Last month environmental advocates led by activist Tom Steyer and a coalition known as Clean Energy, Healthy Michigan claimed a major victory in advancing the state toward a clean energy—and a clean air—future.
Faced with a looming November 2018 ballot initiative that would have required 30% of Michigan’s electricity sales to come from renewable energy sources by 2030, the state’s two largest utilities, DTE Energy and Consumers Energy, jointly announced instead to target 50% clean energy by 2030. At least 25% of their electricity sales will come from renewable energy. The balance of the target they’ll meet largely through energy efficiency.
This latest major development comes fast on the heels of two other notable bright spots earlier this year. In February, Consumers Energy announced that it would phase out its coal-fired generation over the next two decades, while also targeting generating at least 40% of its electricity from renewable energy sources by 2040. Then in April, DTE Energy submitted its 2018 Renewable Energy Plan to the Michigan Public Service Commission. The plan calls for doubling the utility’s renewable energy capacity by 2022 from 1 to 2 GW and driving $1.7 billion in clean energy investment, largely in wind energy with a small amount of solar.
All told, it comes as a big breath of fresh air to a state that wrestled with the problem for years.
Michigan’s fight for cleaner air
At the beginning of this decade, Michigan and its residents faced an air quality crisis underscored by two damning reports released just months apart. In May 2011, the journal Health Affairs published research showing how chronic air pollution around schools in Michigan was linked to poorer student health and academic performance, disproportionately affecting low-income and racial or ethnic minority communities. One of the chief sources of air quality problems? Power plant emissions.
Two months later, in July 2011 the Natural Resources Defense Council released its Toxic Twenty report, shining the spotlight of attention on those states with the highest levels of toxic air pollution from power plants. Michigan’s overall total industrial toxic air pollution was among the worst in the country. It ranked seventh worst specifically for toxic air pollution from the electricity sector, which accounted for 73% of the state’s air pollution.
By 2016, Michigan’s air pollution situation had started to improve according to the State’s annual air quality report, but still had a long way to go. In March of that year, Medical Daily–part of the Newsweek Media Group and boasting more than 8 million unique visitors per month and 2.2 million Facebook followers—declared Michigan’s air quality problem much bigger than the infamous water problem in Flint. More needed to be done to address the issue.
Clearer skies ahead for Michigan
At a time when other states from Hawaii to Oregon to New York have set bold renewable energy and clean energy targets, Michigan’s is particularly exciting because of how much positive impact it could have.
Last year fossil fuels generated just shy of 60% of Michigan’s electricity; coal alone accounted for 37%, according to numbers from the U.S. Energy Information Administration. Renewables including hydro, meanwhile, generated just 8%.
According to a basic WattTime analysis, every megawatt of new wind energy built in Michigan today will displace about two-thirds coal-fired generation and one-third natural gas-fired generation. Thus based on today’s grid mix in Michigan, new renewable energy projects could avoid around a whopping 1,700 lbs CO2 emissions per MWh of generation. To put such numbers into perspective, that 1,700-lb swing in Michigan’s marginal grid emissions from dirty to clean makes the emissionality benefits of new renewables—how much fossil-fueled emissions are avoided for each MW of new renewables built—among the best in the country.
In fact, on an avoided-emissions-per-new-renewable-megawatt basis, renewable energy investments in Michigan are about twice as effective as similar investments in places such as parts of California, Florida, and Massachusetts and roughly 1.5x as effective as neighboring Great Lakes states such as New York.
And the benefits don’t stop there. As Michigan’s grid gets closer to its 50% clean energy target, the grid’s “personality” will change, too. It’ll go from being a “monotone” personality defined by a more or less steady stream of traditional, dirty, coal-fired baseload generation to a “dynamic” personality characterized by much larger minute-to-minute and hour-to-hour swings in marginal grid emissions depending on whether natural gas or variable renewables are supplying the electrons. This unlocks a whole other realm of possibility.
With a grid that has a constantly fluctuating rate of marginal emissions—from dirty to clean to dirty and so on—smart devices such as thermostats, electric water heaters, electric vehicles, battery energy storage, etc. can use real-time and predictive signals from a source such as WattTime in order to automatically and effortlessly use cleaner energy and avoid dirtier energy. This effectively multiplies the emissions benefits of Michigan’s new renewable energy and its clean energy target.
Depending on the specific device and how flexible you assume its electricity demand can be, this capability generates a “bonus” emissions reduction of 5–15% or more above and beyond the aforementioned savings achieved by increasing renewable energy on the grid. For example, an electric vehicle recharging overnight has a lot of flexibility to decide specifically when it’s pulling electricity to charge the vehicle and when it wants to “wait” for the grid to get cleaner.
For certain, Michigan’s electricity sector air quality concerns won’t turn around overnight. But this year’s 50% clean energy target agreement and what it means for toxic air pollution and human and environmental impacts means that there’s a good sightline to clearer skies ahead. And here at WattTime, we’re equally excited about the role that flexible demand can play for enabling smart devices to automatically and effortlessly choose cleaner energy, in the process helping Michigan make ever greater progress in its journey toward cleaner air.
By Peter Bronski
In early January, the California Public Utilities Commission (CPUC) issued a ruling that might well prove to be a bellwether for natural gas-fired power plants: the CPUC directed one of the state’s investor-owned utilities to procure energy storage and/or preferred resources such as demand response and distributed solar to replace three existing gas plants (two gas peakers and a 580-megawatt combined cycle plant).
In the months since, we’ve come to know such combinations of energy storage, flexible demand, and distributed energy resources such as rooftop and community solar by another name: clean energy portfolios. And the idea that these clean energy portfolios could be both technologically and economically competitive with natural gas power plants represents a landmark shift for the market.
That shift now appears to be on the precipice of a major inflection point, per a new report released late last month by Rocky Mountain Institute, The Economics of Clean Energy Portfolios. A team from RMI analyzed four planned natural gas power plants in different regions of the U.S. and evaluated instead replacing them with portfolios of renewables, energy efficiency, demand flexibility, and storage.
More than 100 gigawatts of new, announced natural gas power plants are planned for the U.S. through 2025. Extrapolating retirements and anticipated further new builds through 2030, that “rush to gas” comes with a hefty price tag, locking in $1 trillion in combined infrastructure investment and fuel costs (just over half for capex, the remainder for opex). It also comes with a massive emissions footprint: 5 billion tons of CO2 through 2030 and 16 billion tons through the 20-year lifetimes of those gas plants.
Could clean energy portfolios obviate such as a costly scenario? According to RMI’s analysis, yes. And incorporating WattTime insights and capabilities into those portfolios could make their emissions benefits even greater.
The four real-world scenarios RMI evaluated included:
The corresponding clean energy portfolios varied according to the local grid mix and the primary services they needed to deliver (e.g., baseload capacity, peaking capacity, flexibility/ramping). The portfolios ranged from half wind paired with some storage and energy efficiency to three-quarters flexible demand paired with smaller slices of solar, storage, and efficiency.
“The biggest factor influencing portfolios in each region was the compatibility of local renewable resources with regional load profiles,” explains Mark Dyson, a principal at RMI and one of the lead authors of the new report. “For example, the West Coast region has significant existing solar, so the clean energy portfolio we modeled there relies heavily on new wind to balance solar production. In contrast, we found that new solar in Florida was very valuable for meeting mid-day loads in a state without as much existing solar capacity.”
Even with RMI’s conservative assumptions, the economics were impressive—from essentially net present cost parity in some scenarios (i.e., plus/minus 10%) to substantial savings of 40–60% in other scenarios—prompting media outlets such as Forbes to declare “the ‘rush to gas’ will strand billions as renewables get cheaper.”
“Given the cost declines in renewables and battery storage in recent years, it's not surprising that the economics look good for clean energy portfolios today. What's surprising is how fast the economics turn even better, and the stark implications for investment in new natural gas infrastructure,” Dyson adds.
The emissions side of the story may prove even more profound than the economic one. Clearly, in each of the four scenarios RMI analyzed, the clean energy portfolios avoid the fossil-fueled emissions that would come onto the grid if each of those natural gas plants gets built. Over the 20-year life of those plants, the savings range from 1–2 million tons of cumulative CO2 to upwards of 66 million tons. Across the four scenarios alone, the savings total more than 90 million tons. Total nationwide savings could reach 16 billion tons.
There are likely even further emissions savings available for the taking. For starters, replacing a natural gas power plant with a clean energy portfolio changes where those megawatts of generation sit in the merit order dispatch stack, the order by which grid operators call upon supply-side resources to meet electricity demand. The generator that fulfills the last megawatt of demand is known as the marginal generator.
Renewables generally sit first in the stack, thanks to their near-zero marginal operating costs (e.g., no fuel costs vs. fossil-fueled plants). This means that clean energy portfolios further build up the renewably-generated bottom of the merit order dispatch stack and thus potentially push even more fossil-fueled marginal generation out the top of the stack, above and beyond obviating the new-build gas plant. These “bonus” avoided marginal emissions will vary by location and its local grid mix, but they are very much real.
Further, RMI’s assemblage of clean energy portfolios includes a healthy mix of flexible demand, which equals up to three-quarters of the pie in the case of the Florida portfolio. This represents yet another opportunity to avoid emissions. That’s because how clean or dirty the grid’s electricity is varies across the hours of the day and night, depending on which generation sources are providing the electricity.
When WattTime-enabled smart devices such as thermostats, grid-interactive water heaters, electric vehicles, and others are enabled with the right software signal, they can automatically and effortlessly use their flexible demand to arbitrage clean and dirty grid times, choosing to consume electricity when generation is cleaner and to avoid energy consumption when it’s dirtier. In places where there’s both legacy dirty generation and a sizeable chunk of clean, variable renewable generation, the per-kWh opportunity to shave emissions can be huge.
So what’s next for making the promise of clean energy portfolios a reality? “The path forward requires solving some of the ‘soft cost’ challenges of integrating multiple technologies to meet grid needs,” says RMI’s Dyson. “In particular, customer acquisition costs for energy efficiency and demand response programs can be significant. WattTime-enabled demand flexibility can improve the customer value proposition and help scale deployment of demand-side resources.”
The net takeaway is that clean energy portfolios present a compelling cost-competitive, emissions-less alternative to new natural gas power plants and they can unlock even greater emissions-reduction benefits. This is exciting. As renewable energy continues its rapid growth, the grid’s decarbonization could accelerate even faster ahead of renewables’ megawatts expansion.
As Renewables Surge, They Can Do More, With a 4 Gigaton Opportunity Right Under Their Noses
By Matt Evans and Chiel Borenstein
Pick up any newspaper today, and there are stories that might make you worry. But one bright spot has been the continuing Cinderella story of renewable energy worldwide. When WattTime was founded only a few years ago, renewable energy deployment every year was barely more than a footnote in the global economy. No more. According to January 2018 numbers from Bloomberg New Energy Finance, world clean energy investment totaled $333.5 billion in 2017. That’s a 3% increase vs. 2016 and the second-highest annual investment total ever. Cumulative investment since 2010 has reached an impressive $2.5 trillion.
Investment focused on solar (48% of the global total), then wind, then energy-smart technologies (including smart meters, battery storage, smart grid, and electric vehicles), then all other clean energy technologies (which collectively ranked a very distant fourth).
The United States, for its part, ranked second globally behind only China. That clean energy investment helped to propel the U.S. to its third consecutive year of emissions declines, dropping by 0.5% in 2017.
Domestically and internationally, these are encouraging developments about which to be rightfully optimistic. Yet if we want to beat climate change before we reach the tipping point, we need to move even faster. It’s time for renewables to seize the moment and up their game. At WattTime, we have discovered a way they can do just that.
Tackling the Carbon Emissions Elephant in the Room
Back in November 2017, Carbon Brief—a UK-based climate science journalism site—reported on some alarming findings from the Global Carbon Project: after a three-year plateau, global annual carbon emissions were forecasted to rise by an estimated 2% by the end of the year.
Last month, the Paris-based International Energy Agency (IEA) confirmed those initial estimates in IEA’s inaugural Global Energy & CO2 Status Report. The verdict? In 2017, global energy-related CO2 emissions rose 1.4% to a record-high 32.5 gigatons.
Looking ahead to the rest of 2018, according to the U.S. Energy Information Administration’s (EIA) March 2018 release of its Short-Term Energy Outlook, U.S. energy-related CO2 emissions are expected to rise by 1.0% in 2018, followed by another 0.8% in 2019.
In the wake of the Paris Agreement, it all could be seen as a discouraging setback in the race to decarbonize the energy sector. But rather than despair, there is reason for hope. Renewables in particular have an opportunity to make each new clean MW go further. Here’s how.
The 4 Gigaton Opportunity Sitting Under Renewables’ Noses
People typically think of solar, wind, and other clean-energy projects as just creating zero-emissions energy, making them in some sense all the same. But upon closer inspection, not all renewable energy is actually created equal. After all, the way that renewables help the environment is that they displace dirty energy. So, the same wind turbine can actually have radically different impacts on the environment and the electricity grid’s emissions depending on whether it’s displacing, say, a coal plant, or another windmill.
Thus, as is often noted in matters of real estate, when it comes to renewable energy deployment, location matters. Where developers site new renewable generation can greatly influence which kinds of energy they displace, and therefore how much carbon emissions those clean electrons ‘erase.’ As it turns out, the size of that prize is large. Very large.
Recently, the WattTime team crunched the numbers from the U.S. EIA’s International Energy Outlook 2017, which forecasts world energy generation and consumption through 2040. The results were very surprising to our team.
If the global distribution of new renewable energy generation forecasted to be built through 2030 were redistributed geographically to optimize for avoided emissions, it could save an estimated 4 gigatons (Gt) of carbon emissions over the life of those renewable energy projects. That number is nearly equal to the annual carbon emissions of the United States.
And the impact could easily be far greater. Renewable energy capacity additions have routinely far surpassed the U.S. EIA’s projections in past years, so 4 Gt—big as that number is—could merely be the starting point.
This is an incredible “free” opportunity. Think again about the implications: holding renewable energy investment and new MW of clean generation constant—and optimizing solely on location for the sake of avoided emissions—renewables that are already planned could vastly multiply their impact.
Such an opportunity is squarely within reach. It is now incumbent on utilities, renewable energy developers, renewable energy buyers, and others to add a new lens to their clean energy investment and deployment. Alongside dollars and MW we should now also include location-optimized avoided emissions. A United States’ worth of carbon emissions are on the line and available for the taking.
By Gavin McCormick and Chiel Borenstein, in partnership with Jaclyn Olsen and Caroleen Verly from the Harvard University Office for Sustainability and Chad Laurent from Meister Consultants Group (A Cadmus Company)
In recent years, institutional climate action targets, renewable energy subsidies, and the rapidly falling costs of wind and solar have led more and more large institutions to begin purchasing significant quantities of off-site renewable energy. The practice has grown rapidly, from 70 megawatts purchased in 2012 to over 2,780 megawatts, as of February 2018. Naturally, all these new renewables are reducing pollution. But…exactly how much pollution?
The Boston Green Ribbon Commission Higher Education Working Group, an alliance of leading sustainability-minded institutions, aimed to find out. The Working Group’s chair, Harvard University, partnered with Meister Consultants Group (a Cadmus Company), and RMI subsidiary WattTime to conduct a study exploring methods for quantifying the actual emissions impacts of institutional renewable energy purchases. The results were intriguing.
Notably, the study, entitled Institutional Renewable Energy Procurement: Quantitative Impacts Addendum, found that the answers may be less straightforward than they initially appear. Evidently, not all renewable energy projects are equally effective at reducing emissions. (Currently, the most common emissions accounting framework treats all renewable energy projects as equally reducing emissions.) Better measuring this variation of impact between projects could soon create new opportunities for renewable energy buyers to begin reducing emissions even faster, more cheaply, more reliably, and more credibly due to the new evidence-based approach.
The Higher Education Working Group—consisting of Boston College, Boston University, Harvard University, MIT, Northeastern University, Tufts University, and the University of Massachusetts, Boston—had already been active in illuminating and streamlining institutional renewable energy purchasing. In 2016, the group authored a report in partnership with Meister Consultants Group offering detailed background information on renewable energy procurement options, as well as guidance on impact claims for institutions already making or looking to make renewable energy purchases.
While attending an RMI Business Renewables Center (BRC) member event, Jaclyn Olsen, Associate Director of Harvard’s Office for Sustainability (OFS), met Gavin McCormick, co-founder and Executive Director of Watt Time, and became intrigued by the work WattTime was doing on quantifying carbon impacts of renewable purchases. Jaclyn proposed a partnership to build on the research that the Working Group had already done on the topic, and the result was a collaboration between OFS, WattTime and Meister Consultants Group to create a report for the Working Group members that brought this new way of assessing emissions reduction impacts from renewable purchases to potential purchasers.
Most institutions today report their greenhouse gas emissions using the carbon footprinting approach, as laid out in the Greenhouse Gas Protocol (GHGP). While the process involves multiple methods, hierarchies of emissions factors, and other complexities, at a high level it’s a simple approach: Organizations count how much regular electricity they purchase from the grid, subtract off the amount of renewable energy they purchase, and multiply the remainder by the average emissions intensity of the local grid. This framework allows for straightforward comparison of renewable energy commitments across institutions; however it does not differentiate between varying carbon impacts of different renewable energy projects.
Before we describe the study’s findings, it is important to note that carbon footprinting is not the only way to measure emissions. The Quantitative Impacts Addendum study identifies three different ways institutions can measure the emissions impacts of renewable energy purchases: (1) the status quo, carbon footprinting; (2) avoided emissions; and (3) quantification through the generation of carbon offsets. Each has its own benefits and drawbacks.
The study’s primary goal was to uncover the implications of these differences, so that institutions making renewable energy purchasing decisions will have a broader and deeper understanding of the emissions impacts of the projects they are considering.
1) The Status Quo: Counting Megawatt-hours, Not Emissions
The simplicity of carbon footprinting comes at a cost. The GHGP is very explicit that this approach measures the change in emissions that an institution “owns” in an abstract accounting sense, not necessarily the actual real-world emissions reductions caused by renewable energy purchases.
The reason this distinction matters is that the real-world emissions reductions can vary widely. After all, adding renewable energy to the grid only reduces emissions if it displaces existing power plants. But which power plants are displaced? A renewable energy project that displaces mostly coal will reduce considerably more emissions than one that displaces natural gas, or even other emissions-free resources like hydropower.
2) A Measurement Change: Avoided Emissions
The avoided emissions method is also defined under the GHGP, and is classified as an optional calculation. This method establishes a framework for measuring not megawatt-hours, but emissions. By measuring which existing or future power plants a renewable energy project displaces, it measures the actual emissions impacts of a project.
Employing this methodology, the differences in emissions impacts between renewable energy projects can be substantial. The report finds that renewable energy purchases by Boston area schools could reduce anywhere from 791 to 2,187 pounds of carbon dioxide per megawatt-hour—nearly a 300% variation among projects of identical size—depending on the power plant being displaced.
It’s important to note that while the GHGP allows organizations to measure avoided emissions, the GHGP does not allow organizations to use these calculations in their main emissions inventory. So organizations that declare carbon targets and choose to voluntarily define them in terms of the emissions inventory cannot use the avoided emissions method. This could lead to a situation where the claimed emissions reduction is higher or lower than a more accurately calculated value.
3) Carbon Offsets: Counting Emissions Towards Declared Targets
Unlike the avoided emissions methods, projects measured using carbon offsets can be “counted” towards an institution’s official emission inventory. To ensure the integrity of that system, projects are only eligible for carbon offsets if they pass a series of tests that they are valid and additional (truly reducing emissions beyond what would have occurred in the project’s absence). While ensuring the highest levels of accuracy, the carbon offset process is also much more time-consuming and administratively burdensome than the avoided emissions approach. It is also very difficult to prove additionality for renewable energy projects, so many renewable energy projects will not be eligible.
There are clearly pros and cons to each approach. In determining which method to use, key factors institutions could consider include the following:
The main reasons to measure emissions are 1) to ascertain as accurately as possible whether we are collectively moving towards the emissions reductions we all know are needed, and 2) to allow actors to make accurate comparisons of the impacts of different choices.
When some institutions are using one method and others are using a different method, it is difficult to accurately compare the impact of different individual actions, and to calculate the collective impact. There is a need for a clear and consistent way for institutions to accurately measure the impacts of renewable purchases. It would certainly be possible for the GRC Higher Education Working Group member institutions to collectively define a new standard that draws the best elements out of the three methods and discards the drawbacks. Regardless of the method schools select (or create), acting together maximizes transparency and reduces administrative costs. The report recommends that whatever the Working Group decides, the members collectively decide it together.