Friday, April 10, 2015

Customers Will Leave the Grid Behind in Droves Over Next 10-15 Years

Rocky Mountain Institute has just published a fascinating study on the future of "grid load defection" in the U.S.A. under likely pricing scenarios.  You can download it here:

There is now significant concern in the U.S. -- and there SHOULD be significant concern in Japan -- about the likely failure of the traditional utility business model, as revenues decline once customers can self-generate electricity on an economic basis using solar PV and, eventually solar PV + battery storage.

One response is to charge customers a fixed amount for maintaining the grid, even if they reduce their consumption significantly based upon self-generation.  RMI's study suggests that such approaches only prolong the inevitable.  Over the next 10-15 years, almost everywhere in the U.S. a combination of solar PV + battery storage will become economically optimal, causing customers to purchase much less power and pushing down utility revenues.

The RMI study posits maximum potential customer defection in the Northeast U.S. at 50% of residential and 60% of commercial customers by 2030.

They highlight the need for new utility business models and new regulatory approaches to avoid this.  Of course, the faster on-grid electricity prices rise ... the faster defection will occur.  And the faster solar PV and storage costs decline ... well, you get the picture.

According to RMI, "although they could represent significant load loss, customers’ grid-connected solar-plus-battery systems can potentially provide benefits, services, and values back to the grid, especially if those value flows are monetized with new rate structures, business models, and regulatory frameworks."

But there is a major risk of a huge new group of centralized generation "stranded assets".


Now think about the situation in Japan where on grid power is much more expensive, and the cost is going up much more rapidly, and the current central planning process to decide on "energy mix" is giving a major role for new coal-fired generation and nuclear -- two generation sources that are not currently "economic" and so are just not being built in the U.S. ... and in many cases being mothballed.  What is the likely result?

Renewables in ... Texas

Japanese involved in the energy business and energy policy with whom I speak often marvel at the U.S. "shale gas revolution".  They envy the U.S. access to cheap fossil fuels.  Yes, natural gas is dirt cheap and the U.S. is now, again, the #1 oil producer in the world.

But they are much less aware that the fastest growing area of electric power generation in the U.S. is not gas, but renewables -- solar and wind.  Well of course, they think, in someplace like California where liberals from Hollywood support a governor like Jerry Brown and drive aggressive renewables targets.

But wait, renewables in Texas -- the heart of the "oil patch"?

Indeed, Texas is the #1 producer of wind power in the U.S.A.

And this article in Scientific American highlights how solar PV is going to play a major role in Texas.

Austin, Texas plans almost 1GW of utility scale solar supply by 2025.  And they plan to do it while maintaining affordability -- requiring lower than average utility bills and holding annual increases below 2% (the Kuroda BOJ inflation target, coincidentally).

Well, the article focuses on liberal Austin, Texas, home to University of Texas, Austin and the State Capital.  But Austin is a city of almost one million population, and growing very rapidly.  Austin's electric utility is at 25% renewable energy supply today and plans to be at 55% renewables by 2025.

It is indeed a Brave New World when a major city in the heart of the oil patch plans to be a 55% renewable electricity supply within ten years.

Meanwhile, Japan is building lots more coal plants and hopes to get to ... maybe 25% renewables by 2030?  And they divide the world into "baseload" and "non-baseload"?  Huh?

Thursday, February 5, 2015

Cheap Oil ... will not kill Solar

I just read an interesting short Bloomberg article about why solar PV will survive cheap oil prices.  Of course, it is titled "Seven Reasons ... "  I hate these list-like articles ... attempts to attract online readers who are accustomed to to bite-sized content, rather than serious analysis.

And, of course, the article has the obligatory cool chart.  The same readers who want a "seven reasons" headline and a bullet point list also want charts!

But this chart I really do enjoy.  A reprinted Bernstein research comparison of cost of solar and various fossil fuels, per mmbtu equivalent.  Yes, solar is still more than Henry Hub gas.  But look at that declining cost curve!

Thursday, January 8, 2015

Electricity Storage Makes Dramatic Advances

This morning (January 18 2015) the Nikkei carries an article highlighting a Sumitomo Denko announcement of their plan to cut the cost of energy storage to "1/10" of current levels.  Sounds impressive.

Well ... not quite THAT impressive.  The article focuses on Sumitomo Denko's "Redox Flux" batteries.  Yes, these are one of several impressive battery technologies now being advanced globally.  Sumitomo Denko's target is to cut cost to 20,000 to 30,000 yen per kWh, and to have a large scale product available commercially by 2020.  The important points -- redox flow batteries do not have a limited number of cycles, so conceivably can last over a decade and be consistent with the life of a solar PV facility.  This compares with Lithium Ion and NAS, which have limited cycle lifes.  Also, Redox Flow is safer.

The article does not mention any of the other recent efforts OUTSIDE Japan involving redox flow (more specifically vanadium redox flow) that have been in the renewables trade press over the past year.  I collected a few of these in recent months.  These products are NOT in the 200,000-300,000 yen per kWh range.  Rather, prices are already sliding toward the $500 per kWh range (around 60,000 yen at current exchange rates), and are likely to go lower fast.

So if Sumitomo Denko does not roll out its product until 2020, the main question is, will the market have already passed it by?  Has the market already, today, passed it by?

CellCube model batteries:  Gildemeister -- already available. (now part of DMG Mori Seiki)

Unienergy -- currently $700 to $800 per kWh storage, when scale up will be around $500.

Imergy -- driving costs down from $500 toward $300 per kWh storage.

Eos Energy -- $160 per kWh storage product now taking orders for 2016 delivery!

For a note on ViZn's Zinc Iron Redox Flow batteries, see Peter Detwiler's November 2014 Forbes Post:

And his 2014 year-end post on storage generally as one of the ten major themes of the past year: