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Welcome to the weekly roundup from the Oxford Martin Programme on Integrating Renewable Energy.
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Clean energy transitions

The US has seen strong growth in the wind and solar industry. 2016 saw the installation of 14.625 GW of solar, doubling the country's installed capacity. Wind energy now has the largest installed capacity amongst all renewable resources in the US, and, according to the American Wind Energy Association, will double over the next 5 years to provide 10% of the United States’ energy needs. However, not everyone is as optimistic about the near term potential for renewables, as indicated by Sunpower’s CEO who recently said that near term conditions remain challenging under the current US political climate given the uncertainty around future tax credits and the Clean Power Plan. However, the company remains optimistic around long term growth prospects for the industry due to their track record of technical innovation and cost reductions, which will drive longer term dynamics regardless of policy outcomes.

With Trump’s administration and Brexit both delivering political uncertainty, the push for renewables from corporate entities may become even more important. Initiatives like the RE100 are seeing the world’s largest corporations - including IKEA, Google, Unilever, and over 80 other firms - committed to powering their operations on 100% renewable electricity. In a recent forum, convened in Brussels to discuss how to move the green agenda forward, European Commission’s Maroš Šefčovič claimed that providing the business case behind renewables is key, urging businesses to speak to their governments, explaining that "going renewable makes strong business sense, not only for big consumers of energy but for all the companies.”

But despite the growing appetite and the win-win business opportunities, companies are still facing obstacles in procuring renewable power purchase agreements. Such barriers include the perception of renewable projects and unprepared procurement teams, and while big companies like Google have the size to enter into renewable projects, smaller companies are finding this space harder to break into. 

Storage

A recently published paper in Nature Energy indicates that residential storage can result in increased power consumption and undercut the environmental benefits of rooftop solar. While storage systems do help reduce peak demand in homes between 8 and 32% (corresponding to 5-42% peak power injections into the grid), the inefficiencies in the technology results in increased annual demand of between 324-591kWh. The paper models two scenarios (“target zero” where batteries are only charged with solar power and aim to maximise self sufficiency vs. “minimise power” where batteries are charged from solar and grid power and aim to minimise the use of grid power) and found that neither provides sufficient economic benefits to offset upfront costs. The detrimental environmental effects they saw might be reduced in grids with high levels of renewable generation, though the authors argue that storage "would most likely not reduce emissions or primary energy consumption unless it directly enables intermittent renewable energy.” However, it could provide benefits on reducing the magnitudes of power flows in grids, suggesting that the impact of storage should be considered with a broad focus on the potential benefits (rather than for a single use case or beneficiary), and separately from the impact of renewables.

One key use case for utilities is around improving grid resiliency and deferring network upgrade costs, and Tuscon Electric Power are pushing ahead with three storage projects to explore how storage can provide voltage support to maintain reliable services during peak demand periods in the regions hot and dry climate. In California, the Mira Loma installation marks the largest battery storage facility of its kind in the world, deployed at speed in fear of shortages and blackouts following the Aliso Canyon natural gas leak. Now two more massive facilities are set to go online, and according to Tesla’s CTO “It’s sort of hard to comprehend sometimes the speed all this is going. Our storage is growing as fast as we can humanly scale it."

In fact, a new report from Morgan Stanley estimates that it will be utilities who deploy most storage in the coming years (with a base case scenario of 85GW in the US, reaching 145GW with favourable support from the Federal Energy Regulatory Commission) rather than individuals or businesses, as they are better placed to benefit from the multiple use-cases that batteries can provide. Their report, “Energy storage: An underappreciated disruptor”, predicts that the industry will grow from today’s US $300 million per year now to US $2-4 billion per year by 2020, driven by the need to accommodate an ever growing quantity of wind and solar in the network. Deloitte also identify storage as a technology that will grow exponentially, however, they don’t believe this will happen until it reaches mainstream adoption, most likely in 2-5 years time.

And once the timing is right, four of the UK’s largest listed funds - who own a substantial proportion of the country’s utility scale solar assets - may be interested in deploying batteries to help shift load profile to peak times (as well as participating in frequency response tenders and capacity market auctions), harnessing greater profits and easing grid stress. However, the investors are not yet satisfied with the technological risks presented by storage technologies against an uncertain rate of returns, and are worried that early investors in the technology may lose money. 

Stories of new, cheaper, storage technologies under development make the technological uncertainty particularly prevalent. At Stanford University, chemistry professor Hongjie Dai and doctoral candidate Michael Angell are looking to aluminium, graphite, and urea to deliver a nonflammable rechargeable battery with high efficiency. Currently they are looking to improve the lifecycle of the technology; the battery, which is made with some of the cheapest and most abundant materials on earth, is able to deliver 1500 charge cycles, but this needs to be increased for the technology to meet the needs of a grid-scale system. 

And alongside battery storage, we’re seeing other technologies coming into the market, such as South Australian company 1414 Degrees, who are scaling up silicon storage technology for commercial production. Their system stores electricity as thermal energy by heating and melting silicon filled containers in a process they claim to be 10 times cheaper than lithium ion batteries, and which also generates large quantities of clean heat that can be used for district heating or industrial purposes.

The demand side and transactive grids

Analysis from the American Council for an Energy-Efficient Economy suggests that together, demand response and energy efficiency measures could deliver utilities 10% savings on peak grid demand. In the US, National Grid are hoping to realise some of this potential though a new commercial demand response programme in Massachusetts and Rhode Island, where participants who reduce demand for at least 20 hours over summer will be eligible to receive up to $3,500 (equivalent to $35/kWh) in credits from the utility.

The UK government’s Electricity Demand Reduction (EDR) scheme, which enables businesses and organisations to compete in auctions for financial support to deploy energy efficiency measures that reduce peak demand, has shown positive results to date. Phase 1 of the pilot, which occurred over winter 2015/16, allocated £1.28 million to 18 bidders and delivered 2.595MW of an estimated 4.517MW demand reduction (57% realisation rate). Phase 2 (for winter 2016/17) saw £4.74 million of funding awarded to 25 bidders across 37 schemes to procure 23.307MW demand reduction, though results are not in yet for this stage of the programme. A final report is expected after Phase 3 of the programme for winter 2017/18.

Another UK government led measure to support demand side management is included in their proposed Modern Transport Bill around electric vehicle (EV) charging infrastructure, which incorporates requirements for smart technologies to enable charge points to help balance the grid by receiving, understanding and responding to signals sent by energy system participants. Germany are also pursuing a strong EV push, with $320 million of funding steered toward increasing access to charging points over 4 years.

With the proliferation of distributed energy resources (DERs, such as micro-generation, storage, and demand management measures), one idea receiving a lot of attention recently has been the transactive grid; a system in which DERs receive locational and temporal compensation for the services they offer to the grid in real time. This would allow customers with DERs to trade power and services with both each other and utilities in real time, enabling customer sited resources to deliver benefits to both end-users and the grid. However, a number of utilities remain skeptical about the value that will be created through the developments of new markets, and argue that policymakers will need to make benefits clearer if the idea is to take off.

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