Category Archives: climate change

How much should utilities pay for distributed solar power?

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Close-up of completed project - Gibbs Dairy goes solar

In the energy and climate circles, there is a lot being written lately about the threat to the traditional utility model from distributed, renewable energy sources.  David Roberts has been running a series describing the problem and looking for solutions.  Chris Nelder also has a good read on the topic.

One of the key issues is the idea that utilities want to avoid “stranded assets”, or infrastructure they still have to pay to maintain with a shrinking pool of customers.  As some customers get more power from solar, sales of electricity shrink, leaving utilities with the same distribution infrastructure to maintain using less revenue.  Some utilities, the latest being a municipal utility in San Antonio profiled by David Roberts, argue they shouldn’t pay customers the “market” rate for electricity their customers generate with rooftop solar, but instead should pay them a wholesale rate, or the same as they pay for other electricity on the grid.

The thinking here is that paying the wholesale price will put renewable energy on an even playing field, and help keep the old utility model more financially whole, since wholesale prices are typically much lower than market prices.  For example, the 5-year average wholesale price for electricity in the grid area that serves Minnesota was $53.62 per MWh for the period ending in 2010, according to FERC.  This is for the “peak” time of day, meaning the afternoon, which is also the time solar is most productive.  That’s equal to roughly 5 cents per kWh, which is the unit at which typical household sales are measured.  Last month I paid about 11 cents per kWh to Xcel before taxes, fees and other charges like WindSource.

At 5 cents/kWh, rooftop solar would take a very long time to pay off.  Many fewer people would likely choose to install it.  However, those in the renewable energy world will tell you that 5 cents/kWh doesn’t pay the owner of a system for some of the benefits solar energy has over wholesale electricity.  We should actually be looking at a “value of solar” that includes not just the wholesale energy price, but reimbursement for other values.  There is movement right now in Minnesota to legislate that a true “value of solar” be computed for future projects.  So what other value does solar energy have that utilities might value?

For one, it can be more efficient.  Whenever you transmit electricity or long distances, you lose some due to resistance (heat).  EIA estimates these loses at 7% nationally and 7.4% in Minnesota.  That means utilities are generating more kWhs than are needed to make up for the losses, and thus the customer is paying more for each kWh.  If you’re generating power very close to where you use it, you minimize these losses and the extra generation.  Distributed solar energy should actually be valued 7% above wholesale prices by a utility if you think it will reduce these line losses.  If you include that 7% bump, 5 cents becomes almost 6 cents per kWh.

The other value is the reduced environmental cost of solar generation.  There is plenty of discussion about what the optimal cost of carbon should be, and it all depends on what you adopt as your discount rate.  Here is a must-read on discount rates, also by David Roberts.  If you think that climate change will have a net drag on the economy in the future, your discount rate is likely low, and the optimal cost of carbon gets up into the $50 to $100/ton range.  Carbon levels per unit of electricity produced vary quite a bit across the county, but in Minnesota and parts of the upper Midwest, they averaged 0.738 metric tons per MWh in 2009 (the latest year for which EPA has data).  At that rate, a high carbon tax might add between 3.5 and 4.5 cents per kwh.

If you add all this up, (an economically optimal price on carbon, savings from transmission losses, and a wholesale price consistent with the 5-year peak average), you get a value of solar energy between 9.5 and 13 cents per kWh.  That’s at or above the market rate I’m paying in Minnesota right now.  Check out my extremely messy spreadsheet if you want to see the math.

Keep in mind there are other values of solar energy I haven’t considered in my calculus.  The Minnesota House legislation includes the savings from delaying capital investments in distribution infrastructure, savings from not having to build more generation, fuel price hedge value savings (not having to bet on fuel costs), and the value of local employment generated by manufacture and installation of solar energy.

How much would a 10% solar standard reduce Minnesota’s greenhouse gas emissions?

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Presenting Curt Tosh's farm-based solar project - Solar Works in Central Minnesota!

This week a bill was introduced to the Minnesota legislature to establish a 10 percent solar energy standard by 2030.  This would be on top of the existing requirements for utility renewable energy, bringing the total amount of energy coming from renewables in the state to at least 35 percent in 2030.

This bill is being promoted for it’s job creation aspects, but clearly a key benefit is the reduction in greenhouse gas emissions from the electricity generation sector (which currently produces 32% of the state’s greenhouse gas emissions).  So, by how much would a 10% solar standard reduce Minnesota’s emissions?  Would it allow us to meet our greenhouse gas reduction goals?

The first (and easier) part of trying to put some numbers to this is estimating how much electricity Minnesota will use in 2030.  EIA summaries tell us that Minnesota consumed a little under 68 million megawatt hours in 2010.  Power projections produced for the Annual Energy Outlook tell us that in MRO West (our electricity grid region), the annual growth in electricity consumption will be very modest through 2030, typically under 1% annually.  If you assume these growth rates apply to Minnesota, we may consume over 73 million MWh in 2030, or 8 percent growth over 20 years.

ElectricitySalesThru2030

10 percent of that is 7.3 million MWhs in 2030.  Figuring out exactly how much greenhouse gas this would save is trickier.  In 2010, electricity generation accounted for 32% of the total 155.6 million metric tons of CO2 equivalent emissions.  Rough math using EIA consumption figures provides a greenhouse gas coefficient for Minnesota electricity of 0.73 metric tons of CO2e per MWh.  However, this figure will surely go down over the next 20 years as utilities work to meet the existing renewable energy mandates already on the books.  Xcel Energy, which has to meet a more aggressive renewable energy standard then the rest of the state, already has a coefficient closer to 0.5 mt/MWh, which will be declining (see slide 17) to something like 0.42 mt/MWh by 2025.

So, assume the state’s net greenhouse gas coefficient for electricity is somewhere around 0.5 mt/MWh in 2030 (assuming other utilities and imported electricity are both dirtier than Xcel).  If 10% of our electricity demand is met by solar energy, this would be a savings of 3.6 million metric tons of CO2e.  3.6 m metric tons is about 2.3% of our 2010 emissions total, or about 7% of emissions from the electricity sector in 2010.

Using an net coefficient average emissions factor for calculation may be too simplistic, but it’s the best I’ve got right now.  Those more in the know say that renewable energy like solar will most frequently replace natural gas production, rather than coal or nuclear, as gas is easier to cycle on and off.  I’m not sure whether this would increase or decrease the benefit of this level of installed solar (but I’m working on it).

Update: I was pointed to this journal article by Carbon Counter, which attempts to calculate “marginal emissions factors”, rather than average factors. It turns out, since the Midwest is coal-heavy, usually an “intervention” (adding solar, for example) would displace coal power first, rather than gas.  The marginal emissions factor they calculate for the Midwest is about 13% higher than the 0.73 mt/MWh I mention above.  The Midwest is somewhat unique in this regard, as most regions show gas as the most common “marginal fuel source”.  It also has the highest marginal emissions factor of all the regional electricity generators looked at in the study.  A 12% increase over 3.6 million mt is 4.03 million mt.

At something near 3 or 4 million metric tons of emissions saved, would a 10% solar standard help us meet our state emissions reduction goals?  Nowhere near on its own, but it would be a significant step in the right direction, especially when combined with strong action in other sectors like transportation and agriculture.  Think of it as part of the Minnesota version of the wedge game.

On compost

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Biodegradable cutlery

Don’t you dare throw that in the trash.

At Ensia (formerly Momentum), Bill Chameides tackles compost, or our lack of it.

The thing that really caught my attention was a report on the results of a series of student dumpster dives around campus. After collecting and sorting all the garbage, they found that about three-quarters of Duke’s so-called non-recyclable trash destined for area landfills was compostable—things like food scraps, napkins, paper towels, etc. Based on calculations fromgovernment data [pdf], the national average is closer to 50 percent, but that’s still a lot of compost mostly headed for a landfill.

While I agree with the gist of his post – we should stop sending so much compostable material to the landfill, it makes good dirt – he reaches, what seems to me, a somewhat troubling conclusion (bold emphasis mine):

Right now we send a lot of compostable materials to landfills. If you’ll pardon the pun, that’s a waste. Instead of being treated like trash, compostable items can be converted into organic-rich soil for growing crops. And that could even help slow climate change. The anaerobic decay that occurs in landfills produces methane, a greenhouse gas that can escape into the atmosphere if a gas-capturing system is not installed. Composting, which is primarily an aerobic process, generates very little methane.

But the real challenge in making a compost economy is moving our compostable trash toward 100 percent. Let’s replace recyclable, petroleum-based plastics with nontoxic, cellulosic, compostable plastics. In addition to making compostable products, let’s make the packaging compostable too.

Now, in that first quote he says half our of current trash is compostable.  That seems to me to indicate that our trash is already fairly compostable, and we aren’t doing anything about it.  It seems our real challenge(s) is/are:

  1. Make sure compost collection is available (far from standard across the country, and certainly not in Minnesota).
  2. Education/coercion (get people to throw it in the right bin).  No small task.
  3. Make sure that ability to process compostable material is available.  This is not a minor issue.  Consider that in the Twin Cities metro, there is one location that processes organic compost.  Many items collected through composting collection regimes can’t simply be thrown on a compost pile, they need specific temperature, moisture and material mixtures to break down properly.  Processing needs to expand if we’re going to get that other 50% composted.

My other issue is with Bill’s conclusion: let’s turn all our disposable products into compostable products.  This is backwards.  If collection isn’t available OR people don’t separate their compostable material properly (and just about universally), the results (for the climate, at least) could be worse.

Consider work done by David Allaway at the State of Oregon’s Department of Environmental Quality.  They looked at the lifecycle impacts of different water delivery systems (water bottles), including PLA (compostable) and PET (oil-based, recyclable) water bottles.  As Bill notes, in a landfill, compostable materials produce methane, which when combined with the upstream impacts of making the water bottle, are worse than just using a regular, oil-based recyclable bottle.

pla-decompose

Green bar – 62% of PLA bottles are diverted from the landfill and composted, the rest go to landfill, where they produce methane during decomposition.

The scenario above, represented by the green bar, shows that even if you’re successful at collecting and composting 62% of compostable bottles entering the waste stream, the emissions from the landfill of the remaining 38% offset any benefits.  This includes “upstream” emissions, like making each bottle.

And this assumes a collection regime is in place.  Every time I see a Twin Cities restaurant trying to up their green cred by offering “compostable” cups or flatware, I check their waste disposal area.  Nine times out of ten there is no “compost” container available.

So, is promoting a conversion of “throw away” products like flatware and packaging to compostable materials a good idea?  At best, maybe.  At worst, well, it could make things worse. I think much more analysis needs to be done, and certainly more collection infrastructure and a highly-effective education campaign about sorting need to be in place.  Of course, composting food waste that’s already in the waste stream is a no-brainer, but let’s take a closer look at compostable products.

National Climate Assessment: trouble ahead

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duluth flood - mpr

A draft of the US National Climate Assessment was released about a week ago, and the outlook for changes headed to the Midwest and country as a whole is not good.  Minnpost has a good look at the Midwest section (emphasis mine):

Climate change will tend to amplify existing risks from climate to people, ecosystems, and infrastructure in the Midwest. Direct effects of increased heat stress, flooding,

drought, and late spring freezes on natural and managed ecosystems may be altered by changes in pests and disease prevalence, increased competition from non-native or opportunistic native species, ecosystem disturbances, land-use change, landscape fragmentation, atmospheric pollutants, and  economic shocks such as crop failures or reduced yields due to extreme weather events.

These added stresses, when taken collectively, are 

projected to alter the ecosystem and socioeconomic patterns and processes in ways that most people in the region would consider detrimental.

Much of the region’s fisheries, recreation, tourism, and commerce depend on the Great Lakes and expansive northern forests, which already face pollution and invasive species pressure – pressures exacerbated by climate change. Most of the region’s population lives in urban environments, with aging infrastructure, that are particularly vulnerable to climate-related flooding and life-threatening heat waves.

CC Midwest temp rise

Over at MPR, Paul Huttner also has a good overview, highlighting the coming “climate shock” of project 5-degree warming headed to Minnesota.

 

Bottom line?

This magnitude of warming will likely cause some dramatic… and potentiallyalarming changes in our Minnesota Landscape.

Our forests will shift north. Pine forests may dissapear, and transition to hardwood forests in significant sections of northern Minnesota.

Prairies will also overtake areas that are now forested…possibly even the parts of Twin Cities metro.

Increases in the frequncy of extreme rainfall events will create more events like the multiple “500 to 1,000 year” flood events seen in Duluth and southern Minnesota in the past 9 years.

The changes we’re already observing in Minnesota will continue…and the pace of change is likely to quicken in the next 30 years. Our children will live in a very different Minnesota than our parents did.

How are we doing to address this challenge?  Haven’t US greenhouse gas emissions gone down recently?  Yes, but unfortunately not enough, and we can’t just worry about US emissions.  From the report’s mitigation section (emphasis mine):

Even absent a comprehensive national greenhouse gas policy, both voluntary activities and a variety of policies and means at federal, state, and local levels are currently in place that lower emissions. While these efforts represent significant steps towards reducing greenhouse gases, and often result in additional co-benefits, they are not close to sufficient to reduce total U.S. emissions to a level consistent with the B1 scenario analyzed in this assessment. 

And remember, hitting that B1 scenario is critical if we want to avoid the most dangerous impacts and potentially runaway climate change.  For more on what the world might look like if we stay on the emissions path we’re on, take a look at the World Bank’s most recent report on 4-degree warming.

Too hot to pump gas

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art-weather-620x349

From Per Square Mile, this bit of news from the ongoing mega-heat wave in Australia.

It was so hot in the South Australian outback town of Oodnadatta yesterday that the local servo stopped selling petrol.

The Outback town has been sweltering through one of its great heatwaves with the temperature soaring above 40 degrees every day this year, reaching a peak of 48.2 degrees yesterday.

“The ground, the building, everything is so hot, you walk outside and you feel it’s going to burn you,” Pink Roadhouse owner Lynnie Plate said.

Mrs Plate said the Roadhouse couldn’t serve unleaded fuel after midday because it was vapourising and wouldn’t pump in the extreme heat.

In one part of Australia, temperatures reached 120 degrees F.  Are roads melting and gasoline evaporating an engineering problem, or a wake-up call?

Solar access, land use and 30-year planning

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Over at streets.mn, I wrote a piece about the mostly unknown requirement that cities in the metro address solar access in their comprehensive plans, and how we could improve to address the purpose of the requirement.

By law, every community in the seven-county metro is supposed to adopt a comprehensive plan that includes “an element for protection and development of access to direct sunlight for solar energy systems”.  This requirement dates back to 1978, when there was anoil crisis and gasoline was $1.30 per gallon (or, close to what it was in 2011inflation-adjusted).  In 1979, Jimmy Carter put solar panels on the White House.  Reagan took down the solar panels in ’86 and oil got a lot cheaperthrough the late 90′s.

The requirement remains however, even if few communities have ever done anything related to solar after they developed some language for their comprehensive plan.  As we enter this season of plan updates, perhaps it’s time for another look at how solar access, land use, energy and other issues are interrelated, and what are vision is for our energy systems.  Solar power is cheaper than ever, and the message is pretty clear on the need to start decarbonizing our energy system.

Linking spending decisions, greenhouse gases, and social games

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Via the inbox, I get word of a company trying to develop an app/website to make the greenhouse gas impacts of your spending decisions plain.  Of course, they’d like your support to get started.

Many frustrated Americans would like to take climate action
into their own hands, but it’s hard to know where to start. Enter Oroeco.com.

“The basic idea is that every dollar we spend on products or services impacts the environment and society for better or for worse,” says Oroeco’s CEO, Ian Monroe, who also teaches courses on climate change and renewable energy at Stanford University. “The problem is that these impacts aren’t apparent when we’re deciding what to buy, particularly now that global supply chains have shifted problems half a world away. We are building a tool that automatically connects purchase data from debit and credit cards (via Mint.com) to scientific climate impact data – so you can track the climate footprint of your groceries, gas, airfare, home energy, clothing, etc. You can also see how you compare to your friends and earn points and prizes.”

There are lots of services to track home energy usage/impacts, like Opower and the now defunct but awesome Microsoft Hohm.  I’m not familiar with others that go beyond energy use to purchasing decisions.

Some communities try to inventory consumption impacts, like King County and the City of Minneapolis, but an app/game will probably be a lot more effective at reaching residents and consumers.

What is a carbon tax worth?

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California has begun a historic cap and trade market in carbon, completing the first auction, with permits going for $10.09 per metric ton.  I’m not sure cap and trade and the offsets it allows are the right way to go. But when I read this, I wanted to understand what such a program might mean for an average Minnesota energy consumer (after all, California is a distant and foreign land).

Xcel Energy, the electricity provider for most of the Twin Cities metro, produced 0.5266 metric tons of CO2e per MWh in 2011.  At $10 per mt, that’s about $5.31 per MWh, or roughly half a cent per kWh.  The EIA says the average Minnesota residential consumption is 813 kWh per month.  This seems awfully high, but we’ll go with it.  At that rate, the average residential customer would pay an extra $4 per month on their electricity bill.

Natural gas is trickier to estimate an average for, although some 2005 data says perhaps 650 therms per year, per household, using metro assumptions about people per household.  That seems low.  We used over 1,000 therms the last two years, but our house is old.  At 0.005 mt of CO2e per therm, the tax would increase the price of natural gas 5 cents per therm.  If you use 1,000 therms per year, that’s about $4.50 more per month.

So if something like $10 per metric ton was imposed in Minnesota, residential customers might see a utility bill increase of $8 per month, or $96 per year.  The California Public Utilities Commission has proposed a means to eliminate that cost.  Residential customers would actually be paid a dividend from the revenue generated by the auctions, which they say would more than offset the cost of the carbon tax.  Commercial and industrial users are a whole other ball of wax I haven’t touched here, and higher energy prices probably means higher product prices.

All this is not to say that a carbon tax or cap and trade system is appropriate for Minnesota (or the US).  $10 per ton is likely too low, their could be serious equity issues with offsets and increasing energy prices, and other tricky stuff.  But at $10/ton, direct energy costs to residents probably wouldn’t break the bank.