How much is a kWh?

Hello Readers,

As I was writing my series on Net Metering, it was pointed out to me that most people are not especially familiar with some of the units that I used in the article. Thus, in this post, I would like to offer a primer on units that are commonly used when talking about electricity (and how they relate to renewable energy and energy use). At the bottom of this post, I have also included a glossary of Energy Industry Terminology that you may encounter while reading about renewable energy and energy use.

What's a Watt?

A Watt (W) is a basic unit of power measurement. Watts are used to measure how quickly energy is consumed by or generated by a system.

But what about all of the prefixes?

Unit Name	Abbr.	Meaning	At This Scale
Microwatts	μW	1/1,000,000th Watts	Wrist Watches
Milliwatts	mW	1/1,000th Watts	Laser Pointers
Watts	W	1 Watt	LEDs
Kilowatts	kW	1,000 Watts	Average US Households
Megawatts	MW	1,000,000 Watts	Aircraft Carriers
Gigawatts	GW	1 Billion Watts	Medium Size Cities
Terawatts	TW	1 Trillion Watts	Large Countries

Note: whether a prefix is capitalized or not can alter its meaning in some cases.

How about a Watt-hour?

A Watt-hour (Wh) is a basic unit of energy measurement. Watt-hours are used to measure how much energy is consumed by or generated by a system.

1 Watt-hour is the amount of energy that would be consumed by or generated by a system if the system operated at power level of 1 Watt for a time period of 1 hour. Note that, all of the prefixes listed above apply to Watt-hours the same way that they apply to Watts (e.g. 1 kWh = 1,000 Wh).

Energy Used	At This Scale
15 Wh	Compact Fluorescent Bulb for 1 hour
250 Wh	Xbox 360 and LCD Television for 1 hour
1 kWh	Average US Household for 1 hour
23 kWh	Nominal Rating of Electric Vehicle Battery
12 MWh	Average US Household for 1 year
20 GWh	Small US Town for 1 year
57 TWh	Total Massachusetts Electricity Consumption (2010)
3,750 TWh	Total US Electricity Consumption (2010)

Watts or Watt-hours?

Despite the similarity in name a Watt-hour is very different from a Watt!

For example, If I asked you, "How much power are the appliances in your house using right now?" Your response should be something like, "They are consuming 800 W."

Likewise, If I asked you, "How much energy do the appliances in your house use in a year?" Your response should be something like, "They normally consume about 9,000 kWh."

If you used the two units interchangeably (such as answering the first question as "800 Wh" instead of "800 W), it would be the same as confusing any other two units.

For example, if I asked you, "How fast were you driving when the cop pulled you over?" and you answered, "About 30 miles." In this case, your answer simply does not make sense!

Appliance Power

The more Watts an appliance is rated at, the more energy it consumes. You can think of this as describing how 'hungry' an appliance is. That is, how much energy does the appliance need to consume in order to do its job? In many cases, a higher power rating means an appliance can work more effectively. Of course, a higher rating does not necessarily mean that an appliance is doing a better job, sometimes it can mean a lack of efficiency. To put this in perspective, let me offer two familiar examples.

Example 1: Microwaves A 600 W microwave will typically take longer to cook your TV dinner than a 900 W microwave. In this case, the 900 W microwave is 50% more powerful than the 600 W microwave, which allows 50% more energy to be applied toward cooking your TV dinner each second that the microwave is running. In this example, the added power means the job is done more effectively. Example 2: Light bulbs A 100 W incandescent light bulb can often be replaced with a 25 W compact fluorescent light bulb and essentially the same amount of light will be provided. With each light bulb, enough light is provided to read a book each second that the light is turned on. In this example, the incandescent bulb is more powerful but less efficient, so a lot of energy is wasted by heating up the coils in the bulb.

Reading an appliance's power rating can also, sometimes, be a bit misleading. Some appliances - such as microwaves - have straight forward power ratings. (e.g. A 900 W microwave should be using 900 Watts of power when it is in use.) However, other appliances have power ratings listed that represent their maximum energy use.

Refrigerators, for example, are typically plugged in and 'turned on' all of the time, but a 720 W refrigerator is not constantly using 720 Watts of power. Instead, refrigerators may use their rated power for 5 minutes and then use no power for 25 minutes before switching back on again. In this case, a 720 W refrigerator would have a peak power consumption of 720 W and an average power consumption of 120 W (or 720 W x 5 minutes/30 minutes).

Generator Power

The more Watts a generation system is rated at, the more powerful it is. You can think of this as describing how 'strong' the generator is. That is, would energy being generated feel like a blast from a fire hose? Or, would it feel more like a squirt from a small water pistol?

Electric generator power ratings can also be a little tricky. For most types of generators (such as coal power plants, nuclear power plants, wind turbines, etc.), the so-called nameplate capacity indicates the maximum possible power generation under optimal conditions. However, solar photovoltaic (PV) generation systems can be especially confusing, because they have two nameplate capacities: an AC nameplate capacity and a DC nameplate capacity.

The AC nameplate capacity of a PV generator is relatively straightforward; it indicates the maximum AC power output that the system's inverter(s) can produce. On the other hand, the DC nameplate capacity of a PV generator indicates the expected cumulative DC power output for all of the solar PV modules under Standard Test Conditions (STC) without applying any derates, which in some cases compound to result in an actual output that is much higher than the DC nameplate capacity (see description below).

Solar PV Industry: Standard Test Conditions (STC)

In the PV industry Standard Test Conditions (STC) describe the production of a solar PV module at 25°C (77°F) at sea level with 1000 W/m² of incoming solar radiation (irradiance). While changes in atmospheric pressure can contribute minor changes in the actual output, changes in temperature and irradiance significantly alter the actual output of a solar PV module at different locations and throughout the year (and even throughout a single day). Depending on the location and time (and the amount of moisture and other particulates in the atmosphere) an array of solar PV modules may receive 100-1400 W/m² of solar irradiance during the daytime. This range includes irradiance both less than and greater than the STC irradiance. Greater irradiance will allows for a derate ratio that is greater than 1. Also, the cells in solar PV modules are better able to transfer electricity in cooler temperatures, which also allows for a derate ratio that is greater than 1. As a result, on a hot (cloudy) summer day a solar PV module will probably have  much lower output than the DC nameplate capacity. Conversely, on a cold (sunny) winter day a solar PV module is likely to have an actual output that is much higher than the DC nameplate capacity.

In any case, it is important to remember that the nameplate capacity of a generator is a nominal power rating, so it alone will not tell you how much energy a generator produces in a year. To determine a generator's annual energy production, you will need to multiply the nameplate capacity by the capacity factor and the amount of time in a year (i.e. Nameplate Capacity [W]x Capacity Factor x 8,766 hours = Energy Production [Wh]).

Other Terminology

Well, unfortunately, it would take an entire book or a semester course to explain all of the nuances of power, energy, voltage, and current related to energy generation and consumption. However, to help you along, I have put together a brief glossary of terms that are commonly used in the energy industry. I decided to put them in a logical (rather than alphabetical) order, so that you can read the glossary a bit like a book.

Glossary of Energy Industry Terminology

Nameplate Capacity	The maximum* potential power output or consumption for which a generator or appliance is rated to operate under optimal conditions (so called because this is often the nominal value listed on the name plate of the system).
Derate	A multiplier that describes what portion of a nominal system output remains intact after the effect of a non-optimal or non-standard condition is considered (often used to calculate the impact of changes in operating temperature or other environmental variables).
Capacity Factor	The Actual Power Output compared to the Nameplate Capacity over a period of time (typically as a %).
Availability Factor	The portion of time that a generator is physically able to operate (as opposed to being offline for maintenance; typically as a %).
Peak Power	The maximum amount of power that is actually generated or consumed during a defined period of time.
Average Power	The total amount of energy generated or consumed during a defined period of time divided by that amount of time.
Load Factor	The Average Power divided by the Peak Power for a defined amount of time (normally used to describe how well a utility grid is utilized; typically as a %).
Direct Current (DC)	Refers to power that is generated, consumed, or transferred at a steady voltage during normal operation (commonly used in batteries and solar photovoltaic modules).
Alternating Current (AC)	Refers to power that is generated, consumed, or transferred using a fluctuating voltage, which causes the current to alternate directions (commonly used in household appliances and long distance utility lines).
AC Voltage (VAC)	The voltage range over which AC power fluctuates (in the US, household electrical outlets nominally operate at ~120VAC, which means the actual voltage fluctuates between +120V to -120V many times per second).
Grid Voltage	Refers to the AC Voltage that must be maintained on a utility grid in order to ensure safe and reliable operation (neighborhood utility lines typically operate between a few hundred volts and several thousand volts).
Grid Frequency	Refers to frequency with which Grid Voltage fluctuates each second (in the US, household electrical outlets nominally operate at ~60Hz, which means that each second the Grid Voltage fluctuates through 60 cycles from +120V down to -120V and back up to +120V).
Inverter	A device that turns Direct Current (DC) power into Alternating Current (AC) power (a common component of solar photovoltaic generation systems).
Converter	A device that turns Alternating Current (AC) power into Direct Current (DC) power (often referred to as "AC Adapters" and are used in appliances and electronic devices that run DC power or rechargeable batteries).
Transformer	A device used to increase or decrease voltage (higher voltages are used to transport power over long distances with minimal losses; lower voltages are needed to operate common appliances).

*For solar photovoltaic modules, the Nameplate Capacity typically indicates the DC power output during standard test conditions of the module during its first year of operation.

I hope that you found this post useful. In the future, I will try to link to this post whenever I have included one of the terms listed above.

Cheers,

Sean Diamond

Massachusetts Utility Net Metering Cap

Hello Readers,

Earlier in this series, I described how utility net metering caps conflict with renewable energy installation goals. In this post, I will build upon the context established in the previous post about the Massachusetts Renewable Portfolio Standard (RPS), and I will explore the purpose of and issues with the net metering cap in Massachusetts.

To begin, let us consider the question: What is the purpose of capping net metering rules in the first place? There are two possible reasons why a net metering cap would have been introduced into the regulations: (1) there are physical safety concerns related to allowing significant percentages of net metered systems to interconnect or (2) utility companies lobbied for its introduction.

Safety Concerns with Net Metering

As I described in my graduate dissertation, the addition of a large percentage of intermittent renewable generation, such as solar and wind DG systems, has the potential to cause power quality problems on a non-smart utility grid. In other words, without sufficient demand response and/or energy storage capacity incorporated into grid, the modern utility grid infrastructure may not be able to handle large swings in power output (such as those that may be associated with changing wind speeds or clouds passing over a photovoltaic system) especially if intermittent renewable systems account for roughly 20% or more of a utility company's annual peak demand.

Even so, it is important to note that both DG-scale and large-scale (non-DG) intermittent renewable systems have the potential to cause physical stress on the utility grid infrastructure. In fact, the spikes and falls in production that can be problematic for the grid as a whole have a tendency to average-out across an aggregate of many DG systems, and therefore provide more stable grid voltages compared to a single large-scale system. Again, renewable DG systems should theoretically be favorable for the grid and provide a reason to encourage as much net metering as possible.

So, again, why put a cap on net metering? Understandably, no one wants huge swings in grid voltages to cause rolling brown-outs and damage to appliances, so perhaps a cap at 15-20% of the annual peak demand may be warranted if the grid is too 'dumb' to handle the input of renewable DG systems. However, in Massachusetts the cap has been established at 1% of annual peak demand for homeowners and businesses and at 2% of annual peak demand for municipalities and other government entities (for at total cap of 3% of annual peak demand).

National Grid's Net Metering Cap

National Grid’s historical peak load of 5,131 MWs occurred on August 2, 2006 in Massachusetts Electric territory; making the 1% limit 51.31 MWs and the 2% limit 102.62 MWs. As of July 5, 2012 in Massachusetts, there are 45,244 KWs with net-metering service under the 1% limit and 11,291 KWs with net-metering service under the 2% limit. As of July 5, 2012, there are 443,588 KWs with applications in the process of being interconnected under the 1% limit and of those 64,211 KWs have returned the Schedule Z.

Excerpt from National Grid Net Metering Website

Keeping in mind that 1,000 kW equals 1 MW, it is clear that, utility companies such as National Grid, already have more applications to interconnect net metered DG systems than they have room under their 1% private cap. This begs two questions:

• Why is there a larger set aside for public entities (i.e. a 2% cap for municipalities and other government entities) in Massachusetts?
• What is going to happen to all of the private entities that are applying to interconnect DG systems in Massachusetts?

As it turns out, the Massachusetts DPU is already arranging for the creation of a waiting list for entities attempting to interconnect DG systems after the cap limit is reached (see pdf). However, what good will this do if the net metering cap does not increase? The answer is appears to be little-to-no good at all.

Lobbying for a Net Metering Cap

Ostensibly, it is plausible that utility companies would have lobbied the state legislature on the issue in order to protect their profit margins. That is, logically, offering more net metering credits to DG system owners results in a proportionate decrease in the revenue that a utility company is able to collect, and therefore a proportionate decrease in profit margins. Thus, it would be equally logical in most cases for utility companies to lobby the legislature in support of a cap on net metering credits, thereby protecting utility company profit margins.

As I said, in most cases this would be logical, and in many states this may very well be the case. However, in Massachusetts in particular this makes very little sense due to a provision known as decoupling, which connects utility company profits with the number of customers served rather than the amount of electricity consumed.

Decoupling

The Department of Public Utilities (DPU) [...] issued an Order that will begin the process of "decoupling" rates from sales volume for all of the state's electric [...] distribution utilities, in order to encourage utilities to help their customers reduce their energy consumption and take advantage of on-site renewable energy, as required by the Green Communities Act, the comprehensive energy reform law [...] signed by Governor Deval Patrick. [E]lectric utilities will file rate plans that separate, or decouple, their sales of electricity [...] from the revenues they need to collect in order to maintain the electricity [...] distribution system they are responsible for. [...] Utilities are expected to file decoupled rate plans with the [DPU] as existing rate plans expire - for most companies, by 2012 - though companies can file sooner on a voluntary basis.

Excerpt from Mass DPU Press Release

Thanks to Massachusetts' implementation of decoupling, there is little-to-no direct financial incentive for utility companies to obstruct customers looking to take advantage of renewable DG systems. Under current regulations, utility company profits will remain the same regardless of how much electricity is consumed.

Unfortunately, I do not have the personal resources to thoroughly investigate the lobbying practices of the utility companies on this matter. However, given this understanding of decoupling, it is tough to imagine that utility companies would have invested much effort or money into lobbying in favor of a net metering cap.

Although, on a related note: in a personal, off-the-record discussion with an employee of a utility company, it was suggested that part of the reasoning behind the net metering cap may simply be a lack of qualified personnel. That is, in Massachusetts, which has only recently seen a significant private sector interest in renewable DG systems with the introduction of the Solar Carve-Out of the RPS, utility companies in Massachusetts do not have enough qualified staff to safely and responsibly handle the incoming interconnection requests in a timely manner.

A Possible Solution

To summarize, capping net metering may be providing utility companies some breathing room needed to retrain current staff and/or hire qualified staff. Likewise, it may also be providing the utility companies with an opportunity to figure out how to make the smart-grid smarter (i.e. better able to handle high percentages of intermittent renewable systems).

If either of the above justifications for a net metering cap are the case in Massachusetts, that ought to be made clear to the public and the policymakers. Also, instead of setting a single net metering cap, which provides homeowners and businesses no opportunity to make plans beyond the limits of the current cap, legislators should layout a growth schedule for the net metering cap.

This growth schedule should be clearly defined and - importantly - must lead the growth of the RPS goals by at least a year. If the net metering cap remains stagnant or does not out-pace the RPS in Massachusetts: DG installers, financiers, and potential DG system hosts will continue to be frustrated and delayed by an inability to plan ahead, which will be detrimental to everyone interested in meeting the RPS goals or holding a job in the green energy industry in Massachusetts.

Requiring the utility companies to increase the net metering cap at a pre-defined rate will offer everyone involved some project planning certainty. Also - if implemented correctly - a scheduled net metering cap increase will provide utility companies the incentive they need to safely and responsibly implement beneficial smart-grid technologies, which will improve grid efficiency and reliability regardless of the success of the RPS in Massachusetts.

Sincerely,

Sean Diamond

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Massachusetts Renewable Portfolio Standard

Hello Readers,

In an earlier post, I described how, in general, the low caps on utility net metering rules undermine the goals established in a state's Renewable Portfolio Standard (RPS). Now, I will take a look at the specific case of Massachusetts, which has an aggressive RPS program and already has utility companies running into the net metering cap.

In this post, I shall provide some background on the Massachusetts RPS. Then, in the next post, I will delve deeper into some of the reasoning behind putting a cap on net metering rules in the first place before finally discussing a possible solution to the issue.

Class I Resources

In Massachusetts, eligible Class I resources include: photovoltaics (PV); solar thermal-electric energy; wind energy; ocean thermal, wave or tidal energy; fuel cells utilizing renewable fuels; landfill gas; energy generated by certain new hydroelectric facilities, or certain incremental new energy from increased capacity or efficiency improvements at existing hydroelectric facilities; low-emission advanced biomass power conversion technologies using fuels such as wood, by-products or waste from agricultural crops, food or vegetative material, energy crops, algae, biogas, liquid biofuels; marine or hydrokinetic energy; and geothermal energy.

As described by DSIREUSA.ORG

Since 2003 Massachusetts has had an RPS, which has been increasing by 1% per year since 2008 and shall continue to increase by 1% per year without a legislated limit. By the end of 2012, the Massachusetts RPS requires that utility companies ensure at least 7% of the electricity they sell is produced by Class I resources.

Also, since 2010, the Massachusetts RPS has included a Solar Carve-Out, which specifies that a certain portion of the RPS must be met using energy produced by in-state solar photovoltaic (PV) generation systems that are 6 MW or less. Under the current legislation, the Solar Carve-Out in Massachusetts is ultimately limited to 400 MW of total installed capacity.

However, the requirement that each system must be 6 MW or less means that at least 400 MW of solar distributed generation (DG) systems (officially defined as generation systems 20 MW or less) will need to be installed over the next several years. As we discussed in the previous post, the primary means of DG installation is through net metering interconnection with the local utility company, so it is likely that the 400 MW of solar DG systems will be net metered. Furthermore, even after the Solar Carve-Out is fulfilled, solar DG systems may still be used to meet the general Class I requirement of the RPS.

1% Per Year

The Massachusetts RPS quota is mandated to continue to grow at an overall rate of 1% per year. This breaks down to roughly 580,000 MWh of additional Class I electricity generated per year.1 If the entire Class I requirement were met only through solar PV systems, roughly 482 MW of new solar PV generation capacity would need to be installed each year.2 Likewise, if the entire Class I requirement were met only through wind turbine systems, roughly 265 MW of new wind generation capacity would need to be installed each year.3

It is unlikely that any single Class I technology will fulfill the entire annual RPS increase during any particular year. Instead, each year a combination of new Class I technologies will need to be installed on a massive scale. But what does that mean? Consider some examples of renewable energy installation projects at a scale comparable to the annual increase in the RPS:

• If the Cape Wind project (420 MW) were fully operational, it would only fulfill roughly one and half years worth of the increase in the RPS requirement.
• When the entire Solar Carve-Out (400 MW) is met, it will not cover an entire year of the increase in the RPS requirement.
• The Sihwa Tidal Power Plant (254MW) is the largest wave powered generator in world, which produces 552,000 MWh per year. It is located in South Korea and is part of a tidal barrier that stretches nearly 8 miles in length across a tidal inlet creating an artificial lake.

In general, all renewable energy projects have the potential to provide a variety of benefits to system owners, those seeking domestic green energy jobs, and utility companies attempting to comply with the RPS. Of course, larger individual projects (such as the Cape Wind project and the Sihwa Tidal Power Plant) involve especially complex installation and pre-installation processes, which may involve a multitude of stakeholders and may require years of studies and permitting.

As a result, such mega-scale renewable projects can take years before they begin and can cause massive, localized environmental disruptions. On the other hand, hundreds of micro-scale DG projects (such as those mandated by the Solar Carve-Out) can be installed with relative ease, provided that they make financial sense and the regulatory hurdles do not turn into stone walls.

Unfortunately, even before the Solar Carve-Out requirement has been met, utility companies - such as National Grid - have already received enough DG interconnection applications to cause concern about their net metering cap. In this case, the net metering cap regulatory hurdle may simultaneously stonewall projects and make them less financially viable. In the next post, I will take a look at the net metering cap in Massachusetts.

Sincerely,

Sean Diamond

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Notes from the "1% Per Year" Box:

1)	Estimate based on available data from the US Energy Information Administration (EIA) Electricity Data website - spreadsheet: Retail Sales of Electricity by State by Sector by Provider (EIA-861).
2)	Estimate based on the PV Watts generation calculator, which suggests that 1 MW of solar PV capacity aligned south at a 20 degree inclination can produce about 1,202 MWh/MW per year in Boston, Massachusetts.
3)	Estimate based on information provided on the National Wind Watch website, which suggests a generation rate of 2,190 MWh/MW per year is not unreasonable given a 25% capacity factor.

Utility Net Metering Caps Undermine Renewable Energy Installation Goals

Hello Readers,

As you may know, many states have set up aggressive Renewable Portfolio Standards (abbreviated RPS, and defined below) in an effort to promote clean energy job creation, foster the development of fledgling domestic energy industries, and address pollution and climate change issues. Even though policies vary widely (see map), only 12 states do not have any RPS.  Furthermore, in almost every state that has an RPS, the end-goal of the policy is to ensure that 10-33% of electricity is being generated by renewable sources within the next 5 to 15 years.

Renewables Portfolio Standards (RPS)

Renewable portfolio standards (RPSs) require utilities to use renewable energy or renewable energy credits (RECs) to account for a certain percentage of their retail electricity sales -- or a certain amount of generating capacity -- according to a specified schedule.

As defined by DSIREUSA.ORG

That is to say that: 38 states (and Washington DC) have laws mandating that by the year 2025 at the latest, 10% or more of the electricity consumed in the state must be generated from renewable energy sources (commonly solar, wind, and/or biomass). However, in many cases there are very low caps put on the state regulations that require utility companies to offer net metering to customers.

Net Metering Rules

The definition of 'net metering' varies from state to state, but in the narrowest definitions it at least allows for the owner of a distributed generation (DG) system to be credited or compensated on a 1:1 basis for electricity sent back to the utility grid (as opposed being used on-site). The credits or compensation are then applied to a customer's account to negate other electricity usage. In most definitions, credits may be saved and applied over the course of a 12 month period. In broader definitions, net metering can involve crediting multiple billing accounts for one customer and/or multiple billing accounts for multiple customers, which may or may not be limited to a specific geographic area.

In a very real sense, when electricity is generated, it is used up by the nearest possible consumer. That is to say that, the energized electrons do not care who is paying for the electricity, they just want to get rid of their energy as soon as possible. To understand the impact of this physical reality, let us consider an example, wherein your neighbor has a solar distributed generation (DG) system on their roof and they are not using up all of the energy it is producing during any particular second.

In this example, it is likely that the appliances in your house are running off of your neighbor’s solar DG system rather than the coal power plant on the other side of town. Furthermore, the utility company is benefitting from your neighbor’s solar DG system, because the coal plant does not have to run as hard (using less fuel) and because the power lines running across town are under less stress (requiring less maintenance in the long term). However, during the times when your neighbor’s system is producing less than they are using, your neighbor is drawing electricity from the other sources on the grid just like everyone else.

To ensure that utility companies are fairly compensating DG system owners for the benefits they provide, basic net metering regulations typically require that a kWh of electricity sent back onto the grid from a DG owner negate the financial burden of a kWh equivalently being consumed by the same DG owner.

Unfortunately, not every property is ideally suited for installing solar and wind DG systems, so for many businesses and homeowners it is less financially viable to install a DG system to cover their own energy needs on-site. However, many other properties are perfectly capable of supporting a renewable DG system that can produce more energy than is used on-site. As a result, property owners (and/or electricity users) often prefer to come together to co-finance larger projects on more suitable properties and share the resulting electricity, allowing for a quicker return on investment (i.e. lower electricity costs for participants). Also banks and other financial institutions are often more willing to provide up-front financing when the financial payback (and the related risk of default) is spread over many participants. But how can electricity be shared?

Because of the nature of electricity (as described above), it is often impractical for multiple businesses or homeowners to physically transfer the electricity produced by a shared DG system over long distances. Even in cases where it is feasible to physically transfer the electricity, running the necessary wires would typically create a redundant set of equipment in parallel with the existing utility lines. Instead, arrangements can easily be made to virtually connect the utility billing accounts of the physical host of the DG system and the other participants or co-owners. This is a common form of net metering.

Unfortunately, the net metering rules are often capped at a threshold equal to a very small percentage of the utility's annual peak energy demand. This means that once the total installed capacity of distributed generation systems reaches the cap, no more DG system owners are able to take advantage of the financial benefit of net metering rules (or in some cases even legally interconnect DG systems), which fundamentally limits the ability of businesses and homeowners to afford or finance the installation of new DG systems. But why is net metering important with regard to utility companies meeting their RPS targets?

Superficially, the cap on DG systems does not directly interfere with the ability of utility companies to meet their RPS targets. In fact in most cases, it is entirely possible for utility companies to finance and maintain their own commercial-scale (non-DG) renewable generation systems; however, this would require utility companies to purchase or lease large tracts of land and roof-space and hire workers to develop, construct, and maintain the equipment.

Thus, as a general practice, most utility companies have not been installing and maintaining their own renewable energy generation facilities. Instead, they rely on the purchase of RECs and SRECs from businesses, homeowners, and independent developers who finance, construct, and maintain renewable DG systems on their own property. In turn, the wide of adoption of renewable DG systems, which is hindered by restrictive net metering caps, is the de facto means of meeting RPS targets.

Rather than considering the restrictiveness of these caps on net metering in the abstract only, in the rest of this Net Metering series, I shall consider the specific example of Massachusetts, a state that has recently been gaining a lot of attention from the solar and wind industries.

Sincerely,

Sean Diamond

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ColorPower - A Decentralized Smart Grid Technology

Hello Readers,

I hope you have been enjoying the on-going Global Sustainability series. This post is not in that series but instead is a weekend treat for the avid followers of this blog. Have no fear, the rest of the series is scheduled to post next week.



I was sitting in the lobby of an environmental non-profit the other week, and I happened to pick up a copy of the Spring 2012 issue of the MIT Energy Initiative's Energy Futures magazine in which I found an article about a new smart grid technology called ColorPower, which may be of particular interest for proponents of renewable energy, energy storage, and electric vehicles. The article, Tomorrow's power grid: Adjusting demand to meet supply (starting on page 11 of the magazine, page 13 of the pdf version), describes a 'smart grid' demand-side management technology that decentralizes the decision making process, giving the appliance users greater control over their electricity use and more privacy with regard to their habits.

I encourage you to read the article for yourself before proceeding any further. Here is the link again, in case you missed it: http://web.mit.edu/mitei/news/energy-futures/Energy_Futures_Spring_2012.pdf

I am particularly excited about this ColorPower technology, which is now being developed by Zome Energy Networks. As the article mentions, it could revolutionize the ability of homeowners to participate in their home energy use - especially with larger appliances. However, I think that it could also be (1) a key mechanism for electric vehicle charging and (2) a supplement and/or tie-in to energy storage devices.

In my dissertation (see the Background section), I specifically sought to avoid discussing energy storage devices that only worked in one direction (e.g. could only use electricity but not send electricity back to the grid), because on the electricity grid demand can be both too high and too low compared to supply. This is especially the case on a utility grid that includes a high percentage of renewable energy sources (such as solar photovoltaic and wind turbine generators). Thus, I was concerned that if I based the premise of my dissertation only on a technology that only had the ability to absorb extra energy when demand was lower than supply, I would be missing half of the equation.

During instances in which the supply is unable to keep up with the demand, the ColorPower systems could be used as envisioned by the system designer and described in the article - i.e. temporarily turning off or cycling down appliances based on the user preferences. In a mathematical sense, reducing demand is similar to sending more electricity onto the grid (the first half of the equation). However, I now believe that with the use of ColorPower or a similar technology much (but not all) of the role of bi-directional energy storage devices could be met with demand response, especially if it is used in combination with electric vehicles and thermal power systems.

If the ColorPower systems included a bi-directional switch, owners could not only elect to use less energy when demand is too high but could also request to use more energy when demand is too low. This may not seem practical when only considering traditional appliances. Instead let's consider non-traditional appliances such as electric vehicles and thermal mass systems (e.g. SmartBricks from Vcharge). In this case, appliance owners could prioritize their energy use so that it jumps (e.g. electric vehicles charge quicker than normal) whenever overall demand is too low and supply is too high .

As a result, if each building had some appliances set up to shutdown when demand is too high and other appliances set up to ramp-up use when demand is too low, each building could function in essentially the same role that energy storage devices filled in my dissertation. This sort of bi-directional demand response could also avoid some of the trouble with V2G systems that require EV batteries to be less than fully charged in order to function.



Well, that is all for now, I hope that I have provide you with enough links to keep you busy for the weekend.

Cheers,

Sean

Energy Future TED Talk

Hello Readers,

This is potentially the most important and informative TED Talk you will see this decade. The speaker is the head of the Rocky Mountain Institute.

Please watch this.

Thanks,

Sean

A Timely Article...

Hello Dear Readers,

One week before my dissertation is due, I have found a timely article that briefly describes my dissertation topic: energy storage on the electric grid. If you have tried to read through my dissertation proposal or listened to me try to summarize my dissertation in person and had trouble understanding, I encourage you to read the brief article from the New York Times. Then, just understand that I am studying the impact of those technologies on the overall greenhouse gas emissions of the grid.

That's all for now. Wish me luck as I finish my dissertation!

Sincerely,
Sean Diamond


This post references the article:
Wind Drives Growing Use of Batteries
By MATTHEW L. WALD
Published on July 27, 2010
In the New York Times
http://www.nytimes.com/2010/07/28/business/energy-environment/28storage.html

Off-Shore Oil and Wind

Hello Reader,

This week I turned in my last piece of non-dissertation coursework, so I thought that it might be a good time for some guilt-free blog writing time. In order to keep up with some news-worthy issues, I thought I would point to two articles from last week. The first article discusses recent a step forward in the approval process for the Cape Cod off-shore wind farm and some of the public backlash that has accompanied the news. The second article announced that Florida Governor Crist has removed his support from off-shore oil drilling projects after witnessing the devastation caused by the recent BP off-shore oil volcano. The juxtaposition of these two articles makes me wonder which is the better off-shore option: oil drilling or wind farms.

Given the recent awareness raising that the BP spill in the Gulf of Mexico has been able to offer as an argument against off-shore drilling, it seems hard to believe that there will be much public support remaining by the time this catastrophe plays out. At the very least, it seems likely that new and current drilling projects will be under much closer scrutiny regarding their safety procedures and "fail-safe" devises. After this disaster it seems reasonable to say that if off-shore drilling projects are going to continue, additional safety measures will have to be part of the minimum price of doing business.

The next question in this discussion has to be what are the concerns surrounding off-shore wind farms. It seems that the primary concern for any wind turbine project, which is echoed in the first article, is the aesthetic interference with the natural landscape. In the article, one of the more ethically credible of those arguments is that of the "coastal Wampanoag tribe, which requires unobstructed views of the sunrise for sacred ceremonies". (As a note, I consider this more ethically credible than financially-based arguments such as the detriment to tourism.) It seems reasonable that wind farm projects should try to avoid impinging upon religious ceremonies. However, I would like to question where the ethical balance lies. The main group of protesters seem to be pointing to non-religious arguments. In my mind, this raises the question: Is it ethical to refuse environmentally non-threatening energy from wind turbines, but live a lifestyle that demands the consumption of fossil fuels?

This is an especially interesting question when you consider that the protesters must (or at least should) have some idea of the damage that is caused by the extraction, transportation, and use of those fuels. Whether it is the damage associated with the essentially inevitable oil spills, the death of coal miners, the removal of mountain tops, or the indirect damage caused by emissions, leading a fossil fuel based lifestyle results in tangible damages to the environment and human lives. Admittedly, it is unlikely that all of these damages can be avoided in every case. Furthermore, I understand that even believing and understanding the damages caused by such a lifestyle does not mean that individuals can change their lifestyles alone. However, in a case such as the Cape Wind project where an obvious solution has been presented, is it ethical to protest and obstruct the process beyond ensuring that due diligence has been pursued?

Along the same lines, I have to question if forced to make the choice, whether Cape Wind protesters would choose to have an oil rig 40 miles off their coast or a wind farm a few miles off their coast. While it is unlikely that the protesters will ever have to make that decision, it raises another interesting ethical notion. That is, by refusing the wind farm, protesters are making a commitment to use other energy sources (assuming that they are not planning on going off the grid), which invariably means that the environment will need to be damaged off some other coast or mountain range. That does not seem fair when they have a different option.

Thus, when it comes down to a choice between the tangible damages caused by off-shore oil and the artificial damages caused by off-shore wind, I assert that off-shore wind is the ethically superior choice. Thank you for your time.

Sean Diamond

Wind Turbine Intermittency

Hello Reader,

I wanted to draw your attention to a New York Times article from the past week that highlights one of the major challenges facing developed countries as we try to connect increasing numbers of wind turbines to national and regional electricity grids. That is: intermittency.

Wind turbines are notorious for generating intermittent energy. From a physical perspective this makes sense, because wind does not blow at the same speed all the time. However, when it comes to the electricity grid intermittency can be a huge issue.

On a very small scale, such as a single isolated wind turbine on a farm, this issue can be over come by simply combining the wind turbine with a battery storage system. In such cases, intermittency is not really an issue unless the wind simply stops blowing for days at a time.

On a somewhat larger scale, such as the current state of the US electricity grid, where wind turbines only make up a small percentage of electricity generation the fluctuations are manageable. That is the gaps in generation caused by wind turbine intermittency can be filled in by other generation sources.

Of course, as the article indicates when wind energy starts to make up larger percentages (e.g. 20%) of generation sources, intermittency can pose serious risks to grid stability (e.g. increasing the risk of brownouts and blackouts). The article suggests studies are testing the possibility of connecting multiple turbine farms together to level off the effects of intermittency and provide a more consistent power source. From a physical perspective this also makes sense because when the wind is blowing in one location it may not be blowing in another and vice versa. This means electricity generation will be averaged out.

While this does appear to be a crucial step towards large scale implementation of wind energy, more infrastructural concerns must be addressed. One such step includes the mass introduction of electrical energy storage, which allows electricity to be produced at one point in time (e.g. when the wind is blowing hardest) and used at another point in time (e.g. when you wake up and turn on your electric razor). Unfortunately, the current structure of the electricity grid is not compatible with this concept. As it stands, electricity must be produced as it is being used and at no other time.

Not only is this an issue for installing wind turbines, but it also has massive impacts on the efficiency of traditional fossil fuel and nuclear plants as well. As such, energy storage is the topic of my postgraduate dissertation. Next week I will post part of my dissertation proposal, which explains more about the issue and the need for research into the field. In the meantime, I encourage you to look into the topic for yourself.

The article I referenced within this post is:
A Grid of Wind Turbines to Pick Up the Slack
By HENRY FOUNTAIN
Published: April 12, 2010
http://www.nytimes.com/2010/04/13/science/13obwind.html

Sincerely,

Sean Diamond

A US-China Solution to Climate Change & the Trade Deficit

I. Introduction

After reading a recent news article about President Obama meeting with the president of the People’s Republic of China, I was not surprised to discover that, although somewhat amiable, the two presidents and the two countries were still at an impasse regarding both climate change and economic issues. From my understanding, neither country is willing to fully pursue an appropriate climate change policy that may cede any economic ground to the other country. Furthermore, as China looks to quickly modernize or develop its economy, it is in perhaps a weaker position to address climate change than the US. Conversely, as the US is currently in debt to China on the order of approximately $800 billion and has simultaneously been running a trade deficit with China that has grown on average by 17% per year for the past decade[1], it is in a somewhat weaker position to make economic demands. Seeing these two disparities, I questioned whether the two issues could be combined in order to solve both issues while allowing both countries and the world to benefit.

II. Exchange Rate

The key to a solution lies in China’s current policy that fixes exchange rate between the Chinese Yuan (CNY) and the US Dollar (USD), which currently stands at approximately 6.83 CNY to 1 USD. By holding the CNY at this ratio, China is able to make its goods cheaper on international markets and make imports more expensive. This financial tactic is often cited as one of the factors exacerbating the US-China trade deficit.

III. The Proposal

Similar to the dual problem being addressed, my proposal contains two primary components. The first is for China to agree to incrementally lower the value of its currency over the next decade. The second is that in exchange the US agrees to take on some China’s responsibility to address climate change. Specifically, my proposal is that over the next decade the US will agree to offer domestic renewable energy subsidies equivalent to value that it saves on the trade deficit due to the adjusted rate of exchange. This strategy could allow the US to annually offset (or prevent) a significant amount (approximately 1.8x1010 MT between 2010 and 2039) of greenhouse gas emissions compared to the current, combined annual emissions of the US and China.[2]

IV. Rate Adjustment

Just as the USD-CNY exchange rate is the key to the solution, the adjustment rate of the exchange rate is the key to determining the viability and impact of the program. While a variety of models are possible, I have chosen a relatively simple model to calculate my results. The model I am proposing calls for China to decrease the exchange rate by a certain percentage each year over the coming decade. Doing so would result in an exchange rate at the beginning of 2020 that is in the range of 6.18:1 to 4.09:1 (CNY:USD) for adjustment rates of 1% to 5% annually.

V. Potential Costs to China

Without question, this program would cost China money. Table 1 shows the cumulative value of costs (based solely on US-China trade deficit figures) to China over the course of the program (from the beginning of 2010 to the end of 2019) in billions of 2010USD at different adjustment rates (rows) and discount rates (columns). While the costs listed in Table 1 only reflect the loss in value from US-Chinese trade, China would also incur additional costs in trade with other countries for which I have not yet accounted. However, assuming that this is seen by the international community as the cost of China continuing to grow its economy in the face of the looming climate change impacts, the costs may be justifiable.


Just how much China would be willing to pay may be a matter of negotiation. As such, this program should merely be one of many tools used to solve the issues put forward in the introduction section rather than an all-inclusive set of actions. Further, the scale of these values should be put into perspective. For example, the 2008 annual US-China trade deficit was $268 billion (not discounted) or in other words 16% of the most costly scenario in Table 1 or 250% of the cheapest scenario in Table 1. Another point of reference is that the US’s debt to China as of September 2009 was about $800 billion (not discounted). With these points of reference in mind, all of the potential costs seem fairly reasonable if not negligible.

VI. Hurdles for the US

In order for this program to be as successful as possible, the US must be willing to use truly renewable energies with the highest possible MWh/$ ratio with the greatest potential to rapidly scale-up over the coming decade. As such, my primary suggestion is to fully invest in large-scale (2 MW or greater) wind turbines, which to my knowledge offer the greatest MWh/$ ratio currently available (approximately $1.6 million per MW of installed capacity) for low-GHG emission energy sources.[3] In this scenario, I suspect that the biggest hurdles to overcome would be NIMBYism (Not-In-My-Backyard objections) and ensuring that the utility grid infrastructure can support the variable energy generation provided by wind turbines.

VII. Assumptions

In order to perform calculations, I was forced to make several assumptions and estimations. In this section I will explain many of these assumptions and estimations and justify my reasoning for each of them.

1. Trade Deficit Growth

The first assumption was that although the US-China trade deficit varies greatly from year to year, it has tended to increase by an average of 17% per year over the past decade. Therefore, I assumed that over the next decade it is likely to do the same. Of course, due to the semi-chaotic variability of international markets, this may not be a safe assumption, so I also looked at some practical limitations to this assumption.

Firstly, if the trade deficit grows more rapidly than 17%, then the result will be that more savings will be realized by the US due to a reduction in the exchange rate. Therefore, although economic relations between the US and China may be further strained compared to current conditions, the greenhouse gas emissions program would receive greater funding. As such, so long as the rate of growth does not surpass some critical value that causes the US economy to disintegrate, from an overall benefits perspective this seems to be a neutral outcome. Furthermore, considering the fact that the disparity between the USD and the CNY will be shifting in favor of the US, it seems more likely that the trade-deficit growth will slow rather than accelerate. However, so long as the growth does not slow by more than 13% per year (at which point the US-China trade deficit will be essentially non-existent by 2020), which seems rather unlikely, the program will still be viable. In fact, even if the average trade-deficit growth decreases by 6% annually (meaning that the trade deficit will peak during 2011 and start decreasing during 2012), the benefits of the program are still substantial.

2. Discount Rate

Another matter that needs to be considered in the case of a long-term venture such as this is the discount rate. With no discount rate applied, the program is extremely viable for all proposed adjustment rates. For any of the proposed adjustment rates, a discount rate of up to 2.75% allows for emissions reductions that are about half of those for a 0% discount rate, and a discount rate of up to 5.5% yields emissions reductions that are about one quarter of those for a 0% discount rate.

3. Technology Rate

Due to the nature of renewable energy research and deployment, it is also important to anticipate a decrease in the cost of renewable energies due to advances in technology, which for simplicity’s sake I have termed the technology rate. While the viability of the program would only be increased by a positive technology rate (causing decreasing costs over time) and is therefore not a concern, estimating a reasonable technology rate allows for a more accurate estimate of the total impact of the program and the degree to which the effects of discounting can be offset. I have assumed a technology rate of 3.5%.[4]

One caveat to the technology rate assumption is that an effectively negative technology rate could be experienced if supply could not be scaled up to meet the newly created demand for renewable energies in a timely fashion. However, I believe that an essentially reliable source of funding and demand over the next decade will merely persuade more suppliers to appear and for current suppliers to invest more heavily in scaling up and improving technology to remain competitive. Therefore, if anything, I suspect that this technology rate may be too low.

4. Wind Turbine Limitations

In the particular case of wind turbine deployment, the capacity factor is crucial in determining the amount of energy produced (and the emissions prevented). For all cases I have assumed a capacity factor of 25%, which means that on average each turbine will be producing 25% of its name plate capacity. In other words for each MW of installed generation capacity, 0.25 MWh will be produced each hour on average. Obviously higher capacity factors will yield greater reductions in emissions just as lower capacity factors will yield lesser reductions in emissions. However, predicting such figures exactly is not practical. Therefore, I have chosen to use a reasonable (although arguably low) capacity factor.[5] In addition to capacity factor, the operating lifetime of installed wind turbines will also be a factor in determining the total electricity generated as a result of this program. To be conservative, I have assumed that each wind turbine will have to be decommissioned twenty years after its installation.

VIII. Results

Based on the assumptions stated in the previous section, I calculated a variety of potential outcomes. Figures 1-5 below depict some of the trends in values that can be expected for different currency adjustment rates and a discount rate of 2.75%.

Figure 1 shows the potential wind capacity that could be installed each year during the program. Note that the last year in Figure 1 is 2019 since this would be the last year that China would be obliged to adjust its exchange rate and that the US would be obliged to continue funding the subsidy. While Figure 2 shows the cumulative capacity that would be available as a result of the program. Given the assumption that I have made about wind turbine lifetimes, the direct impact of the program would not exceed the end of 2039.


Figures 3 and 4 show annual electricity generation and annual avoided greenhouse gas emissions respectively. Note that the trends depicted are identical in shape, because I calculated the avoided greenhouse gas emission by simply multiplying the electricity generation by a factor of approximately 0.609 eCO2 per MWh.[6] The generation and avoided emission do not start until 2011, because presumably the turbines would still be under construction during 2010 and not producing substantial amounts of energy. There is also a decline in the trends after 2031 as the first set of turbines are decommissioned. Although, in reality some turbines may fail prior to this date and others may still be useful well past the predicted lifetime, which would mean that the trends would start to decrease sooner but trail off much more slowly. Admittedly, the values in Figure 4 do not take into account for greenhouse gas emissions associated with production and installation of the turbines. However, in reality this impact would only impact the years in which installations occur (2010-2019), and I suspect it would be relatively negligible if it were amortized over the lifetime of the turbines. Furthermore, any emissions associated with maintenance would likely pale in comparison to the emissions associated maintaining and providing fuel for most other generation types.


Figure 5 shows the value (in millions of 2010USD) of annual energy production. This estimate uses an average US electricity rate of 9.5¢/kWh. Unfortunately, I do not know how to predict with any amount of certainty how much this rate will fluctuate over the course of the lifetime of this program. Therefore, I have simply left it constant. These values also do not account for secondary values that may be associated with installation such as Renewable Energy Credits. The trend shown in Figure 5 depicts an increase in value during the installation period (2010-2019), followed by a slight decrease as energy generation remains constant (2020-2031) and the effects of the discount rate dominate, and ends in a sharp decrease after 2031 as the effects of the discount rate combine with the loss of generation capacity as turbines are decommissioned.



IX. Conclusions

If this program is successfully implemented, wind energy could annually generate an amount of electricity equivalent to 4.8% to 36% of the total amount of electricity generated in the US during 2008[7] for the decade of the 2020s. Furthermore, if the renewable energy subsidies required a 2:1 or 3:1 match on the part of investors, the impact of this program could be double or triple the values that I have calculated. Concurrently, the disparity between value of the US Dollar and Chinese Yuan could be lessened, and the “you first” climate change deadlock between the US and China could be resolved. During negotiations, this solution could be taken a few steps further if (1) China agrees to peak its greenhouse gas emissions during the 2020s and (2) the US agrees to start actively reducing its debt to China during the 2020s.

Finally, while this entire proposal may seem like wishful thinking to some, I feel that its scope is realistic and achievable even if the timeline might need to be adjusted one or two years into the future. However, I recognize that for this program to be successfully implemented, it will take a great deal of action in a lot of areas where rhetoric may be a more common response to problems. Therefore, I remain hopeful but unoptimistic.

Wind vs. Nuclear Power

Dear Reader,

To divert from the usual flow of assignments, I am posting a response to a discussion on Linked-In in which I have recently taken part. The original post mentioned in the writing below refers to a CNN article entitled "Nuclear renaissance -- not dead yet" that can be found on cnnmoney.com. Please enjoy...

----------

Mr. Whealan,

To return to the topic at hand, I would like to consider the rent issue that you raised initially. In particular, let’s use the figures available in the article indicated in the original post. According to the article, the nuclear power plants in question would cost $10 billion ($10,000,000,000) to construct and would have a capacity of 5400 MW. If we consider that newly constructed nuclear facilities have regulated lifetimes before they need to be decommissioned for safety purposes, we can guess at a ‘rent’ for a nuclear facility. To keep the number simple, I will assume that the new facilities will have a lifetime of 50 year. Therefore, the ‘rent’ can be considered ($10,000,000,000 / 50 years =) $200,000,000 per year.

I realize that economist would argue that the money would be significantly reduced in value by the end of the 50 lifetime of the system due to discounting. However, given the assumption that the initial payment is made in the form of a loan (of some form or another) that will need to be paid with interest by someone (either tax payers in the case of subsidies or rate payers in the case of consumers) it seems reasonable enough to use the $200,000,000 per year figure, so let’s stick with that.

Now, we need to figure out the equivalent ‘rent’ for 5400 MW of wind-generated capacity. While I do not know what the size of the turbines you are referencing is, I will assume that we can use 2 MW turbines (to keep the math simple). This means that we will need (5400 MW / 2 MW =) 2700 wind turbines. Using your suggested rate of $10,000 per acre, and using an assumption of 1 turbine per acre, the cost of rent would be ($10,000 * 2700 =) $27,000,000 per year.

To be fair, we need to also include the construction/installation costs as we did in the nuclear case. According to windustry.org (http://www.windustry.org/how-much-do-wind-turbines-cost), an installed 2 MW wind turbine will likely cost about $3.5 million ($3,500,000). So our installation costs would be ($3,500,000 * 2700=) $9,450,000,000 in total. Or using a relatively short lifetime of 20 years, the installation portion of the rent would be about $472,500,000 per year. This means that the total ‘rent’ would be just under $500,000,000 per year.

Thus on the face of the issue, the wind turbine system would cost 2.5 times more per year. However, this disregards maintenance costs, fuel costs (and all cost associated with procuring fuel … none for wind, and substantial costs for nuclear), and decommissioning costs (and all costs associated with disposal … which I believe would actually be negative for wind since most if not all materials could be recycled, and which I believe would be very significant for nuclear if you consider that appropriate technologies for disposal or long-term storage have not really been developed and tested yet).

Thus, in my personal opinion, I believe that it is favorable to implement wind technologies where it is a possibility in place of nuclear technologies. Unfortunately, wind turbines suffer where nuclear power has an advantage in the phrase “out of sight, out of mind” on two levels. The first is that as you point out, wind turbines tend to be very visible, whereas nuclear power stations are much more compact. The second is that the users of the energy must suffer the environmental and financial drawbacks as they use them in the case of wind turbines, or the users may divert them for several generations in the case nuclear power.

In closing, thank you for prompting me to critically analyze the situation rather than simply go with what others have heard. I will be posting some form of this reply on a blog that I have had to create for a sustainable consumption course that I am currently taking. I hope that this has given you something to consider that you find digestible and not elitist. Also, if you find any trouble with my math or assumptions, please let me know.

Sincerely,

Sean Diamond