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Welcome to the weekly roundup from the Oxford Martin Programme on Integrating Renewable Energy.
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Clean Energy in the UK

In her maiden speech at the United Nations in New York, Theresa May emphasised the UK’s commitment to the international efforts against climate change, and said that the UK will begin a process to ratify the Paris agreement before the end of the year, joining the 60 countries (representing a total of 47.7% of global emissions) who have already signed up. There had been prior concern that the change of prime minister could see Britain retreat from taking a lead on tacking climate change, especially after she abolished the Department of Energy and Climate Change, and in light of uncertainly following Brexit. 

An informal Brexit energy forum, launched by Solar Media and law firm Eversheds and including major investors, utilities, renewable energy developers and policy experts from both sides of the channel, met in London last week. The group will explore implications of Brexit for the industry both in the UK and Europe, and work to deliver suggestions on what needs to be considered for the energy sector in exit negotiations.

The future of solar

Market research firm EnergyTrend anticipate the supply of solar cells will exceed their demand by up to 35% through to 2018. While they expect production capacity to increase by up to 15GW, their analysis suggests that demand will only grow by 0.3GW in 2017, largely due to stagnation in the Chinese market and falling demand in Japan and the US.

This overcapacity could drive prices down, with solar modules falling to US$0.35/W in the next 6-9 months. And perhaps is also responsible for the lowest ever bid for PV capacity submitted by an Asian consortium at US$0.0242/kWh (17% lower than the current lowest tariff submitted in August this year) for their planned 350MW plant in the United Arab Emirates.

It may also help renewable energy growth in developing countries, as  IHS Markit records continued growth in renewable energy investment in Latin America with new solar installations expected to reach 2.7 GW installed capacity in 2016. Mexico and Chile both recently help successful capacity auctions (with Argentina looking to follow suit), supported in Chile by new transmissions laws permitting grid expansion and improving connections between the country’s three grids. However, in Brazil, 6 developers awarded PPAs in Brazils’s first energy auction are looking to terminate their agreements arguing that projects are no longer viable due to political and economic instability.  

In addition, a recent post on Climate 2020 highlights that the growth of renewables is not constrained by resource availability of wind and solar (which could technically supply all global energy demands) or economics (as economies of scale in manufacture have driven costs of wind and solar down to the same range as coal, gas and nuclear) but challenges related to grid integration, heat and transport, and market arrangements. Solutions to these include flexible generation, system interconnection, flexible demand (demand response), and  storage (from real time grid balancing to inter-seasonal storage using technologies such as power to gas), as well as revising business models around renewable energy to stimulate more effective investment and operation of renewable resources, all of which requires continued policy innovation.

Policy innovation

The European Parliament’s committee for industry, research and energy (ITRE) recently approved a new report that proposes amendments around electricity storage, advocating for a comprehensive definition of energy storage within the legislative text of the European Commission’s New Energy Market Design framework. While storage is key to support to integration of renewables, there is no regulatory mechanism to support implementation of an efficient storage system. The report also recommends a separate asset category for storage systems, and argues for a technology-neutral energy market design so storage systems can take advantage of excess production and curtailment opportunities. 

Utility innovation

Southern California Edison has contracted for 125 MW of clean energy resources (solar, storage and demand response) in Orange County, adding to the exist 136MW already acquired. In addition to their partnership with Nest thermostats to deliver 50MW of load reduction across 50,000 homes in the region, additional demand response and storage projects are also planned.

Table: Inside Edison

In fact, SCE plans to spend US$2.3 billion between 2016 and 2020 to get the grid ready for a distributed future. In 2015 they made over 22,000 changes to the distribution system to accommodate distributed resources, and they anticipate 1.5 million more to be added by 2025. And the utility has also given the green light for Tesla to supply a 20MW storage system at their Mira Loma substation, making it the largest Lithium-Ion project in the world. 

Microgrids are often looked to as providing one mechanism for integrating distributed resources, and Duke Energy has been leading the charge in developing a utility-controlled microgrid. Their test site in North Carolina (a fire station connected to a substation with a 50-kilowatt solar array and 500-kilowatt lithium-ion battery) demonstrated the power of the microgrid in two events in 2016 - the first when lightning strikes hit in April, and the second when heavy winds and rain from Hurricane Hermine threatened grid ability in September. The microgrid senses the disturbance, disconnected from the larger grid, and kept the fire station’s lights, computers and communications gear running before connecting back to the grid once threat of a power loss had faded. The microgrid also supported the fire station to run on just its solar and batteries for 26 hours. The utility is now looking to make their utility microgrid available on a border basis. 

And newly passed bills in California may support a distributed future as they seek to boost storage. AB 2868, which directs utilities to add 1325MW of storage to the grid also allows them to own an additional 500W of storage behind the meter, using ratepayer money to finance investments (so long as projects "do not unreasonably limit or impair the ability of non-utility enterprises to market and deploy energy storage systems”). AB 1637,  plans to double the size of California's Self-Generation Incentive Program, AB 33 calls on the CPUC to look at the potential for grid scale storage, particularly pumped hydro, and AB 2861 establishes a process for solving interconnection disputes.

In the UK Good Energy sees record growth in business customers (and 40% year-on-year increase in half-yearly revenues) following their shift in strategy to targeting business customers who are looking to decarbonise. Another part of this strategy has been the implementation of Piclo, a trading platform connecting business with renewable generators, which will be widely rolled out before the end of the year. 

Residential and Commercial Innovation

During the summer a coalition including the California Housing Partnership, California Environmental Justice Alliance, Brightline Defense Project, the Natural Resources Defense Council, and the National Housing Law Project came together to support the implementation of AB 693, California’s new $1 billion affordable housing solar energy programme. Their plan includes: geographic targeting; support for tenants to mitigate rent increases; provision of solar incentives aligned wth full costs borne by property owner and their ability to cover these costs; local hiring to create green job opportunities in low income areas; energy efficiency push through energy audits; and energy storage to be integrated and incentives alongside PV.

While there seems to be a strong push for residential storage to sit alongside solar micro generation, a recent survey by Enphase finds that the market may not be as robust as initially expected. While the study found that homeowners who have PV are interested in backup power, most wanted systems that would cost less than $10,000 and could supply power for multiple days.

However, GM, who have a target for global operations to be 100% renewable by 2050, believe that their expertise in EV batteries will support their endeavours. They are using repurposed Chevrolet Volt batteries to store energy from solar and wind at their testing facilities in Michigan, supplying power to their data centre and returning excess capacity to the grid to supply the rest of the site. In addition, the company believes they have saved US$5 million per year (and US$80 million to date) from using renewable energy.

Apple has joined the growing renewable energy initiative RE100, committing to going 100% renewable with worldwide operations (up from 93% in 2015). The company is also pledging to drive clean energy into the manufacturing supply chain, having a knock on impact with their suppliers. 

And it’s not just companies supporting clean energy; Los Angeles joins 17 other US cities pledging to achieve 100% clear energy, phasing out coal by 2025 and meeting 50% clean energy use by 2030. But with increasing evidence that the impacts of climate change are happening faster than initially suspected, the question remains as to whether all these endeavours can happen fast enough.

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