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Chapter 9

How to Re-Energize Our Electric Grid for the Future of the Planet Downloaded by UNIV OF FLORIDA on December 11, 2017 | http://pubs.acs.org Publication Date (Web): October 23, 2017 | doi: 10.1021/bk-2017-1254.ch009

Jessica McDonald* Nicholas School of the Environment, Duke University, 450 Research Dr., Durham, North Carolina 27708, United States *E-mail: [email protected].

It is nearly universally understood that fossil fuels must be phased out of the global energy mix by the end of the century if we hope to avoid the worst impacts of climate change. There is enormous potential for renewable energy in the electricity sector, and in some cases, wind and solar have become price-competitive with traditional fossil fuel generation. This chapter highlights current market trends and future opportunities for renewable energy as countries look to meet their Nationally Determined Contributions under the Paris Agreement.

Instantaneous Demand We were already more than 15 miles into our hike. The soft sunlight was peaking through the forest cover, which was beginning to thin as we gained elevation. One...two…ten…twenty…the number of switchbacks continued to rise, taunting my tired legs. I stopped as we hit switchback number 30, and I took a deep inhale to steady my racing heart. The air felt thin. We were close. An hour later, the forest trail straightened and we were surrounded by the mountains of the Northern Cascades. I threw off my 65-liter Sierra Nevada pack and spun around in circles to take advantage of the 360-degree view. Glacier Peak captured my attention (Figure 1). We camped in view of the volcano, and we were already on the trail when we saw the sun peering over the mountaintops the next morning.

© 2017 American Chemical Society Peterman et al.; Climate Change Literacy and Education Social Justice, Energy, Economics, and the Paris Agreement Volume ... ACS Symposium Series; American Chemical Society: Washington, DC, 2017.

Downloaded by UNIV OF FLORIDA on December 11, 2017 | http://pubs.acs.org Publication Date (Web): October 23, 2017 | doi: 10.1021/bk-2017-1254.ch009

Figure 1. Glacier Peak, Northern Cascades, Washington State, 2016.

Sixteen miles later and I’m situated in the passenger seat of my friend’s car racing back into civilization. Going “off the grid” is my favorite kind of vacation, however, I return from every trip with a revived appreciation for some modern amenities: hot shower, cup of espresso, and the ability to turn on the lights and read after dark. Okay, maybe those aren’t considered today’s “modern” amenities with the rise of technologies like Amazon Echo and Virtual Reality, but when I return from a multi-day hiking trip, I’m reminded of my dependence on electricity for almost every aspect of my daily routine. I flip up my light switch. The lights turn on. When I’m home, I never doubt the outcome of this perceived simple action. Our demand for electricity is met instantaneously. Think about it. How incredible is that?! Our electric grid is this reliable and extraordinarily complex machine that powers our homes, businesses, and electric cars. However, our grid is going to face some challenges in the near future if we are to transform to low-carbon generation. Approximately 67% of our electricity comes from burning coal and natural gas. In 2014, electricity production contributed to 30% of greenhouse gas emissions in the United States (1). Due to climate change, air pollution concerns and significant improvements in renewable energy technologies, the Energy Information Administration (EIA) predicts the share of energy generation from renewables and nuclear energy in North America is expected to rise to 45% in 2025 (2). This analysis by the EIA gives clout to the latest trilateral clean energy and climate agreement target set by the United States, Mexico, and Canada to reach 50% of electricity generation from clean energy sources by 2025 (3). The United States, Mexico, and Canada are not the only countries to set a regional renewable energy target. The Caribbean Community (CARICOM) has set a regional goal of 47% renewables in the power sector by 2027, and the Economic Community of West African States (ECOWAS) has set a target for a share of renewable energy in the region’s overall electricity mix to 10% in 2020 and 19% in 2030 (4, 5). 100

Peterman et al.; Climate Change Literacy and Education Social Justice, Energy, Economics, and the Paris Agreement Volume ... ACS Symposium Series; American Chemical Society: Washington, DC, 2017.


When you add these regional targets to the subnational and national policy landscape, the holistic picture of clean energy targets and greenhouse gas reduction commitments turns into a jigsaw puzzle where everyone is questioning the overall, cumulative greenhouse gas reductions. Nevertheless, the ultimate objective is clear through the multi-layered climate policy landscape: phase out fossil fuels before the end of the century. This phase-out of fossil fuels by 2100 was also supported by the leaders of the G7 economies in June 2015 (6). In the power sector, this is going to require innovation and the creation of a new status quo of how we generate, transmit, distribute, use, and measure electricity. We have a grid in the United States that was built for a time of fossil fuel generation in a centralized generation system. The integration of solar and wind technologies is going to transform our infrastructure due to the variability of renewables and the transition from centralized to more distributed generation. We must understand the challenges we face as we look to meet our climate goals while ensuring the lights always stay on. We must also remember that building a flexible, efficient, and responsive grid for those who currently do not have access to electricity is a critical piece of the puzzle. Globally, there are an estimated 1.2 billion people without access to electricity, which is nearly 17% of the global population (7). More than 95% of people living without electricity are located in Sub-Saharan Africa and developing Asia. In recent decades, hundreds of millions of people have gained access to electricity, with the majority of those people living in China and India (8). Electrifying rural communities and cities that currently lack power is central to enable economic empowerment and to raise standards of living. This challenge of meeting energy access needs while ensuring the mitigation of greenhouse gas emissions is one of the central challenges we face as a global community looking to meet targets set forth under the Paris Agreement and the 2030 Sustainable Development Goals.

Renewable Energy in the Paris Agreement In addition to the regional renewable energy targets mentioned previously, countries have submitted national climate action plans under the Paris Agreement. These plans are called Nationally Determined Contributions, NDCs for short, and they are fascinating due to their individual uniqueness. They all vary in length, scope, level of detail, and substance. I’ve been able to witness the creation and transformation of NDCs in the past two years through my involvement with the American Chemical Society (ACS) and the United Nations Framework Convention on Climate Change (UNFCCC). Attending the UNFCCC’s 20th Conference of the Parties (COP20) as a delegate for the ACS in Lima, Peru in 2014 transformed my perspective of international action on climate change. I was thrilled to attend the COP with an incredible group of peers, pictured in Figure 2.

101 Peterman et al.; Climate Change Literacy and Education Social Justice, Energy, Economics, and the Paris Agreement Volume ... ACS Symposium Series; American Chemical Society: Washington, DC, 2017.


Figure 2. Left to right: , Shelby Barianna, Kowan O’Keefe, Jessica McDonald (author), Nina Diklich, Kaitlyn Teppert. COP20 Lima, Peru. 2015. It was at this COP that countries decided on the framework of voluntary, bottom-up climate plans as a part of the new international climate agreement. As we participated in the negotiations as observers, we spent hours talking about solutions to our climate change challenges with those participating as part of country delegations, international organizations, and universities. It was through these conversations, and my Masters courses at Duke University, that I began to take a systems approach to our energy challenge. As a Master of Environmental Management student studying energy and the environment at the Nicholas School of the Environment, I began to understand the constraints and opportunities present within our existing energy systems. This understanding and approach is very different from the values and opinions I held as an environmental science major at the University of Pittsburgh. While at Pitt, I learned the science of our climate system. I felt an urgency to address the issue of climate change as quickly as possible. It seemed to me that the solution was apparent: produce more electricity with renewable generation. I was reading and learning about the impacts of climate change, and I was listening solely to the science. The science tells us that we need to act as quickly as possible to avert the worst impacts of climate change. However, looking at the climate change challenge only through the lens of climate science is comparable to jumping out of an airplane with a backpack but missing a parachute. Understanding the science is not enough. Connecting the science to policies and technologies is the parachute that will help us find economically sound and ambitious solutions. 102



This is the systems approach I brought with me when I attended the 21st Conference of the Parties (COP21) in Paris in 2015. During COP21, I worked for an international NGO called the International Centre for Trade and Sustainable Development (ICTSD) to track changes in the negotiating text. Before attending the COP, I worked for ICTSD as a consultant researching and writing reports on the development of countries’ NDCs. This is where my fascination with NDCs began. With each and every new country NDC submission, I started recognizing trends and gaps in countries’ communicated actions. These observations were put to use when I started working for the Department of Energy and their Office of International Affairs. I was able to take my interest in NDCs and translate it into the creation of a database that organized some countries’ NDC actions into energy-related sectors, including energy supply, energy demand, and transportation, to name a few. The number of communicated renewable energy actions in NDCs is astounding. For example, Morocco would like to reach over 50% of installed electricity production capacity from renewable sources by 2025, Chile set a goal to have 45% of all electric generation capacity installed between 2014 and 2025 to be generated from cleaner energy sources, and Malawi set a goal to install 20,000 solar PV systems (9–11). Thirty-one of the 33 country NDCs I evaluated mentioned renewable energy as a means to reach the countries specified climate goals. On the other hand, only 12 countries explicitly mentioned evaluating or improving grid efficiency and grid technologies. Through a systems lens, this is problematic! The integration of renewable energy requires a systems approach through the evaluation of the grid in order to overcome barriers associated with high-penetrations of solar and wind.

Next Generation of Renewables This stark increase in the amount of renewable generation needed to meet countries climate objectives has drawn the attention of several international organizations including the International Energy Agency (IEA). In 2016, the IEA coined the term that there is a “next generation” phase of renewables deployment on the horizon. This next phase will mark a time in our history where wind and solar PV technologies are mature and economically affordable (12). Many of the barriers that once stood in the way of renewables are quickly being overcome. Cost According to Bloomberg New Energy Finance, investments in renewable energy broke record trends in 2015. China spent $111 billion on clean energy infrastructure in 2015, 17% more than in 2014. This is more than the U.S. and Europe combined (13). In fact, funding in renewables worldwide is outpacing fossil fuels 2 to 1 (14). This is due in part to falling prices of these technologies. On-shore wind and crystalline silicon photovoltaics are two of the most widespread renewable technologies used today, and both had reduced costs 103



in 2015. Impressively, the cost of solar has fallen to 1/150th of its level in the 1970s (14). The price of solar fell for residential, commercial, and large scale PV from 2007 to 2013, with the sharpest decline in cost for large-scale projects (15). Onshore wind projects are consistently delivering electricity for $ 0.04/kwh to $0.09/kwh. This is within the same range as new fossil fuel capacity (16). Declining costs are leading to increased generation from renewable sources. In the United States, the increase in solar generation is mostly from utilities, and GTM Research estimates that 16 Gigawatts of solar will be installed in the U.S. in 2016 (17). Globally, 50 Gigawatts were added to the grid in 2015, with Italy, the United States, Japan, China, and Germany hosting the largest installed capacity (18). The generation of these two renewable technologies is large enough to influence when coal and natural gas plants are kept running. This could lower fossil fuel plants capacity factors (19). A capacity factor is the percentage of a power plant’s maximum potential that is achieved over time. A plant’s capacity factor depends on several operating principles, including seasonal demand and maintenance (20). Historically, fossil fuel plants have had high and predictable capacity factors, for example, the average natural gas plant may produce about 70% of its full potential. This high capacity factor is taken into account when investors and operators calculate the fixed costs of the plant. With more renewable generation, the traditional base-load plants, including coal and natural gas plants, will likely be used less (19). Some reports conclude that fossil fuel plants are becoming more expensive per unit of power produced and the profits less predictable (21). This is in part due to how a plant’s operating cost depends on how much electricity the plant produces, and this cost required to produce each MW of electricity is referred to as “marginal cost” (22). The marginal cost for renewable energy is very low, because there are no fuel costs for solar and wind power. The sun and wind provide free power, and the only costs are the capital costs and operating costs of the plant. This is a reinforcing cycle for renewable energy (19). Variability The central challenge that arises from the use of more solar and wind is the inherent variability of these sources. Simply put, the sun does not always shine and the wind does not always blow, and the amount generated by these sources varies by time of day, season, and geographic location. Thus, solar and wind resources have high inherent resource variability and limited predictability – which is why they’re often referred to as Variable Renewable Energy (VRE). When the percentage of VRE on the grid is between 5-10%, the variability of supply can be managed relatively easily without significant investment (12). We can see from the renewable energy targets mentioned above that the integration of renewables is going to be much higher than 10%! Thus, additional investments in the flexibility of the power system are required to balance the increased levels of uncertainty while keeping the lights on and costs down. In addition to flexibility, power operators also need to adopt new operational strategies and policymakers need to put in place policies and 104



regulations that support VRE. For example, operators are strengthening their ability for advanced renewable energy forecasting and on the economic side, policymakers are evaluating reforms to electricity pricing (23). The integration of renewables is unique to each system, and there are several strategies that can be adopted into power systems. Firstly, technologies can focus on the supply side and focus on generation technologies that can be quickly ramped up and down. Secondly, on the demand side, smart-grid technologies and efficiency improvements can more readily align supply with demand. Lastly, storage can work with both supply and demand to quickly fill the gap between VRE generation and demand (12).

Ramping Up, Storage, Smart Grids Most fossil fuel plants were designed in the United States to operate at a consistent, high-level to provide base-load generation. Nuclear and coal plants are known for being among the least flexible forms of electricity generation. While coal and nuclear generators can take more than 12 hours to ramp up, some gas combustion technologies can start-up in minutes (24). This means that natural gas generation can quickly fill in the generation supply gap when there is a significant and fast change in electricity generated from solar and wind. There are limitations to the flexibility of these systems, which can be complemented by energy storage. The preferred technologies for energy storage include pumped hydro, compressed air storage, and multiple battery technologies (25). With storage, system operators can save the excess energy created by solar and wind and release the energy when demand is high or supply is low. The current market for the storage industry is limited, despite the large potential of scaling-up storage in the future. The prices of batteries are still either too expensive or not durable enough to remain a worthwhile investment. In the first quarter of 2016, just over 18 megawatts (MW) and 21 MwH of storage were deployed (26). Demand response measures allow consumers to play a significant role in the balance of electricity on the grid. Demand response involves consumers, either residential, commercial, or industrial users, reducing or shifting their electricity usage during peak electricity periods (27). With renewables, demand response can be utilized when there is a surge in wind or solar power. This is oftentimes motivated by a financial incentive provided by the utility, and thus can save consumers money. This can be achieved through the installation of control equipment that manages electricity use based on price signals from grid operators. One aspect of this is the introduction of two-way communications for measuring and controlling energy usage. These “smart-grid” technologies, such as two-way thermostats in residential homes, can allow customers to sign up to demand-response programs and opt-in to reduce power from smart devices, such as iPhones and tablets (28). Several countries have already started utilizing the technologies and policies that are best suited to their unique power systems, leading the way in the renewable energy transition. 105



Renewables Are Forging Ahead While I was at COP21, I heard Ramon Mendez, Uruguay’s head of climate policy, speak about how Uruguay transformed its energy system to reach 94.5% of its electricity from renewable energy in under a decade. I didn’t realize that countries had reached this percentage of renewable energy in the electricity mix! Overall, biomass, solar power, wind, and hydropower account for 55% of the country’s overall energy mix, including transport fuel. For comparison, the global average is 12% (29). Uruguay hasn’t imported energy for three years, and now exports to other countries in the region including Argentina. In 2008, the government launched an energy policy that started Uruguay down this low-carbon generation path. The model adopted includes three key factors regarding Uruguay’s unique utility model and resources: 1. Credibility for foreign long-term investments 2. Bountiful natural resources with wind, solar, and biomass and 3. Public companies with strong relationships with the private sector. For instance, the state utility guarantees foreign investors a fixed price for two decades, guaranteeing a profit for firms with wind farms low maintenance costs and small staff. The new direction relied on one central overarching principle: strong decision making with policy certainty (30). While this model is not replicable in all countries, Uruguay remains a case study of the possibilities of renewables in the electricity mix. Other countries, like Scotland, have witnessed the power of renewables this past year. For example, high winds in Scotland on one day in August 2016 were strong enough for the countries’ wind turbines to power the equivalent of all of Scotland’s electricity needs for the day. Many environmentalists are hoping that this milestone will motivate the Scottish government to forge ahead with a more ambitious renewable energy target when the draft energy strategy is created (31).

Decentralized Systems Centralized grid systems prove economically prohibitive for millions of people living in remote and rural areas in developing and emerging economies. There is no uniform definition for what encompasses energy access, but two classifications have been widely accepted 1) metrics related to electricity and 2) metrics relating to the use of solid or traditional fuels for cooking. Distributed renewable systems (DRE) are another path forward for providing energy access to the approximately 1.2 billion people living without access to electricity. DRE systems in the form of small-scale community and residential solar PV, stand-alone lighting systems, wind, biodiesel generators, and micro and pico-hyrdo stations for electricity generation are a few examples of DRE technologies. These technologies can provide electrification for power, cooking, and heating and cooling. In recent years, DRE has benefited from decreasing system sizes, improved system costs, and enhanced affordability linked to efficient appliances (32). Efficient appliances are critical to energy access because increased efficiency increases the affordability of the energy services provided by lighting, cooling, and cooking technologies (33). 106



Clean Energy Ministerial The challenges that we face as a global community in reaching our clean energy targets and mitigating climate change requires the acceleration of clean energy markets, political leadership, and the sharing of best practices for policies and financing mechanisms. Outside of the UNFCCC framework, there are other international forums that are actively bringing governments together to mobilize knowledge and resources for increasing energy efficiency, transforming power systems, and expanding energy access. The Clean Energy Ministerial (CEM) was announced in 2009 after the UNFCCC stalled in negotiations in Copenhagen. This voluntary forum brings together 24 countries and the European Commission, including all major economies, to improve and expand the deployment of clean energy technologies. With a combination of technical expertise, private sector participation, and high-level policy dialogue, the CEM is a forum through which countries can gain the knowledge and capacity needed to reach their domestic energy and climate goals. Through initiatives such as the 21st Century Power Partnership (21CPP), Super Efficient Appliances and Equipment Deployment (SEAD), the International Smart Grid Action Network (ISGAN), and the Global Lighting and Energy Access Partnership (Global LEAP), the CEM is filling a vital niche in the international policy dialogue on how we’re going to transition to a clean energy economy. This platform for knowledge sharing and technical assistance in clean energy technologies and policies supplements the targets set forth under the UNFCCC negotiations. My experience as a delegate for ACS two years ago at COP20 directed my career towards international climate policy. In 2017, the 8th Clean Energy Ministerial will be held in Beijing in early June. Reaching the targets set forth for 2030 and 2050 is going to take a systems approach, and I look forward to seeing the transformation of our energy systems in my lifetime.

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