Climate Change

Looking back upon 2015, the year may prove to be a seminal one for climate change efforts. In October, the U.S. Environmental Protection Agency (EPA) published the final version of the Clean Power Plan that calls for a 32% reduction in power plant carbon emission by 2030. In December, the U.S. and 194 other nations signed an historic climate change agreement in Paris. As part of the agreement, the U.S. agreed to reduce its greenhouse gas emissions by 26% by 2025. Also in December, the U.S. Congress, in an exceedingly rare example of bi-partisan compromise, passed a bill that extended the solar investment tax credit and wind production tax credit subsidies for several more years.

Popular and scientific support for climate change initiatives appears to be growing and high-tech billionaire Bill Gates is taking a refreshingly reasoned approach in conducting his personal campaign to fight climate change globally.

President Obama is also pushing hard to make climate change action a legacy accomplishment for his administration. He recently appeared with renowned adventurer Bear Grylls on a special episode of the NBC TV show Running Wild with Bear Grylls. Accompanied by a small off-camera army of secret service and Whitehouse staff, the two hiked to the base of Alaska’s Exit Glacier, where they cooked salmon over an open fire, talked about life and discussed the impact of climate change upon the Exit Glacier (It has receded 812 feet since 2008) and the threat climate change poses to the world at large.

It seems that in 2015, the climate change train has accelerated and is now headed down the track under a full head of zero-carbon steam. So dust off your crystal ball, and let’s gaze into 2016.

What does the climate change future look like and what does it mean for the electric utility industry? What other major trends do you foresee emerging in 2016?

MICHAEL HEYECK

In my last entry for this column, I stated that Bill Gates wrote an op-ed published in The Washington Post [paraphrasing] to suggest zero emissions with existing technologies cannot be achieved. He further suggested that zero emissions can be achieved with breakthrough nuclear technology (e.g., the traveling wave reactor). This should be an imperative for any lower carbon future.

Politicians can only solve these large, seemingly impossible, problems with will and focus with the long term in mind. On May 25, 1961, President Kennedy announced before that decade was out we should place a man on the moon and have him return safely (the last point, missed by many, i.e., returning safely, was the real technical challenge). His leadership instilled focus with budgets and incentives to accomplish. Certainly focus is infinitely harder with global players, politics and pressures. However, I am hopeful that the United States, with its innate “can do” technological and spirited approach, can solve this problem.

Here is a proposed action plan that has as its foundation private-sector ingenuity with public-sector facilitation. This is certainly not all-inclusive, but it is a start to seed further ideas and refinements. It is hoped that once implemented, we can use the private sector to export the changing technologies globally using fair and free trade practices to make a difference worldwide.

1. Develop a breakthrough nuclear technology as Bill Gates suggests that is safe and more affordable. This is our only hope for zero emissions and should be a national imperative.
2. Develop a breakthrough energy storage technology that is more affordable (including a sustainable life cycle for the battery form of this technology). This not only helps renewables play better in grid operations, but the battery form also serves to displace fossil fuel for transportation via electric vehicles.
3. Use the market reach of transmission to make the economics of renewables more attractive for the sunset of the tax credits. This requires better business models (e.g., aggregation), innovative grid operation and market tools, and game-changing energy storage technology.
4. Focus on greater penetrations of electric energy for transportation, industrial processes and commercial uses to achieve lower effective emissions (e.g., displace billions of gallons of diesel fuel annually used for rail transportation by electrification of rail and use the corridors for added transmission capacity).
5. Transform distribution with more automation and transparency (and security), including finer volt/VAR regulation, continual monitoring and control by distribution system operators with clear interface protocols for (transmission) grid operations, and (communications) allowance for business models to reach distributed energy resources in aggregate.

This plan above will take years to achieve, but for 2016, I suggest the following focus for utilities (a taste that is not all-inclusive):

1. Given the greater certainty of the five-year renewable tax credit, greater renewable penetration will begin at both the T&D levels. Some suggest a 50% greater penetration, but it could be more in five years. Get ready for this.
2. As distribution infrastructure is replaced, enable better automation and transparency (and security) for the potential eventuality of distribution system operators, the need for communications protocols with (transmission) grid operators, and the potential aggregation for distributed energy resources.
3. Engage with regional transmission planners for further enabling of the Clean Power Plan via transmission build, and the potential for greater penetration of renewables. Continue replacement of aging transmission infrastructure in a smart way.
4. Get your head out of the box with changing business models and regulatory advancements (not just in your states). Perhaps the utility of the future is greater than a conduit with a fixed charge for wires with others at play. Consider the future (for example) with energy storage and distributed energy resources. Questions for formulating answers in 2016: What are your allowed to do by regulation? What do you aspire to be within those boundaries? Can you influence change in those boundaries? How will you get there?
5. As you upgrade T&D, recognize the reality that physical and cyber security is a continual upgrade process and not a “set it and forget it” process.

The New Year of 2016 has great promise for those with extraordinary will, laser-like focus and “can do” spirit. Ours is a great business to be in these days.

RICHARD BROWN

Climate Change (i.e., global warming due to carbon-dioxide [CO_2] emissions from fossil fuel power plants) is a highly politicized issue. Electric utilities are also highly politicized, and utility executives are feeling the “squeeze” between being good environmental citizens, keeping rates low and, in some cases, preserving coal-related jobs.

Climate science will continue to advance, particularly with regards to feedback effects of clouds, the cryosphere and the oceans. This will be aided by an increasing use of NOAA satellite global temperature measurements, which have been available since 1979 and can be used directly without modification, unlike land and sea measurements. These advancements will increasingly remove uncertainty related to temperature projections and the impact of various CO2 reduction scenarios.

Today, much of the utility pressure to reduce CO₂ emissions is gone due to cheap natural gas. Base-load energy production is shifting from coal to gas for purely economic reasons, resulting in dramatically reduced emissions as a bonus. Cheap gas has relegated the “nuclear renaissance” to a vague memory and greatly reduced the incentives of governments and utilities to focus on renewable energy mandates.

In a practical sense, our power system needs sufficient rotating mass to operate reliably. If natural gas increases in price, or it gets to the point where natural gas plants are regulated out of economic competitiveness (like what is currently happening to coal), from where will rotating mass come? Due to the lack of any other viable alternatives, nuclear is the best bet.

Today, it rarely makes sense to build a nuclear power plant when it is far easier and more economic to build a combined-cycle natural gas facility. If low natural gas prices persist, this trend will continue, and society will consider the CO₂ emissions of combined-cycle natural gas power plants preferable to the alternative of nuclear and all of its associated issues. If natural gas prices eventually go up, plan on “Nuclear Renaissance 2.0.” The coal industry fights for its life in either case – no new coal fired plants get built in the U.S., and U.S. coal increasingly gets shipped overseas where is still gets burned.

LEE WILLIS

To those who read this, thank you for taking the time and considering my opinion.

I worry about climate change a lot, but probably not for any of the reasons discussed here so far, or normally discussed. Climate change – global warming – whatever you want to call it, is occurring. That seems undeniable given what, as near as I can determine, are really the facts. But then, it always has been occurring. That is also undeniable. Our planet has been going through cycles of heating and warming and ice ages and “heat ages” for billions of years, for tens of thousands of times longer than we humans, as a society with recorded history, have observed it.

We know there are cycles in our weather like El Nino. There is substantial evidence there are longer-term cycles of longer duration, including “climactic energy storage” in the oceans that last 4,000 years or more. And clearly there are even longer-term cycles, as ice ages come and go, etc., that are there but we know little details of. The global climate is complex, with cycles upon cycles on interactions, swings back and forth from one global climactic extreme (polar ice caps reaching Oklahoma) to the other (ten degree rise compared to pre industrial age). 

My chief worry here is that the combination of politicians trying to do good, advised by scientists who think they understand and know what to do, has proven nearly toxic in situations like this. It may seem strange to use this as a comparison, but I draw your attention to Crater Lake and the changes happening there. The lake is a tiny micro-ecosystem and climate that is unique to the area inside the caldera. It is changing too, due to The U.S. Forest Service’s grossly mismanaging it, always with only the very best of intentions, always based on “the best scientific evidence available,” for the last century. Here is a link to what the Park Service itself says about this (and realize they are by far the gentlest critic of the situation right now):

I really don’t care much about a unique species of newt that I imagine the world can do without, or about Crater Lake ecosystem, or the trend in changes to its microclimate that appear to be turning the once pristine clear blue lake into the world’s largest and deepest opaque, algae-infested pool. Frankly, it would be more interesting and entertaining if the volcano would erupt again . . . sort of clearing the table and reinitializing the game so we could try a second round. 

But, seriously, Crater Lake is important to me because it is an example of what I worry about: Our political-scientific-institutional machinery mismanaged it, and in solving what they (but probably not the lake) thought was a small problem decades ago, created a larger, and very likely, unmanageable problem now. 

What concerns me most is that while our climate is changing, our centuries-old habit of thinking we understand and know what to do, and then doing it, isn’t. Scientists study a situation and learn, but also convince themselves they understand and see the big picture, when they often don’t, but their study and education and the fact that they know more than anyone else, gives them confidence in themselves – too much confidence. It convinces them that they know enough, and often that proves to be wrong. Politicians, for all we say negatively about them, generally respond by trying to do the right thing, at least as they and the political machinery see it, but they listen to the scientists, maybe not taking their advice, but eventually they take action informed by those scientists. History is replete with examples. 

Now we face climate change, and my biggest worry is that we’ll screw up the global climate in exactly the way the U.S. Park Service screwed up the ecosystem and “climate” in Crater Lake. The best and most informed scientists, acting through our political process, will direct our society to take actions to control the situation and only make it worse. When I was in elementary school, that system, including those “most informed scientists” at the time, was telling my classmates and me that “another ice age is coming, we just don’t know when.” And they were right; there eventually will be another ice age – count on it! But we were told in the 1960s that it would be next, and now . . . no. 

Maybe the volcano will explode here, too, and reinitialize, the planet simply deciding that the fools that evolved in its thin atmosphere don’t deserve another chance and it’s game over . . .

But hopefully not.  Anyway, with that said, what I think is:

Climate change is occurring. Undeniable. But it is not all to the bad, just different. Some areas will get worse. Some will get better. 

The seas will rise - we can deal with it. Talk to the Dutch. It’s manageable. It’s affordable. The solution is simple, durable and dependable. That’s all you need to know. Frankly, I look forward to having a shorter drive to the beach.

Global warming - It will get hotter, so what? The planet moves in cycles, guys. You’d rather have an ice age to deal with? I’ll take three degrees anytime. And if it gets worse? Well, people in New York will no longer have to move to Florida when they retire. They’ll have that climate right there! 

More storms and rain. It’s always seemed to me that ultimately it boils down to just about the energy. Global warming è more heat in the atmosphere è more energy in the atmosphere è more activity in the atmosphere è more hurricanes, more tornadoes, more evaporation and rain cycles. This strikes me as, ultimately, much the worse effect to deal with. And, no, don’t take the recent few “hottest years” on record and “worst cyclone in history” and tornado seasons as proof it’s happening yet. They could just be statistical anomalies. But eventually, yes, more storms, more rain, more activity in the atmosphere, in ways we haven’t seen and may not yet understand. This could be difficult to deal with.

Did we cause it? In particular, this conclusion that we did, bothers me a lot, and I offer it as an indication of how misguided we may be. I think, in a way, it is terribly arrogant of humanity to take the credit for the recent global warming trend. The planet’s been doing this (getting warmer, getting cooler) on and off in cycles for hundreds of millions of years. The fact that our recent activity correlates with the most recent rise in global temperature, over a period only about one ten-thousandth of the duration of all that time, means little given the evidence the planet does this by itself, anyway. We have proven we have the capability to ruin a local environment (and not just Crater Lake). Beijing. Rome might actually be worse in the long run. But planet-wide? We don’t understand how the planet works well enough to conclude that in my view. Maybe we contributed a bit, our carbon emissions being the straw on the camel’s back that exacerbated/accelerated a swing that would have occurred a few hundred years from now anyway. I tend to think that’s more likely the situation, but I don’t know. My real point is I don’t think anyone does.

I worry when I see people proposing solutions now. Particularly expensive solutions, solutions that will have their own, predictable consequences to our lifestyle and prosperity, but worse, unintended, unanticipated consequences for our climate and health we may not yet understand. 

Why do we think that cutting carbon emissions, etc., back to pre-industrial levels would fix the problem? The planet’s been going through this climate cycles for billions of years anyway.

What I’d like to see us do is stop panicking and realize we have to deal with this problem whether we caused it or not. We live on a planet that is, in its own way, a living, breathing system that goes through cycles. We evolved during a period of tranquility between extremes. If we intend to continue occupying this real estate, we have to eventually deal with the planet’s propensity to change climate regardless, in ways we don’t completely understand but must. So we’d better start owning up to that and not distract ourselves by saying we caused the climate change and just have to cut carbon emissions to fix the problem. That won’t fix the problem, not entirely, not in the long run. Maybe not even in the short run.

Finally, I think climate change, whether we contributed or not, is manageable.  I believe that technically, we can/could control global climate. I’ve read and thought about it a lot, and I think we could do it. It would be expensive, and completely “science fiction” technology (barely within our grasp now) involving controllable orbiting mirrors and shades a couple of hundred miles in diameter, seaborne sprayer ships powered by solar panels, and probably other things - "completely wacko ideas” - we haven’t thought of and proposed so far. But I think we can do it, and probably will have to if we stay on this planet another 200 years.

I have no objection to renewable energy, sustainable plans, etc. I think they are the right things to do. For one, they clean up Beijing and Rome and make this a better place to live. They are long-term sustainable options. But they won’t “save the planet” and they probably “won’t” save us, because we don’t need to save the planet from us. We need to save us from the planet. It will continue to do what it has done for billions of years, and sooner or later, we’ll have to deal with global warming regardless . . . and worse, if we are still here, another ice age. So I have no big objection to our going ahead and, in the cleanest and most efficient way possible, burning up all the fossil fuels we have. I think, on balance, the good the use of that energy does will, if we manage it well, do far more good for humanity than not burning it would do, if we manage it well and start learning to manage global climate. 

I just hope we do.

DOUG HOUSEMAN

I think we can set aside the term "climate change" within the industry. It is a term that divides rather than unites, in most cases. I would prefer to think of the changes as evolution in generation sources and requirements. Because of the regulatory environment the industry operates in, it will be regulation that drives the changes in the industry. Mandates already exist in California and Hawaii for massive amounts of renewable generation within the current industry planning horizon. Many more states are working on mandates, but most of the states have renewable portfolio standards that require significant amounts of either capacity or energy based on renewable generation.

FERC 1000 changes how transmission is planned and paid for, other FERC regulations are going to have other impacts on transmission planning and capitalization that will impact how the industry thinks about using transmission to connect to new renewable generation and where the new transmission may run. These rules have impacts on who pays and who does not, causing some pushback from state commissions and others. These issues are important but compared to distribution they are much simpler to plan for and operate within.

Distribution is heavily in flux from the push from Jon Wellinghoff and the Rocky Mountain Institute to take operations of the distribution grid away from the utilities and put it in the hands of independent system operators, and the push by solar-leasing companies to put as much solar onto the roofs of homeowners who meet their minimum credit standards to qualify for a second mortgage. Distribution planning and operations is becoming complex.

Coal generation is going away, very little if any of it will survive beyond 2030, most of it will be on the way to gone by 2020. Once the majority of the coal generation is gone, expect that natural gas generation will come under pressure to close. Nuclear generation is not economically feasible today and would take regulatory changes to make these investments viable. Expect the wild rivers organizations to push on removing hydro-electric facilities, and the wildlife-related groups to try to limit or remove wind turbines from areas that have higher levels of bird and bat strikes. Additionally, local communities are enacting zoning ordinances that limit placement of both wind and solar installations that would be visible from anywhere outside the owner’s property. In short, with all the fragmentation in society about what they want, generating any power at all in the emerging regulatory environment may be difficult. It will not get that bad, but some days it will seem that way.

Given the radical changes to generation the new regulatory environment will devolve to customers and distribution to work together to solve, along with a wide array of third parties, aggregators and other support groups. Getting this ecosystem together and willing to work together is going to be a major hurdle to the future. Some people are purely going to look at how much profit they can make and others may want to protect the economically disadvantaged groups, others may have regulatory responsibilities that limit what they can do or require them to do specific things. In short, there will be divergent goals in the ecosystem, and there may be no one in charge.

If every state required 1 kW of photovoltaic generation on the roof of every one of the 130 million residential units (e.g., apartment, condo, single family home, etc.) then a lot of PV would be installed and the impact on the grid would (in comparison to other options) be minimal. This would provide effectively a “negative load” impact on the grid. It would have a massive revenue impact on the utility industry and would change the daily load curve, changing the generation mix for the rest of the needed power.

Instead, most states have adopted a “first come, first served” method of allowing distributed generation. If the distribution grid can support it, then permission is given to install the distributed generation. If an early mover consumes all of the available capacity on a transformer, then their neighbor can be denied permission because they did not act soon enough. If the second mover is willing to pay the cost to change the transformer or make other needed changes to allow the grid to host their distributed generation then they can have permission. But the first mover does not have to pay any of the costs, even though they used all of the hosting capacity. This may end up in lawsuits and changing regulations in the very near future, as the density of distributed generation grows.

Most solar-leasing companies are pushing for first movers to install the largest, economically feasible generation capacity that the site will support, even beyond net-zero in some cases. Distributed generation will have a heavy impact on planning, engineering and operations in the distribution organization. In many cases, it is going to reverse the trend to smaller planning and engineering staffs.

Eventually there will be a hierarchy of markets, many may not actually have monetary value, but they will exist in some form of exchange of value (e.g., a homeowner trading lighting for air conditioning or heat).

The markets will probably fall into a hierarchy that starts within a home or business, then to the whole building (e.g., an apartment building or office building with multiple tenants), then to the transformer and the contention between the customers on that transformer, then to the segment and phase of the distribution circuit, the whole distribution circuit, the substation, and up to the typical wholesale markets. Expect that implicitly there will be ancillary services, capacity and energy markets at each level. Many users may never notice it, but they will exist. Some of these “markets” may be worth pennies per day, others will be worth thousands of dollars an hour. In many, there will be little or no contention 99.99% of the time, and in others, contention may exist most of the time.

Grid operations needs to be aware of the changes and how it will impact reliability, cost and provisioning.

These changes are just the tip of the iceberg of the changes that are coming from the regulatory environment changes. For some states, the future is now or soon; for many, it will be years to decades in the future. The patterns are being set now for what the impacts will be and how the regulatory organizations will act and react.

MIKE PARR

The question with respect to a "climate change future" is difficult to answer in objective terms apart from the fact that the INDCs (Intended Nationally Determined Contributions), now NDCs (Nationally Determined Contributions) proposed by countries pre-COP21 will not prevent temps exceeding 2°C. Ambitions need to be raised, given that with roughly a 2°C rise, the "entertainment" with respect to climate is increasing (UK floods, U.S. floods, 2015 hottest year ever, etc).

What This Means for the Power Industry

The power industry is on a trajectory towards no-carbon/low-carbon generation (ditto for transport, the other major emitter) coupled to on-going improvements in energy efficiency on the demand side. In Europe, "traditional" utility companies such as EON and RWE are trying to reorganise themselves as "service" providers, rather than just pushing electrons down a wire. It remains to be seen if they are successful.

Technical & Price Trends

In Europe, transition effects due to the move from fossil systems to no-/low-carbon systems will continue to be felt. Germany has a surplus of generation (due to government policy of allowing old fossil stations to keep functioning) that has pushed wholesale rates to below Euro30/MWh, which makes many/most stations only marginally profitable. This also has knock-on effects on prices in bordering countries. It also raises a question mark over the future of large power generators such as RWE and EON (who like capitalism in the good times but are hoping for some socialism/government intervention now that times are tough). Over the border, EdF also known as the French state, faces no such problems, apart from the certainty that Flammenville is likely to be the last nuclear reactor built in France, due to cost.

The above contrasts with the UK, where a lack of generation (due to government non-policy) has led to the highest wholesale prices in the EU (Euro70 - Euro84). The Scandinavians, Germans and French find this situation quite funny, particularly given that even with the highest prices in Europe, UK generators claim that power prices are still too low to justify new build. The UK government claims that this shows that UK energy markets are working. (irony alert)

Technology progress (coupled to a fall in material prices such as steel) has led to further declines in wind costs. For example, new-build on-shore North German wind now delivers a MWh at Euro53, which is 1 Euro less than new-build lignite. However, both technologies need subsidies, given currently low wholesale prices that have no prospect of a rise in the short/medium term (pace any changes in German energy policy). Lignite's and coal's days in Europe, in terms of new-build look numbered (although the Poles seem to think not). Across the Atlantic, it will be interesting to see how, with the extension of the PTC in the U.S., large-scale wind and PV costs evolve and how quickly parity is reached.

With respect to RES intermittency, storage and transport de-carbonization, it remains to be seen if EU governments have the ability/desire to see that power-to-gas could provide a solution to both problems. Germany looks promising.

In the area of networks, and with respect to TSOs, the CEO of 50 Hz (East Germany) claims to have the biggest installed base of on-shore wind in Europe. During 2015, 40% of power flows on the 50 Hz network came from this source and there is confidence (within 50 Hz) that they could go up to 60% to 70%. An example for other TSOs? Certainly, the Danes experience no problems with their wind, and National Grid in the UK has repeatedly said it has no problems handling renewables.

Denmark will announce the results of another round of off-shore auctions (600 MW) in February. It is likely that this will deliver an off-shore MWh over the lifetime of the wind farm at around Euro60. This will confirm Denmark as the global price setter for off-shore wind. Although the price is higher than Nordpool prices, it is certainly lower than UK prices, which is perhaps why National Grid and its Danish equivalent are going to build a 1.5 GW HVDC Denmark - UK power connection. This raises the interesting prospect of the UK being significantly powered by imported electricity, whilst at the same time having the largest (and unexploited) wind resource in Europe.

Governments, Policies & Companies

In Europe, action with respect to RES and energy efficiency is somewhat variable. In most cases, energy efficiency has been poorly tackled. That said, the Germans now appear to be committing to action, ditto the French. The UK, by contrast, has (quoting David Cameron, the Prime Minister) "cut all this green crap" with the result that the UK has no functioning de-carbonization policies or energy-efficiency policies. Mr. Cameron prefers the "market" to decide.

Returning to EdF-land (also known as France) the government is now focused on building out wind and PV because new nuclear costs too much. This policy is likely to continue, regardless of who sits in the Elysee Palace. In Spain, "traditional" power companies are worried about which parties will form the next government. This is based on the fact that a) rooftop PV in Spain can deliver a kWh for around 8 eurocents, b) the next government is likely to rescind some of the legislation passed by the previous government preventing people putting PV on their rooftops. This does not mean that subsidies will come back, just that it will be possible to build RES systems and connect them to a power network. That said, with the right connections, and provided you are part of the "in-crowd" (step forward Gas Natural Fenosa), it is easily possible to build new on-shore wind in Spain (with no subsidy). GNF has a 300 MW pipeline of such projects. Iberdrola also sells rooftop PV into the residential market. One is reminded of the words from the song "Me and Mrs. Brown" - "We got a thing goin' on" - which certainly applies in the case of GNF, Iberdrola and other incumbents on the Iberian peninsula.

In Europe, 2016 will see the "traditional power companies" attempting to reorganize themselves whilst still dreaming of the "good old days" and resisting with all their might market reform (which is ongoing). The intensity of the conflict and change in a given EU country will be partly a function of regulatory capture (the regulator as utility glove puppet - or not) and the level of government gullibility/bribability. And finally, for those who like watching disasters in slow motion, the UK's attempt to implement "smart meters" is likely to be particularly rewarding.

BRAD SCHMIDT

The question of climate change isn’t if there’s change, but rather what and who is causing it. That question will be debated ad nausea without any real resolve as it’s not largely not a scientific debate anymore, but rather all political, even within the halls of science.

The telltale on the futility of the U.S. effort to solve the climate change problem lies with a quote that came from the Paris conference by Secretary of State Kerry when he stated:

“The fact is that even if every American citizen biked to work, carpooled to school, used only solar panels to power their homes, if we each planted a dozen trees, if we somehow eliminated all of our domestic greenhouse gas emissions, guess what – that still wouldn’t be enough to offset the carbon pollution coming from the rest of the world.

If all the industrial nations went down to zero emissions – remember what I just said, all the industrial emissions went down to zero emissions – it wouldn’t be enough, not when more than 65% of the world’s carbon pollution comes from the developing world.”

The political aspect of the whole saving the world in which they live is something that most would find quite appealing. The scope of the argument seems to center around not an environmental concern or interest, but rather purely a financial one. The environmental aspect is simply the means to an alternative end; one can probably easily derive why an issue like climate works well as a means to such an end as people are often hesitant to part with their wealth at will. The redistribution of financial wealth aspect of this whole matter can be seen in many aspects:

As the scale of international climate finance needed above and beyond current flows requires the re-direction of hundreds of billions of dollars annually, public finance from developed countries plays a key role in leveraging the much larger flow of private finance attracted to investments in the energy sector. Public finance can assist in setting the direction for private investment, helping to channel it towards climate projects, such as renewable energy production, and away from investments in fossil fuel infrastructure. (Source:  The Road Through Paris.)

So if one is to believe Secretary Kerry’s comment about 65% of the pollution comes from the developing world, the above would question the ability to reform or change this matter, even with the vast amounts of monies promised through the Paris agreement, what with the adaption part of the equation largely being ignored. And that’s all hinged on the premise that it is mankind that is in fact causing global climate change. This is probably the fear that strikes the heart of those so adamantly pursuing the climate change decree, i.e. allowing science to truly and independently determine if the cause of climate change can be identified.

While the argument for climate change caused by humans consistently references a statement akin to ‘97% of scientists agree,' that argument has been debunked many times by many different entities as being a gross misrepresentation of the scientific community at best. Additionally, much has been written of the fight for research monies by institutions and researchers, and how those monies are limited to only those with an intent or promise that their research will support the foregone position on man-caused climate change, to the point that institutions and/or researchers have had research monies pulled from them if they in fact fail to provide the politically correct research answer (Sources:  Forbes, Climate Depot and The Wall Street Journal).  It’s troubling to see that research is not above being bought, or worse, threatened with funding.

It’s most interesting to watch the industry response to the matter; surely there is a diversity of reactions, varying from wholly supporting the current administrations direction to staunchly decrying it. What I find most interesting is how those wholly supporting him often are realizing significant financial gain by doing so, through such means as earmarked funding for ‘research’ or ‘demonstration’ projects, with those funds going directly to them or a wholly-owned subsidiary, or other more direct means such as tax incentives.

There was a recent report where some in the industry are taking a much different approach to the newly proposed CPP rules and regulations, stating it’s not their responsibility to protect their fuel source industries (i.e., coal and gas), but rather the states from where these natural resources are mined. That really poses a much broader question on the issue: Just what is the role of the power generation industry in this whole matter? For those who might be left with untold stranded investments in technologies that might be mothballed far before their depreciated life, who will bear those financial costs?

Likewise, while no one argues that the cost of renewable energy power generation has declined significantly, it surely must remain beyond the realm of being financially viable to develop or there wouldn’t be such a clamor for the extension of all the financial incentives that this assignment references were just granted by Congress. Truth be told, while there are numerous stories of ‘sold-out’ solar communities these days, there are also examples where those projects are not selling to the general public. The difference being the latter are not subsidized to a point that makes the investment feasible; those non-subsidized projects with 25- to 30-year paybacks just don’t make much financial sense to anyone who values their money. That begs the question: If American’s are hesitant to make that type of investment, why should the government be so anxious to do so?

Likewise, many utilities who were so willing to offer net metering interconnections to renewable energy production are now realizing the Pandora box they created and finding the attempts to close that door challenging at best. If renewable power generation was so affordable, why the need to net meter it? Again, many in the utility industry likely made decisions that appeared to be the politically correct answer only to find the decision was not feasible, and are now left to solve the unsolvable puzzle they created.

(For more discussion along with charts and graphs, please see Brad’s full response.)

MARLON VOGT

If we’ve been following the news, climate change seems to be a contributing cause of nearly everything bad that happens on the planet. A typhoon hits somewhere in Asia – climate change. Drought in California and the American west – climate change.  Forest fires and insect damage to forests in the Rocky Mountains – climate change.  Significant flooding events nearly anywhere (pick the current flood) – climate change. No snow in Iowa at Christmas – climate change. My dog has worms – climate change.

It was not that long ago when imminent planet doom was worthy of panic because of ‘global warming.’ Yet, we have seen the narrative change to the current-day crisis, now referred to as ‘climate change.’ When I read of someone still referring to warming instead of change, I wonder if they didn’t get the memo.

As a global society, we appear to be ‘warming to change.’

As Mr. Lee already noted, climate change, which by definition also includes periods of warming, has always been part of the global climate pattern. 

The recent United Nations Climate Summit created guidelines that were focused on a ‘not to exceed’ average temperature rise of 2°C. This somewhat arbitrary number is most assuredly a target determined as the result of a political agenda, not scientific analysis.

The United Nations Intergovernmental Panel on Climate Change, arguably the most comprehensive climate analysis document, does not even mention a 2° increase limit. The most recent data from the past 15 years indicates an average temperature rise of 0.09°F. Models predicted 0.8°, so the ‘warming’ is 90% lower than predictions upon which we are basing our policy decisions.

The Cato Institute’s Center for the Study of Science has determined that there has been “no significant warming trend in surface average temperature” in at least 18 years. The ‘catastrophic’ temperature increase, upon which most of today’s policies are based, essentially plateaued in the late 1990s and has not resumed a notable increase since.

The Intergovernmental Panel on Climate Change published a report in 2013 that predicts a critical level of global warming may never be reached, regardless of the level of man-made emissions. It notes that there is a significant difference between the climate model forecasts and actual temperature measurements. The numbers simply do not add up.

As a result of the climate concerns, we are seeing the following trends:

• Coal and nuclear base-load generation are largely no longer being built, and existing units are being removed from service
• Natural gas price and supply volatility has stabilized resulting in an increase in gas-fired base-load generation
• Renewable, non-base-load generation, specifically solar and wind, are expanding rapidly

Today, the impact of wind and solar generation, according to the International Energy Agency, accounts for 0.4% of the global energy consumption. The most optimistic predictions of renewable energy production deployment would only provide an estimated 2.2% of the global energy needs.

As a global society, we are making choices. We are moving away from base-load coal and nuclear generation. We are replacing these base-load sources with natural gas. We are embracing, legislating and moving forward aggressively with solar and wind generation. Wind and solar certainly offset other generation sources, but without utility-scale storage options, they are not base-load. 

We are making choices. These choices are being driven largely in response to decisions we have made regarding the man-made effects on climate change and our ability to affect these changes.

My purpose in adding to this dialog is to not debate the details of the larger questions, but to point out that we are making very important decisions related to our electric power system in the United States, and our decisions have critical consequences. We need to seriously consider and evaluate if we are making good choices, because our choices matter.

As utility professionals, we will be challenged to manage these disparate generation sources and their impacts on the grid, in ways that maintain historical system reliability and reasonable power costs.  The good news – we work in an exciting industry – and regardless of the future direction of the utility world, we will have important and interesting challenges to tackle. 

There is obviously much more that could be said about this topic, but I have to take my dog to the vet.

MATTHEW CORDARO

It is hard to argue with the possibility that the earth is getting warmer, since geologically it has been getting hotter and colder for billions of years, and without divine intervention, will continue to do so for billions more. The real question, however, is how much influence does mankind have on accelerating global warming?

Not that I have the answer, but man is  responsible for only a very small percentage of the so-called greenhouse gases in the atmosphere, and mathematical models predicting climate change do have a significant range of uncertainty. In fact, current models cannot accurately explain the actual temperatures observed in the atmosphere over recent time periods. Perhaps this is why the United Nations studies did not cite any specific ending temperature goal for limiting climate change.

Yet world leaders are calling for the commitment of trillions of dollars to reduce the long-term effect of global warming to a value of 2°C, when even the local weatherman would not bet his salary on temperature predictions in the week ahead forecast. What then could the motivation be for taking such a risk?

Maybe the reason lies in the politics of the issue rather than science. What better cause to be embraced by a politician than one where the truth will not be known for a century? Think about it: In the end, who will know who was right or wrong? Even better, who would still be around to make such a judgment? It is the ultimate in the kick the can down the road game that political leaders frequently engage in.

For 2016 and somewhat beyond, it does not appear the frenzy surrounding global warming will moderate unless the political winds change. Although remote, it could happen in the face of a global pandemic, or more realistically, a revelation that a greater proportion of financial resources should be dedicated to dealing with the consequences of global warming should it occur. Unfortunately for the utility industry, it cannot assume any of this will happen and must plan for a future dictated by policies designed to deal with climate change.

History tells us utilities are slow to embrace change, which is well demonstrated by continued reliance on coal for 39% of U.S. electric generation, despite efforts to reduce carbon emissions. As a result, it will be difficult for the industry to achieve milestones for carbon reduction, even with accelerated efforts in solar and wind programs. In actuality, renewables have a long way to go and are limited by their intermittent nature, scale limitations and substantial land requirements. With all the progress that has been made, wind and solar together account for only about 6% of current U.S. electricity generation.

Given this, over the next few years, natural gas will continue to be used as a fuel for generation, because it is cleaner than coal or oil, abundantly available and economical. Beyond this, apart from the hope that more practical and economic storage becomes available, the big gorilla in the room is nuclear construction, as well as the continued operation of existing nuclear units.

Unfortunately, due to the design of wholesale electricity markets, existing nuclear units with zero carbon emissions have become uneconomical compared to cheap gas plants and renewables. As a result, a number of existing nuclear plants have been prematurely retired or have announced plans for retirement. To correct this, changes must be made in the structure of the wholesale markets to recognize the unique qualities of nuclear power plants. In addition to being zero carbon emitters, these qualities include having high capacity factors and excellent reliability, even in severe weather.

New nuclear construction is probably the only large-scale option for significantly reducing fossil emissions. Several hundred new nuclear plants are now being constructed throughout the world, with a few located in the U.S., but many more will be needed if climate change goals have any hope of being attained. Ironically, many who once opposed the nuclear option are starting to embrace it as a means to reign in global warming, recognizing that as more units are constructed, designs will be improved and costs reduced. This will not happen, however, without worldwide acceptance of the concept and the establishment of supporting polices.

Believe it or not, the freight train representing climate change policies and actions is barreling down the tracks, and the utility industry has no choice but to jump on until someone pulls the emergency cord.

MIKE PARR

I've looked at some of the recent responses to the questions. All utility professionals in Europe “buy into” man-made climate change and that humanity faces an existential threat.

Posts by Brad Schmidt and others would be regarded as very strange, even by the likes of EON, RWE and other “fossil heads.” From time to time, I talk to senior people in the Europe Commission and elsewhere who meet U.S. congressmen, from time to time. The congressmen make the comment (I'm paraphrasing) "Gee, European politicians really buy into the climate change thing" (as if this was surprising). Even cretins such as the UK Tories "buy into" climate change. No political party in Europe, if it wants to stand a chance of getting elected, says that man-made climate change is not happening. This contrasts with the situation in the U.S., which we across the pond find very, very strange.

I'm a power engineer, I know how to design and run power networks. I'm not a climate scientist and as such leave it to experts (climate scientists) to provide me with information in this area. In the same way that I'd rely on experts to, for example, run a nuclear power station.

But what I see is power engineers doing “let’s play climate change.” Frankly, it’s pathetic. They should be ashamed of themselves. They are numerate, but that does not make them climate experts. However, when I look at what they say, well, they certainly fancy themselves as such. As we (used to) say in the UK, “Cobblers - stick to your last.”

This will end badly. Mark my words.

Many people smarter than me have confirmed that it is very real. A few people who appear to be smarter than me have also said that it is not real.

In last week’s State of the Union address, President Obama said the following:

What does the climate change future look like and what does it mean for the electric utility industry?  What other major trends do you foresee emerging in 2016?

But even if the planet wasn’t at stake, even if 2014 wasn’t the warmest year on record — until 2015 turned out even hotter — why would we want to pass up the chance for American businesses to produce and sell the energy of the future?

Seven years ago, we made the single biggest investment in clean energy in our history. Here are the results. In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power. On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills, and employs more Americans than coal — in jobs that pay better than average. We’re taking steps to give homeowners the freedom to generate and store their own energy — something environmentalists and Tea Partiers have teamed up to support. Meanwhile, we’ve cut our imports of foreign oil by nearly sixty percent, and cut carbon pollution more than any other country on Earth.

Agree or not, real or not, it is important to note that change is here. I, for one, believe that climate change is real and is already upon us.

So, what does this mean for us?

Quoting from my own blog from a few months ago, “The electric power industry is entering a very uncertain phase from a generation-profile perspective; at least in the U.S., coal power plants are being retired at rates almost similar to the ones that were seen from a commissioning perspective in the 60s and 70s.” 

From a centralized perspective, these sources of power supply are being replaced by natural-gas fired power plants. In addition, input of power from renewable sources, mostly wind and solar, is on a rapidly increasing trend. While some of the sources of renewable power are from centralized (or large) plants, the majority of this power is coming from distributed sources – mostly rooftop solar.  In fact, it is fair to point out that rooftop solar is probably the fastest source of new generation in the U.S. and very soon, will be in the world as well. To support this, a new study described in today’s Utility Dive states that a “new industry report shows solar photovoltaic prices are moving toward a lower and standard range nationally.”

So, what does this mean to the utility industry?

The growth of energy supply from renewable sources several challenges to the utility industry. I will attempt to drive through some of them in this article.

• Volatility of supply: This is the one that everyone is aware of. Most renewable sources of supply tend to have a variability that comes with them. Wind has to be blowing for a wind farm to generate and sun has to be shining for the solar cell to generate. What should a utility do when there is no wind or solar?
• Customer becoming a supplier: With exceptions to the “not so common” situation of an industrial customer with cogeneration facility, the basic utility equation has been that the utility generates and the customer consumes. With solar PV and others, for the first time, this equation will no longer be true. The customer will also generate and when they do so, will expect to get paid for the energy delivered to the grid.
• Not in control of location of supply sources: With the customer taking control of developing generation sources, the utility is no longer in full control of the location of generation sources and needs to deal with it. 

There are, I am sure, several other challenges that need consideration by the utility.

So, what should the utility do about it?

Surprise, surprise, surprise: utilities are not sitting still, waiting for someone to solve it for them.

With New York and California leading the way, it is very clear that utilities are already dealing with this new reality as presented above. 

Several options are being considered and being implemented at utilities all across North America.  Some key examples of what they are doing is presented below:

• Better forecasting tools to predict quantity and location of generation
• Newer mechanisms such as microgrids are coming into play which can almost be defined as smaller grids within the existing distribution grid. This grids have the ability to be somewhat self-sufficient in energy supply-demand under some circumstances.
• The advent of AMI and better sensing mechanisms in the field is allowing distribution utilities to control demand is ways that were considered not possible before.
• Better access to storage mechanisms whose prices are also coming down.
• Better power electronics that allow us to dispatch renewable sources of power.

So What?

The future is bright. The utility industry is very resilient, their personnel very smart and intelligent.  The solutions defined may not be perfect on day one, but will continue to evolve with increased penetration of new and unpredictable sources of energy supply. 

My biggest takeaway from all of this is that – distributed (and renewable) sources of power may actually have the potential to make our grid more secure, reliable and resilient by moving us away from the dominant dependence on fewer centralized sources of power and towards more sources of power. This new paradigm towards which we are moving could provide us with better ability to withstand either cyber attacks, weather-related attacks, or man-made attacks. 

As a power system engineer, I am positive that this is a better future for the utility industry.

Please share your comments in the space below.