved with available technologies at reasonable prices, leading to “wildly unrealistic expectations” and “massive misallocation of resources,” says David Victor, an energy policy researcher at the University of California, San Diego, and coauthor of the critique. “That is both harmful to the economy, and creates the seeds of a backlash.”
Jacobson has reacted furiously to the criticism, writing a response and saying that “the authors were motivated by allegiance to energy technologies that the 2015 paper excluded. ‘They’re either nuclear advocates or carbon sequestration advocates or fossil-fuels advocates,’ he said. ‘They don’t like the fact that we’re getting a lot of attention, so they’re trying to diminish our work.’”
Lead author Christopher Clack, chief executive of Vibrant Clean Energy and a former researcher at NOAA (National Oceanic and Atmospheric Administration), described Jacobson’s accusation that the authors were acting out of allegiance to fossil fuels or nuclear power as ‘bizarre’.
MIT Technology Review writes that “in the original paper, Jacobson and his coauthors heralded a ‘low-cost solution to the grid reliability problem.’ It concluded that U.S. energy systems could convert almost entirely to wind, solar, and hydroelectric sources by, among other things, tightly integrating regional electricity grids and relying heavily on storage sources like hydrogen and underground thermal systems. Moreover, the paper argued, the system could be achieved without the use of natural gas, nuclear power, biofuels, and stationary batteries.”
But among other criticisms, “the rebuttal argues that Jacobson and his coauthors dramatically miscalculated the amount of hydroelectric power available and seriously underestimated the cost of installing and integrating large-scale underground thermal energy storage systems. ‘They do bizarre things,’ says Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley, and coauthor of the rebuttal. ‘They treat U.S. hydropower as an entirely fungible resource. Like the amount [of power] coming from a river in Washington state is available in Georgia, instantaneously.”
Jacobson, however, maintains that ‘There is not a single error in our paper.’
Technology Review notes that “other models, including Kammen’s, do show that the U.S. can transition to nearly 100 percent zero-emissions energy technologies. But the established view among energy researchers is that it would require making use of nearly every major technology available and that the transition, particularly getting the last 20 percent or so of the way there, would be prohibitively expensive using existing technologies. One of the key missing pieces is affordable grid-scale storage that can efficiently power vast areas for extended periods when wind and solar sources aren’t available.”
The authors of the rebuttal “stress that cutting emissions as quickly as possible is a crucial goal”, but they are concerned that if the wrong pathway is taken, “that could lead to spending public resources on the wrong technologies, underestimating the research and development still required, or abandoning sources that might ultimately be necessary to reach the stated goals.”
One particularly contentious issue is the fate of nuclear power in the U.S. “While some interest groups remain opposed to the technology, many researchers believe it should be a crucial part of the energy mix,” notes the article, “since it’s the only major zero-emissions source that doesn’t suffer from the intermittency issues plaguing solar and wind.”
“Energy issues are complex and hard to understand, and Mark’s simple solution attracts many who really have no way to understand the complexity,” Jane Long, another coauthor and former associate director at Lawrence Livermore National Laboratory, said in an e-mail. “It’s consequently important to call him out.”
Call him out they did. The debate will no doubt not end here. (The Washington Post also reports on this story.)
ENERGY WATCH #2 by Karel Beckman
A realistic projection for renewable energy
June 26, 2017
Bloomberg New Energy Finance (BNEF) is known as a think tank that promotes renewable energy, so you would think they would be in the business of giving out optimistic projections for future renewable energy uptake. But nothing could be further from the truth.
BNEF’s 2017 New Energy Outlook (NEO) – which came out on 15 June and focuses exclusively on the electricity sector – seems to be quite a realistic assessment of what we can expect for global renewable energy. And this puts BNEF squarely NOT in the 100% camp.
Renewables enthusiasts may indeed be disappointed to hear that according to the NEO by 2040 34% of electricity generation worldwide is expected to come from wind and solar (48% of installed capacity). That’s compared to 5% today. Steep growth therefore, but it leaves two-thirds for other sources – and please note: we are talking here only about electricity, which is just 20% of energy demand.
It is important to know of course on what assumptions these projections are based. They are quite interesting. As NEO puts it, what sets the study apart is “that our assessment is focused on the parts of the system that are driving rapid change in markets, grid systems and business models. These include the cost of wind and solar technology, battery storage, electricity demand, electric vehicles and consumer dynamics.”
“In the medium to long term, the forecast is driven by the cost of building different power generation technologies to meet projected peak and average demand, country by country. The modelling then preferentially deploys least-cost technology options that change over time in line with shifting capital, operating and financing costs.”
“We explicitly model small-scale and large-scale battery systems, as well as taking a view on growth of demand response and charging electric vehicles.”
NEO “explicitly removes renewable energy subsidies once they have run their course, and does not assume national climate targets are met, unless a mechanism to ensure compliance has been legislated. For example, we do not include the US Clean Power Plan or assume the Paris Agreement is achieved.
The objective of the study, therefore, is not to provide a political document or a BNEF house view, but to highlight the changing fundamentals of renewable and conventional energy, how these may shape the future energy landscape and what opportunities and risks may arise for market participants as a result.”
In other words, the NEO is a “least-cost optimization exercise”. Renewables supporters may take heart from this: it implies that the outcome could be quite different if policies are actively applied to stimulate renewable energy or other low-carbon technologies. In this sense, the outcome may be regarded as rather positive for renewable energy.
What are some of the other main conclusions? We highlight what we regard as the most important or surprising:
- We anticipate renewable energy [i.e. electricity!] reaching 74% penetration in Germany, 38% in the U.S., 55% in China and 49% in India by 2040 as batteries and new sources of flexibility bolster the reach of renewables.
- “The levelized cost of new electricity from solar PV drops by 66% by 2040….The levelized cost of new electricity from onshore wind drops 47% by 2040, thanks to more efficient turbines and streamlined operating and maintenance procedures.
- We expect the levelized cost of offshore wind to decline 71% by 2040, helped by development experience, competition and reduced risk, and economies of scale resulting from larger projects and bigger turbines.
- By 2040, rooftop PV will account for as much as 24% of electricity generation in Australia, 20% in Brazil, 15% in Germany, 12% in Japan, and 5% in the U.S. and India.
- In Europe and the U.S., EVs account for 13% and 12% respectively of electricity generation by 2040. Charging EVs flexibly, when renewables are generating and wholesale prices are low, will help the system adapt to intermittent solar and wind. The growth of EVs pushes the cost of lithium-ion batteries down 73% by 2030.
- We expect lithium-ion batteries for energy storage to become a $20 billion per year market by 2040, a tenfold increase from today. Small-scale batteries installed by households and businesses alongside PV systems accounts for 57% of installed storage capacity worldwide by 2040.
- By 2030, wind and PV start to undercut existing coal plants on an operational basis in some countries, prompting an acceleration in the deployment of renewables and the decline of coal generation. Only 35% of new coal power plants that are in planning ever get built. That means 369GW of projects stand to be cancelled and global demand for thermal coal in 2040 ends up 15% lower than in 2016.
- Global coal-fired power generation peaks in 2026.
- Gas is a transition fuel, but not in the way most people think. Gas-fired capacity increases 16% by 2040 but gas plants will increasingly act more as a source of flexible generation needed to meet peaks and provide system stability rather than as a replacement for ‘baseload’
- European investment in renewables grows by 2.6% per year on average out to 2040, averaging $40 billion per year. Total investment in renewables across Europe reaches almost $1 trillion over 2017-40. Europe’s firm generating capacity shrinks by 29%, replaced by variable and flexible capacity.
- Half of European electricity supply in 2040 comes from variable renewables, posing challenges for grid and generators. With 97% of fossil fuel capacity in 2040 required for peak demand, under-utilized thermal plants are the norm. The changing grid creates opportunities for 103GW of new flexible capacity, including 56GW of batteries. These help with peak load, ancillary services, shifting demand or renewable supply and regulating frequency.
- Gas in Europe benefits from a wave of coal and nuclear retirements over the next decade, but power sector gas consumption never returns to the record level set in 2008 as the role of gas shifts from providing firm capacity to providing flexible generation. Nuclear generation drops 50% and the combination of sluggish demand, cheap renewables and coal-to-gas fuel switching slashes coal use by 87% by 2040. This drives down power sector emissions by 73% over 2017-40.
A lot to take in here. One thing that strikes me is that lithium-ion batteries may grow ten-fold, but from $2 billion to $20 billion globally by 2040 is not a gamechanger. Another interesting point: according to this report, solar and wind will only start to undercut existing coal plants by 2030. You often read that solar and wind are already cost-competitive with coal power, but there is a big difference of course between existing plants and new ones.
ENERGY WATCH #3 by Karel Beckman
Foot off the gas?
June 26, 2017
“Increased reliance on natural gas risks an emissions lock-in”, says a new report from Climate Action Tracker , released on 22 June, entitled Foot off the gas: increased reliance on natural gas in the power sector risks an emissions lock-in”.
Climate Action Tracker (CAT) describes itself as an “independent science-based assessment that tracks the emission commitments and actions of countries”. It is a joint project of Climate Analytics, Ecofys and the New Climate Institute. As the names of these organisations imply, they are at least partly climate activists, which complicates their analysis.
They state that “the future of natural gas is limited, even as a bridging fuel”, but it is not quite clear whether they mean “is” limited or “ought to be limited”.
Presumably the latter, as the report warns that “continued investments into the [gas] sector create the risk of breaching the Paris Agreement’s long-term temperature goal and will result in stranded assets.”
It is no secret, of course, that gas is a fossil fuel, but gas advocates believe gas can stay in the mix if it is combined with CCS (carbon capture and storage) and if methane emissions are limited. CAT, however, regards this as unlikely. “Although it is conceivable to decarbonise power from gas based on the technical approaches above [i.e. CCS and action against methane], it is unlikely that there would be a role for gas with CCS in the evolving power system”, says the report. “The increasing market share of renewables due to their rapid cost decline will leave only a small part of the electricity supply for non-renewables in most regions. This will add further cost pressures as the gas plant will not run at all times … .”
So here the argument is a little different: it is not “Paris” that will take out gas, but the fact that gas-with-CCS cannot compete with renewables on cost.
However, it is not quite clear what this argument is based on. The report notes that “the competitiveness of renewables versus gas with CCS is often underestimated in IAMs [integrated assessment models]. One reason resides in the slower reduction of renewables’ costs in such models, for instance compared to the recent rapid decline. At least as important is the fact that, due to implicit or explicit structural assumptions, IAMs are inclined to propagate energy systems with a historical, or present-day, analogue. For example, systems with a constant base load provided by natural gas with CCS are easier to model by the IAMs than novel system configurations in which gas, or indeed any alternative, is used as a modulating/balancing energy source complementing a large share of variable renewables.”
But this seems an argument against prevailing models rather than one based on an independent assessment of costs. It is difficult for the reader to judge how credible this is.
The report contains yet another argument against gas with CCS: it says that “capture rates” need to be improved, which it says is “challenging”. That may be true, but it does not make it impossible.
I was not convinced by this report, which is only 7 pages long in any case. It does not succeed in making the highly important debate around gas any more transparent.
ENERGY WATCH #4 by Karel Beckman
Carbon bubble, the next episode
June 26, 2017
The London-based Carbon Tracker Initiative (CTI) made a name for itself as the NGO that introduced the idea of the “carbon bubble” (“stranded assets”) to the world. We first reported on this in Energy Post in May 2014 (see this article by Sonja van Renssen) and if you search on our website for “carbon tracker initiative”, you will find many more articles on this revolutionary idea.
Because it can’t be denied that it has quickly conquered the world. The latest proof was the vote at the ExxonMobil annual meeting recently where shareholders forced the management to carry out an annual “stress test” of the company’s investments against climate risks.
Meanwhile, CTI is still at it, producing reports that purport to show that huge investments from oil and gas companies are “at risk” in a 2-degree world. Its latest analysis, called 2 degrees of separation, released on 21 June, claims, among other things that:
- US$2.3 trillion – around one third – of potential capex [in the global oil and gas sector] to 2025 should not be deployed in a 2D scenario compared to business as usual expectations.
- Company level exposure varies from under 10% to over 60% when considering the largest 69 publicly traded companies.
- Around two thirds of the potential oil and gas production, which is surplus to requirements in a 2D scenario [i.e. at risk of becoming stranded], is controlled by the private sector.
One thing that is new about this report is that was produced in collaboration with five major institutional investors: Swedish pension fund AP7, French fund Fonds de réserve pour les retraites (FRR), the UK’s Legal & General Investment Management, Dutch pension fund manager PGGM and Danish pension fund PKA.
The five institutional investors said in a joint statement: ”Investors are through an unprecedented commitment taking steps to reduce the risk of stranded assets within the oil and gas industry. Lack of transparency at company level has, however, been a bottleneck to understanding how companies are responding to the considerable changes in the energy market. This extensive research clearly emphasises that some companies have to reconsider their business strategy and will eventually lead investors to more efficiently price the financial risks associated with a 2 degree world.”
ENERGY WATCH #5 by Karel Beckman
What can we expect from biogas?
June 26, 2017
The Oxford Institute for Energy Studies (OIES) has just published a useful new report, written by Martin Lambert, about what we may expect from biogas as contributor to a low-carbon energy system. Main conclusion: biogas is not going to change the world but it can make quite a positive contribution to a decarbonized energy system.
Biogas production has seen strong growth in Europe – the number of biogas plants grew from 6,000 in 2009 to nearly 17,000 in 2015 – but its contribution to total gas and electricity use is still modest.
The report notes that “total European Union biogas primary energy production in 2014 was estimated at 14.9 Mtoe, up by 6.6 per cent from the previous year. 57TWh of EU electricity was produced from biogas in 2014, up 9 per cent from 2013”, which is 1.9% of total EU electricity generation of 3,032 TWh. Its contribution to total primary energy demand in the EU was around 1%.
Further growth is expected in the next 10-15 years: “in a recent presentation in Brussels, the European Biogas Association suggested that by 2030, European biogas production could reach 50 bcm/year, or around 10 per cent of the EU’s current natural gas consumption.”
The Green Gas Grids project, which ran from 2012 to 2014, funded by the Intelligent Energy Europe programme of the EU, “forecast a maximum technical biogas production (whether used as biogas or upgraded to biomethane) in the EU-28 in the range (in natural gas equivalent terms) of 150 to 250 Bcm/year, comprising around 100 Bcm from residues, and 50-150 Bcm/year energy crops. The report also postulated that around 33 per cent of the technical potential, or around 50 Bcm/year could be realised by 2030. This is based on reaching around 25 Bcm/year by 2020, based on achievement of the National Renewable Energy Action Plans, and (perhaps somewhat more arbitrarily) assuming a further doubling by 2030. While this is only around 10 per cent of forecast European gas demand in 2030, it is over half of the forecast indigenous European natural gas production (excluding Russia and Norway), and in that context is not insignificant.”
Currently, most biogas is produced through anaerobic digestion (AD), at relatively low temperatures. An alternative route is through high-temperature thermo-chemical processes, when it is called bio SGN (or in the U.S. renewable natural gas, RNG). This technology is still at an early stage.
Germany has by far the largest number of biogas plants in Europe, as can be seen in this chart from this chart from the European Biogas Association:
Biogas can also be upgraded by removing the CO2 to produce biomethane, potentially for injection into the natural gas grid. “Compared to the amount of raw biogas production, there has been only a relatively small amount of upgrading to biomethane”, notes the report. “In 2014, there were estimated to be 367 biomethane upgrading plants in Europe, 70 per cent of which injected gas into the grid, producing a total of approximately 1.4Bcm of gas. Representing just 0.3 per cent of total European gas consumption, this is not yet significant.”
What’s important to note, according to Lambert, is that the success of biogas strongly depends on government policy. In Germany incentives were drastically reduced in 2014, which has led to stagnation in biogas production. The German government was concerned about a large amount of crops used to produce energy rather than food.
In Sweden, biomethane production is encouraged by the government: some 57% of raw biogas production is upgraded to biomethane which is used for road transport.
According to the report, there is unlikely to be a lack of feedstock for biogas. The amount of feedstock depends strongly on other applications for biomass that compete with biogas. IRENA (International Renewable Energy Agency) has estimated “that global biomass use was around 50EJ (14000TWh) in 2010 and could more than double to around 100 to 150EJ by 203037, of which 20-35EJ will be in Europe (see Figure 6). The same study concludes that, even with constraints on the use of energy crops, there will be sufficient biomass resources to meet the expected demand.”
Source: IRENA: Global Bioenergy Supply and Demand Projections for the Year 2030 (published Sept 2014)
As to costs, they vary greatly. For raw biogas, “the main outcome of interest is the levelised cost of electricity (LCOE) of the resulting power generation. The International Renewable Energy Agency (IRENA) has estimated that the LCOE using biogas from a digester can range from 6-14 USc/kWh. The range is principally driven by feedstock costs – the low end being where manure or sewage is available free, and the high end where up to US$40/tonne is paid for energy crops. At the lower end of this range, the LCOE is comparable with the latest benchmark for onshore wind at 6.8 USc/kWh, and the higher end of the range is a little higher than the offshore wind benchmark of 12.6 USc/kWh”.
The estimated costs of biomethane “range from as low as 0.5 US$/m3 (equivalent to 4.7USc/kWh or 14 US$/MMBtu) to more than 1.5 US$/m3 (equivalent to 15USc/kWh or 42US$/MMBtu). With natural gas prices to industrial customers in Europe typically around 4 EURc/kWh47 (4.3 USc/kWh) biomethane at the lowest end of the cost curve is nearly competitive, but the higher costs are clearly uncompetitive in the absence of significant government subsidies.”
With regard to emissions, the report notes that “the assessment of greenhouse gas emissions is an extremely topic”, but nevertheless comes to positive conclusions: “It is reasonable to conclude that production of biogas from waste from all sources (agricultural, forestry, industrial and municipal) for the production of combined heat and power is a very effective GHG mitigation measure. The use of energy crops, and the upgrading to biomethane for injection into the natural gas grid, can still reduce GHG emissions, but the specific circumstances will need to be considered in each case to explore potential lower cost of abatement solutions.”
An important asset of biogas is that it can be used very well in combination with intermittent renewables at a decentralised level: “wind, solar, and biogas could be an effective combination on the path towards a low carbon, decentralised energy system”, a combination that is “already being demonstrated in practice in the BioEnergy Villages” in Germany.
“Several rural communities in Germany (for example Jühnde in Lower Saxony in the North and Freiamt in Baden-Würtemberg in the South) have been developed as BioEnergy Villages. Perhaps more accurately termed renewable energy villages, these employ a combination of wind and solar electricity generation, together with biogas-fuelled combined heat and power to meet all of the heat and power needs of the local community as well as being able to export surplus electricity to the grid. Such villages have clearly benefited from the generous subsidies available under earlier renewable energy legislation, and the economics of future installations will be very location-dependent, but it does provide a model of biogas providing a valuable contribution to a feasible low-carbon energy solution.”
In short, don’t expect miracles from biogas – but don’t ignore it either.
ENERGY WATCH #6 by Karel Beckman
There goes another battery startup: the failure of Aquion and what it means for grid storage
June 26, 2017
“By all measures that usually matter, Aquion Energy should have succeeded”. Thus starts a recent article on MIT Technology Review discussing “Why bad things happen to clean-energy startups”.
Clearly, MIT Technology Review is feeling slightly guilty by the failure of Aquion, which filed for bankruptcy in March: only a year ago, it had ranked the company number five on its list of 5-Smartest Companies! Clearly some soul-searching was in order.
But maybe MIT Technology Review should not be blamed too much, since Aquion, founded by Jay Whitacre, a materials science professor at Carnegie Mellon who previously developed batteries for Mars rovers at NASA, had raised nearly $200 million from prominent investors, including Bill Gates, Shell Technology Ventures and venture capitalists Kleiner Perkins.
What is more: “the company entered the market with a clear-eyed awareness of earlier missteps by battery startups. It took pains to avoid the use of rare materials. It relied on repurposed manufacturing equipment. And it identified niche markets where it might gain a foothold.”
Yet the company needed more money in March and when that was not forthcoming, it folded. What went wrong?
Certainly Aquion has not been the first battery manufacturer to fail. “EnerVault, which was developing what are known as flow batteries, put itself up for sale after failing to find additional investors in 2015. Later that year, liquid-metal battery startup Ambri laid off a quarter of its staff. Around that same time, LightSail Energy, which was struggling to develop technology to store energy as compressed air in carbon-fiber tanks, pivoted to selling its containers to natural-gas suppliers.”
As MIT Technology Review notes, “taken together, these struggles have deflated hopes for the emergence of affordable and practical grid storage anytime soon”. While that assessment may be overly dramatic, it is clear that alternatives to lithium-ion batteries are struggling to get off the ground.
There are two main reasons for this, according to the article: “First, the slowly developing market for advanced grid storage still isn’t large, in part because the technologies are immature and expensive. Second, and more important in the immediate term, the price of existing technology in the form of lithium-ion batteries has dropped far faster than expected, narrowing the promised benefits of new approaches like Aquion’s.”
As Ilan Gur, founding director of the Cyclotron Road program for energy entrepreneurs, who previously cofounded a battery company that was acquired by Bosch, puts it: “Don’t hold your breath for the things that come after lithium-ion. We’re much more likely to ride the lithium-ion cost curve for another few decades.”
Although many people are convinced that lithium-ion isn’t the best option for full-scale baseload grid storage, its success nevertheless makes it extremely hard for any alternative options to get off the ground. New alternative technologies need long-term financial support and that is hard to come by. As the article notes, it’s not just the actual costs of lithium-ion that are problematic, the projections of further cost reductions into the future – even though they may never materialize – put a chill on investors.
And investors face another uncertainty: it’s still “anyone’s bet” what alternative storage technology, or which combination of technologies, will prove to be the one that will ultimately displace lithium-ion in grid storage.
The good news, as the article puts it, “is that the market for large storage systems is widening as more wind and solar energy projects are built, and as factories look to shave costs during peak usage times. And the economics of grid storage are becoming more favorable as additional renewable generation comes online and more aging fossil-fuel plants shut down.”
Nevertheless, “market mechanisms alone” may not do the trick. “Nascent storage technologies are fighting forces embedded deep in the core of capitalism. Markets consolidate around dominant technologies and companies. It often takes a radical advance to shake up the old order, and in the energy sector those don’t come along often.”
That may only leave government funding as a last resort. But this may not be forthcoming in the age of Donald Trump – at least not in the United States.