You might recall that I wrote a column on the road map for a European low carbon future. The road map is an in-depth analysis performed by KEMA, McKinsey and the Imperial College of London. This document looks at the options Europe can take to ensure that 95% of electric power comes from decarbonized sources by 2050, resulting in investments of up to 136 GW of additional transmission capacity.
Low carbon sources would include up to 5,000 sq km (1,930 sq miles) of solar panels and up to 100,000 new and replacement wind turbines. On the customer side, we would see up to 200 million electric and fuel-cell vehicles, along with an additional 100 million heat pumps for buildings or city districts.
I have been looking for similar forward-looking studies or initiatives around the globe. Today, I am sharing from a bold work provided by the Rocky Mountain Institute (RMI) to look at reinventing energy with one of the intents to ensure a low carbon future.
RMI Chairman Amory Lovins has worked with fellow authors, along with national and global thought leaders, policy makers and energy executives, to craft a scenario where we can transition to an electricity future in 2050 that does not include oil and coal. In the book Reinventing Fire, which might more accurately be called a manifesto, Lovins and his fellow contributors from RMI provide three or four scenarios that would lead to a low carbon future.
Free enterprise is a central theme. Lovins believes in free markets and thus is looking at what our energy future could look like in 40 years if businesses adopted currently available technologies and if public policy were adapted to remove barriers to adopting energy and design innovations.
RMI outlines the steps required for the United States to produce 80% of its electricity from renewable sources by 2050. Lovins’ most promising scenario would be to come up with a mix of centralized and distributed renewables integrated into the grid using advanced communications and controls. But the proposed solution also requires access to real-time demand-side resources. RMI sees that advanced efficiency, demand-response technologies and the enabling power of microgrid-based communications and control systems are vital partners when developed together.
If we are to follow RMI’s “renew” scenario, we will need an additional 116 million MW-miles of high-voltage transmission lines by 2050, costing an estimated US$166 billion, largely to bring utility-scale renewables to load centers. Thirty-two states already have portfolio standards that will require 20% of load to be met by renewables by 2030.
Lovins et al. suggest we target the stock of existing larger buildings and apply both well-known and available energy-efficiency techniques to access energy savings on the order of 38%. For new construction and refurbishment initiatives, gaining access to integrative designs would enable us to extract another 16% to 31% of energy savings.
What particularly caught my attention is the opportunity for industrial and commercial consumers to also become producers of electricity. These so-called “prosumers” will generate electricity closer to demand and thus will not compete against wholesale bulk power generators but will compete against far pricier low-voltage retail power. In particular, CHP (combined heat and power) plants already common throughout Europe will become commonplace in the U.S. The tripling of CHP capacity to 240 GW would cut America’s total CO2 emissions by 12%, according to work referenced at Oak Ridge National Labs.
We are already seeing demand-response aggregators bidding into the grid. The PJM Interconnection market allows demand response to bid negawatts into the grid. RMI points out that more than 9% of the winning bids in PJM’s 2014/2015 auction were demand-side resources.
With customer behaviors changing, Lovins states that distribution companies must adapt if they are to remain relevant. Accordingly, the RMI team recommends we decouple electric utilities’ revenues from sales so that regulators can actually reward the utility for buying energy efficiency. Called shared savings, a utility could keep as extra profit one-tenth of the energy savings obtained through energy-efficiency initiatives.
The analysis that led to the above recommendations weren’t based on a carbon market. Similarly, author recommendations didn’t call on Congress to pass any new national taxes, to create any subsidies or to set any mandates. In fact, being an energy steward pays. In 2010 net present value, the integrative solutions are projected to cost $5 trillion less than business-as-usual solutions.
The vision provided by Lovins and his team at RMI might not require government intervention, but it does require broad stakeholder engagement if we are to gain public acceptance. Fortunately, the public has never been more aware of the impact of energy on the environment and the role energy plays in the quality of their lives. As we unleash consumers to make personal energy choices, they will reshape our industry and cause us to react in ways we have yet to imagine.