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Welcome to the weekly roundup from the Oxford Martin Programme on Integrating Renewable Energy.
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The UK's energy debate

While the UK Government continues to debate the future of Hinkley, Drax, the owner of what was the UK’s biggest coal plant, joins other companies jostling to fill the potential energy gap. Koss, Drax’s CEO, claims that biomass would be the most cost-effective form of energy on a whole-system cost basis. With the benchmark levelised cost of energy for the proposed Hinkely C estimated at $187/MWh, a biomass incineration plant would be significantly cheaper at $145/MWh according to Bloomberg New Energy Finance. 

Another alternative, explored by the Energy and Climate Intelligence Unit’s ‘Hinkley: What If?’ report, is the use of demand side management. According to the report (and backed by evidence from from the US where demand response is more established) energy efficiency could offset 40% of the new demand, with the rest delivered through demand response. 

And according to Nicola Shaw, National Grid’s new Executive Director, an “internet of energy” including distributed generation, storage, efficiency and energy management, could prevent blackouts and keep energy costs down. While agreeing that more investment in gas-fired power is needed, Shaw argues that 30-50% of fluctuations on the grid could be smoothed by demand side adjustments. However, the energy worker’s trade union GMB isn’t buying into this vision, claiming National Grid as being “naively complacent”. GMB’s national secretary believes that “what’s needed to guarantee the lights stay on over the coming winters are new power stations and the go-ahead for Hinkley Point C ... given that the coal fired stations are due to close next week."

The future of solar

While the EIA is predicting that renewable generation, particularly solar, is on the rise, solar companies are starting to trim back production as ahead of an expected slowdown in the market. While projections for annual installed solar capacity shows growth across residential, non-res, and utility deployments from 2015 to 2016, they are anticipated to drop when Solar Energy Industries Association data is released for 2016 Q2. 

In India solar growth has been slower than expected, but a recent Press Trust of India (PTI) release shows imports of solar into the country has tripled in the last year as the market boomed with an addition of 3.6GW. Now, eight of the ten top module suppliers to India's market are Chinese; their market share rising from 50% to 75% as they look to hit the Indian market with “aggressive pricing”.

Cambodia is also expecting to see more solar with the development of their first large-scale solar farm, expected to be completed in 2017 to supply enough power for 2,600 households in Bavet City and Svay Reing Province.

And Japan is developing a floating solar plus micro-inverter system installed on an irrigation reservoir in Fukuoka City. Although floating systems have been developed previously, this 300kW installation of 1200 panels includes micro-inverters which convert DC to AC for each panel individually, apparently increasing the system performance by about 10%. 

Storage

While solar has grown rapidly in recent years, the addition of storage could provide further benefits, such as increasing self consumption, cutting demand charges (e.g. during peak use) and providing back-up power. In fact, UK’s National Grid just announced 201MW of winning bids in the first ever tender for enhanced frequency response. Grid will pay $86 million for eight lithium-ion battery projects (between 10 and 49MW in size) in one of the single biggest storage deals so far this year. 

One idea currently being floated by Bloomberg New Energy Finance (BNEF) founder Michael Liebreich is the use of discarded EV batteries to provide storage for the grid. Another idea under development at the Fraunhofer Institute in Germany is the use of underwater storage devices that turn pumped storage on its head. A large concrete sphere sits at 600-800m depths; energy is stored by pumping water out of the spheres. A miniature model is being tested in autumn, and if successful will lead to a commercial pilot within 3-5 years.

New models for growing renewables

Corporate PPAs have been doubling every year since 2012 and in 2015 corporations purchased more wind power than utilities in a trend that looks to continue upward. One main driver behind the trend seems to be due to large corporations embracing sustainability, with half of Fortune 500 companies and 60% of Fortune 100 companies having climate and clean energy goals. Another is around development; with state renewable portfolio standards reaching capacity and slowing utility demand for new renewable projects, developers are seeking new markets. While the results can be win-win, corporate PPAs are not without challenges. In fact, in many cases they are virtual PPAs or contracts for differences; corporations do not buy electricity direct from the source, instead they contract to pay a certain price for a certain amount of energy, which is sent to the wholesale market before being bought by the corporation. When wholesale prices are above contracted prices, the corporation gets paid the difference, when they are below the corporation pays out (see Figure below, Credit: Google).

Corporate PPAs tend to be for shorter duration than utility PPAs (10-15 years instead of 20), and can even be cross jurisdictional. While some utilities are recognising the need for new “green” tariffs, other are pushing back. In Nevada huge exit fees are placed on customers who wish to sever utility ties; the MGM Grand will pay an $87 million exit fee, and Wynn Resorts has agreed to pay $15.7 million. While this is driving utilities to look at new opportunities in the market, they also run the risk of having to strand assets should they sign long term PPAs. Either way, these new models and growing corporate interest are driving renewable growth; according to the Rocky Mountain Institute, 60,000MW of new wind and solar may be called for by 2025 to serve the growing market.

Community solar is another growing market; as of August there were 103 active community solar programmes deliver 135 megawatts (MW), with another 350MW anticipated to come online in coming months. While many consumers remain unaware of community solar, once they understand the concepts about half (across both residential and commercial customers) would be interested in subscribing to a project. While the boom of solar projects may help close the gap and bring projects to more people’s awareness, there may be some challenges in place.

In June this year regulators approved a community solar programme in Maryland state, making solar power available to renters and residents of subsidised housing. However, to make this financially viable, the Public Utility Regulatory Policies Act obliges utilities to buy excess output of these projects. Renewable projects are also paid avoided costs, which have become controversial as they have not been adjusted to match prevailing wholesale power prices. This has led the Southern Maryland Electric Cooperative to file a complaint with the Federal Energy Regulatory Commission, and led FERC to review the role of the Public Utility Regulatory Policies Act as the energy market makeup changes.

In California recent changes have been approved that improve the alignment of distributed (non-generator) resources with traditional market structures, particularly improving storage and demand response opportunities to help the grid operator manage resources participating in its markets. This change allowing aggregated distributed resources to bid into grid markets, could be implemented as soon as early next year. 

Off-grid and microgrids

Tyalgum, a town of 300 residents near the Queensland-New South Wales boarded in Australia, is looking to go off-grid. The environmentally conscious community are turning to 100% renewable electricity, and have come up with a plan to ensure local energy can be generated in a secure and affordable way. Being at the grid edge, means Tyalgum can be disconnected without much disturbance on surrounding communities; they are currently awaiting regulatory approval. 

A desire for grid independence and resilience is emerging globally, and while many communities may not be looking to go totally off grid, microgrid deployment may provide an exciting new opportunity. In the US the capacity of microgrids, with on site generation and distributed energy resources, is anticipated to reach 4.3GW by 2020; a 116% increasing in annual installed capacity. However, greater opportunities might be realised if financing models also accounted for the public service that many microgrids can play, including social value streams. Now, an increasing number of utilities are interested in owning and operating microgrids, and looking at public-private partnership models for future deployment.  

Mixed-ownership microgrids market make-up
Credit: U.S. Microgrids 2016

A new microgrid project in Brooklyn is pushing the boundaries in terms of how such systems might be managed; local generation, energy trading between neighbors, and less reliance on traditional utility companies are key tenants in the cooperative TransActive Grid system, a joint venture between Lo3 Energy and ConsenSys, a blockchain developer. 
Although only a few homes are participating, the ideas and approaches toward peer-to-peer energy trading could be a crucial part of the future “internet of energy” 

Smart homes

Apple’s iOS 10, to be released this autumn, will see major updates to their smart home platform, HomeKit. Branching out from tech-savvy early adopters, HomeKit is aiming to bring remote and automated control to all iPhone users. The app is broken down into 3 tabs; home (a general overview of HomeKit setup, offering users ability to programme different scenes), rooms (where you can assign your smart appliances into rooms in the home) and automation. The automation tab starts to bring together co-ordination between devices in the home (so long as users also have the newest Apple TV or iPad to act as a hub); for example, if the iPhone sees users approaching their home (for example, through GPS tracking), it could open the garage door and start to set internal “scenes” automatically. 

One consequence of the new "smart home" is the large amounts of data that are being generated and documented. However, we currently lack regulation governing access and use of this data, and don’t really know how best to use it to add value to customers' lifestyles. Knowing that there are patterns with which appliances are used doesn’t necessarily help people to plan better, and the opportunities for personalised messaging based on this data wont necessarily be well received by households. Understanding how best to design and implement home energy management, and the degree to which consumers need or want to be engaged remains a hot topic of research as the smart home market continues to grow.

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