Fracking dominates the energy headlines, and there is no doubt that the cheap natural gas produced by fracking is a major contributor to the ongoing economic woes of a good number of nuclear reactors and coal plants.
But fracking has its limits and its own problems. Not only is protest against the practice growing (for good reason), but gas is and always will be a fossil fuel. And ultimately–hopefully before the tides are lapping daily through Manhattan–the nation and world will get serious about climate change and realize that continued use of fossil fuels is simply not sustainable nor conducive to continuing human life on Earth.
What if it didn’t take that long? What if there were some sort of means of generating electricity that were both cleaner and cheaper than fracking? What if, say, solar power were competitive with natural gas; wouldn’t that begin to change the energy landscape?
Well, yes. And it’s happening before our eyes.
In Minnesota, regulators have approved three new Xcel power projects–despite some misgivings that all this new power–more than 600 MW worth–may not really be needed. Two of the projects are natural gas plants. The third is 100 megawatts of distributed solar power–which came in cheaper than gas.
When solar power comes in cheaper than gas in often-frigid Minnesota, the future suddenly looks a little brighter.
Indeed, developments in solar power, as well as developments in the ongoing transformation of electric utilities, are happening so fast it’s difficult for anyone to keep up with them.
Here are a few more major developments, all from the past few days:
*The capital city of Texas, Austin, has long been known for its commitment to renewable energy. Earlier this year, it made a major purchase of solar power–of 150 MW–for only 5 cents/kwh, cheaper than any other form of electricity generation. The city already receives 850 MW of power from Texas wind farms. It has a goal of 200 MW of solar power by 2020.
Scratch that last sentence–Austin now has a goal of at least 950 MW of solar power by 2025. 200 MW of that solar power is to be generated within city limits–a huge boost for rooftop solar. Austin’s goal is to have 70 MW of that in-town solar power operational by 2020.
*FirstSolar, one of the nation’s largest manufacturers of solar panels, is teaming up with the Clean Energy Collective in a major new campaign to install community solar systems around the country. Community solar systems allow people who either don’t want to or can’t install their own rooftop solar–because they’re renters, live in condos, because their roofs are shady or otherwise not suitable for solar, etc., in other words, much of the population–join together in community-sized solar installations. Rooftop solar isn’t suitable for everyone; but community solar can be. This collaboration will allow many, many more people to join in the solar revolution and to have a stake in the energy they use. Bad news for traditional utilities; good news for the people involved and the planet.
*The international furniture retailer IKEA announced this week that it will begin offering solar panels at its stores in Switzerland, which is in the process of weaning itself off of nuclear power and is thus heavily promoting solar power. IKEA already sells solar panels in the UK and the Netherlands, and is expected to announce similar programs in five more countries soon.
*Community solar is one way to bring the benefits of solar power to low-income people, who typically can’t afford, even with solar’s plunging costs, to install solar on their own rooftops. But even investment in community solar is beyond many peoples’ means, and if renewables, especially solar, are to be the game-changer they can be, it’s critical that everyone be able to take part in their benefits. There are a lot of potential ways low-income communities and individuals can be served by renewables; this article explores several of them, most of which can be implemented at the local level.
Even though solar remains a tiny part of U.S. electricity generation, its skyrocketing growth and stories like these–repeated across the country just about daily–bring migraines to most traditional utility execs. Utilities are used to planning ahead, often decades ahead, but when utilities attempt to plan ahead these days, they see at best uncertainty over what the future will look like. More and more, they see fundamental and inescapable changes coming to their business.
A future powered by distributed, or decentralized, renewable energy coupled with greatly increased energy efficiency and a modern grid looks very different than the present system of large baseload power plants supplying electricity to a nation with no choice but to be hooked up to a grid and to pay pretty much whatever the utilities can get away with. We have been, and are increasing, the pace of moving from no choice to a multitude of choices–just as the telephone industry moved from Ma Bell and rotary phones to a competitive marketplace ranging from Verizon to CREDO to Vonage and a plethora of smartphones within a generation or so.
In Australia, the CEO of one of that nation’s largest electricity networks echoes what observers here have been saying in these pages all year: that there is “no long-term future for large, centralized electricity generators, nor for big electricity retailers. Rob Stobbe, the CEO of SA Power Networks, says both business models will be made redundant – the generators by the increased use of localized, mostly renewable generation, and the retailers because, well, they just won’t be needed any more.”
Stobbe’s company predicts incredibly rapid growth for solar in Australia: within two decades, 70% of Australians will be solar-powered and 50% of them will have some form of electricity storage. That level of solar penetration will mean less and less need for large-scale electricity generation as well as less need for utilities to distribute electricity; what will be left will be, according to Stobbe, a network set up to facilitate sharing of energy among houses in micro-grids.
Stobbe said: “You can be a retailer without being a retailer, it depends on the how micro grid is set up. Who says that you need retailer at all, if you have community willing to share energy among houses. We just provide a charge for that network.”
As an example, he suggested customers could pay $15 a week for that network, and that is all thy would have to pay – apart from the cost of installation of their own solar and storage. “They could get rid of 70% of costs and have us provide distribution for $15 a week. That’s not bad. Economically, that makes sense for consumers.”
If you’ve read this far, you win! What you win is this. We rarely term anything a “must-read.” This is a “must-read.” John Farrell of Institute for Local Self-Reliance has produced a major, important new report: Beyond Utility 2.0 to Energy Democracy. Farrell lays out, in well-written, accessible language, a brief history of how the electric utility industry got to where it is today and where it is going tomorrow–often termed Utility 2.0. It’s an essential guide to the enormous changes taking place in the utility industry and what those changes mean for all of us.
But Farrell goes beyond that and proposes a Utility 3.0–a model for democratizing the generation, distribution and use of electricity that would benefit both utilities and the public.
Some excerpts from the introduction:
The 130-year old electricity system is undergoing a historic transition, as new, decentralized technologies undermine a decades-old centralized utility business model. Energy efficiency and conservation have undercut utility revenue, even as rooftop solar begins to erode electricity demand right at the source.
There’s a growing discussion about a 21st century Utility 2.0 business model that would reward utilities for achieving an efficient, low-carbon, and flexible electricity system.
It’s not a moment too soon.
Utilities have made battlegrounds out of nearly 20 states, fighting their own customers about installing rooftop solar and other measures. They continue to invest in the infrastructure–power plants and power lines–for a 20th century, centralized electricity system, assets that may be stranded by the exponential growth of on-site power generation, distributed energy storage, and electric vehicles. They struggle to retain control and ownership of the electricity system even as technology increasingly lends itself to decentralized control and ownership.
It’s not entirely the utilities’ fault.
Utilities face mixed incentives. States have layered requirements for renewable energy and energy efficiency on top of a business model where many utilities still profit from growing electricity sales and building their own power plants. State and federal regulators frequently make decisions about utility investments without complete information about cost-effective alternatives.
What is popularly known as Utility 2.0 is a new business model designed to solve many of these problems, properly aligning financial incentives with the outcomes most participants want from the electricity system. But Utility 2.0 may not go far enough.
Rooftop solar, smartphones, and widespread energy storage will give utility customers unprecedented opportunities to control their energy usage, and to capture their share of the $364 billion spent on electricity each year. The rules and principles of a 21st century electricity system must go beyond an efficient, low-carbon, and flexible grid to encourage capture of the economic opportunities for individuals and communities. This requires two additional principles: local control and equitable access. Combined, these are the five keys to Utility 3.0, or energy democracy, that can unlock an economic transformation that parallels the technological one, by allowing communities to maximize capture of their local energy dollar.
December 17, 2014
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