By Kate Zerrenner

Source: Winning Communities

Around 20% of the US population lives in an area that is classified as “rural.” The US Census Bureau defines an urban area as a territory with a population of at least 50,000, or a cluster of 2,500 to 50,000 people. Rural is then defined as anything outside of that definition. Rural areas face particular challenges when it comes to energy and water use. For example, utilities are met with higher costs and often find it harder to implement new clean technologies to modernize their energy infrastructure because of the great distances between customers and an irregular patchwork of reliable resources. Besides, many system planners and thought leaders for innovative energy technologies live in urban or suburban areas and may find it harder to relate to the specific challenges of rural settings.

It’s likely that climate change will impact rural communities in different ways than it will urban areas, due to a number of factors including the types of common occupations, poverty levels and demography. Of particular concern is the “climate gap”, which refers to the lower economic and physical adaptability of rural communities.  It will vary based on region, but research indicates that rural communities in the Southeast and Southwest could face particularly dire circumstances due to changes in electricity prices and water scarcity.

Areas that produce food for urban centers could face very serious problems, which in turn compounds these problems for everyone. According to the US Department of Agriculture (USDA), California is by far the largest food-producing state in the country, with Texas not too far behind. Both are water-constrained. Eight Midwestern states make up the rest of the top ten. To mitigate the severity of these consequences, rural residents and businesses need to address the inefficiencies in their electric and water usage.

Source: The Economic Collapse

Many companies and industries base their manufacturing facilities in rural areas because of land availability and lower costs. There are huge opportunities for efficiency gains here, and some companies have discovered this untapped potential. For a number of years, EDF has been working on mapping industries and manufacturing companies that are more energy efficient and help grow green jobs sectors across the US. Some rural electric cooperative utilities are leaders in helping inform their members about their energy use and offering solutions. I highlighted one great example in a previous blog post on Bluebonnet Electric Cooperative just outside of Austin, Texas.

The American Council for an Energy-Efficient Economy (ACEEE) recently published a report on energy efficiency opportunities for the USDA. The report highlights prospective grants and loans for rural communities to carry out energy improvements to their homes, properties or manufacturing facilities. The Farm Bill is up for reauthorization this fall, and includes many grant and loan guarantee programs for rural communities. However, the majority of clean energy assistance through the USDA is based on renewable energy, instead of energy efficiency. The vast majority is renewable biomass (over 94%).

As the ACEEE report notes, rural communities could greatly benefit by paying more attention to and encouraging grantees to apply for energy efficiency assistance that is available under the current system. This includes grants or loans for energy-efficiency farm or manufacturing equipment, feasibility studies, energy audits, revolving loan funds for rural cooperative utilities and developing water and electric conservation plans. While the energy-related provisions of the Farm Bill are relatively non-controversial, there is some danger to the bill’s reauthorization due to some more political issues included. But it’s important to ensure that energy efficiency programs, which are very cost-effective, remain well-funded and that rural communities are informed of their availability.

Urban populations need to be aware of and sensitive to the needs of our rural communities and their increasing vulnerabilities to energy and water constraints. Making up a fifth of our population is one thing, but these communities represent more than that — they are the lifeblood of this country, providing food and products that we all rely on. It’s imperative that our energy and water efficiency policies are promoted and taken up by these vital communities. We are all in this together.

By Greg Andeck

Environmental Defense Fund and the North Carolina Sustainable Energy Association recently joined the North Carolina Utilities Commission Public Staff and environmental colleagues in reaching an agreement with Duke Energy on its new incentive mechanism for energy efficiency investments.

The NC Utilities Commission is expected to issue a ruling on the agreement by the end of November 2013.  If approved, the agreement will motivate Duke to implement energy efficiency measures as broadly and cost-effectively as possible.  Duke’s efforts, in turn, can help ensure a robust market for providers of energy efficiency goods and services.

The agreement would replace Duke's avoided cost energy efficiency program, “Save-a-Watt,” with a business model known as “shared savings.”  Save-a-Watt, which expires at the end of 2013, was successful in motivating Duke to make investments in energy efficiency.  In fact, the company exceeded its energy savings targets, but the program was overly complex for energy regulators and stakeholders.

In contrast, the shared savings approach will split the anticipated dollar savings between Duke and its customers and set a single, flat rate of return.  By sharing the savings, the model properly balances the interests of the utility and customers, and it will motivate Duke to make energy efficiency investments that save customers money.  The shared savings model is the most commonly used energy efficiency utility incentive mechanism in the United States.

The recent agreement provides an additional financial incentive for Duke to achieve the voluntary energy savings it offered when the company merged with Progress Energy in 2012.  The merger agreement included a minimum 1% per year energy savings starting in 2014 and 7% cumulative energy savings over five years (from 2014-2018).  If the company achieves certain energy efficiency performance targets, it will receive this additional “milestone incentive.”

By the end of 2013, Duke Energy has also agreed to convene a stakeholder discussion on the feasibility of commercial/industrial on-bill repayment (OBR) and combined heat and power (CHP) programs, which will be necessary to achieve high levels of energy efficiency performance by the commercial sector.

If approved, Duke’s new business model could help clean up our air, save people money and grow the marketplace for energy efficiency technologies.

By Andy Darrell

Last week, the Hurricane Sandy Rebuilding Task Force released a Rebuilding Strategy, which aims to rebuild communities affected by Hurricane Sandy in ways that are “better able to withstand future storms and other risks posed by climate change.”  From an energy perspective, the main goal of these recommendations is to make the electrical grid smarter and more flexible.  This effort would minimize power outages and fuel shortages in the event of similar emergency situations in the future.

The Task Force is led by President Obama and chaired by Housing and Urban Development (HUD) Secretary Shaun Donovan.  The recommendations put forth in the report were developed with Governor Cuomo, Governor Christie, and a number of federal agencies and officials from across New York and New Jersey, representing an unusual opportunity to make changes that will help communities weather future crises.

This key idea – smarter, flexible energy – is central to resilience, safety and quick recovery in a storm, as well as reducing the harmful pollution linked to climate change in the first place.  This has been a key theme of EDF’s efforts to help the Northeast region respond to Sandy.

When the power grid went down on most of New York City following Hurricane Sandy, a number of buildings were able to keep their lights on thanks to existing microgrids and on-site, renewable energy sources.  The Task Force report lays out a path forward for taking these isolated success stories to scale and making these clean technologies available to everyone.

It is also essential for electric utilities to invest in technologies, like sensors and modernized digital meters, which give quick feedback about outages and enable fast response and transparent customer communications.  These technologies and policy solutions enable improved customer service and a wider range of options for customers.  Good examples include innovative ideas like TXU Energy’s ‘Free Nights’ in Texas, which offers customers free energy rates between 10pm and 6am (when the wind happens to blow the hardest), and the ability to manage the power grid where critically-important infrastructure like hospitals and school-based shelters can “island” themselves in a crisis.  These ‘microgrids’ also make it easier for utilities to manage an electricity network that takes full advantage of the technical potential of cleaner energy sources like solar and wind.

EDF’s smart power experts are already deployed in the thicket of utility regulation to help accomplish these goals.  Along with many partners, we’re ramping up in New York and New Jersey – and it’s not only helpful, but also inspiring, to add the Task Force’s wind to our sails as we work through the challenge of taking big ideas like these and helping to translate them into effective regulation.

The HUD strategy report also recognizes a key insight that is often overlooked in the esoteric, wonky debates about energy regulatory policy:  the vast potential, and therefore need, for energy resiliency occurs in our homes, offices, schools and public buildings – in other words, in the buildings that we use every day, in the way our neighborhoods are built, in things that we see and touch at home and work all the time.

For example, the report calls for smart recovery steps to make “housing units – both individual and multi-family – more sustainable and resilient.”  One idea put forth recommends that mortgages and insurance plans should offer affordable energy upgrades and one-stop shops for clean, distributed, customer-side energy resources.

EDF, too, is advancing ideas like on-bill-repayment to create an easy path for energy efficiency upgrades to be financed with both private and public capital.  Efficiency, solar and other renewables create financial savings for customers that open the door to financing, because they pay for themselves over time.  Our Investor Confidence Project offers a template for making those energy savings transparent and bankable to the investment community.

Responding to a crisis like Hurricane Sandy is in many ways a complex exercise in connecting the dots across policy, finance and infrastructure.  Envisioning what all this looks like can be a challenge, and I’m excited that HUD has partnered with the Van Alen Institute (disclaimer: I’m a trustee there) and other civic groups to launch a competition for energy-resilient, post-Sandy designs.  It’s time to connect the dots between energy regulation, resilience and what we need to be safe and secure, in ways that celebrate our great communities, cities and coastlines.

Fortunately, these steps by the Task Force are a great start.

By Kate Zerrenner

Source: feww.wordpress.com

Over the past few weeks, I’ve written a number of posts to help shed light on the fundamental connection between energy and water. Because many of our energy sources gulp down huge volumes of water, it’s imperative that we break down the long-standing division between energy and water planning — especially in drought-prone states like Texas. I’d like to take a step back and look at how Texas’ neighbors are addressing energy and water co-management. While Texas may be an extreme example, looking toward its immediate neighbors could provide ideas and best practices to improve the state’s situation.

A number of western states are facing many of the same challenges as Texas. Electricity production is a major drain on the region’s water supply. A study co-authored by Western Resource Advocates and EDF showed that thermoelectric power plants, such as coal, natural gas and nuclear, in Arizona, Colorado, New Mexico, Nevada and Utah consumed an estimated 292 million gallons of water each day in 2005 — roughly equal to the amount of water consumed by Denver, Phoenix and Albuquerque combined (and we’re talking water consumption, not just withdrawals). Like Texas, the western states face a future of prolonged drought. Scientific models predict climate change will increase drought throughout the Southwest, placing greater stress on the region’s delicate water supply.

Additionally, electricity production, numerous thirsty cities and widespread agricultural activity all strain the water system, too. Because so many flock to western states for fishing, kayaking, rafting and other recreational water activities, setting the region’s water system on a sustainable path is a critical economic issue. The exceptional challenges facing western states have already prompted some states to consider the energy-water nexus when planning to meet future water and electricity needs.

Arizona

Palo Verde Nuclear Center. Source: SouthwestClimateChange.org

Arizona is at the forefront of innovative co-management policies that address the energy-water nexus. The Arizona Corporation Commission (ACC), the state agency charged with regulating electricity, has considered water in its electric resource planning for over ten years — and as we have acknowledged before – water use is no small consideration. The agency has gone so far as to deny permits for proposed natural gas power plants partially due to their impact on groundwater supplies. The ACC has also ordered Arizona Public Service (APS), the state’s largest and longest-serving electric company, to consider building new solar farms, specifically noting solar energy’s low-water needs. To APS’ credit, the company has reported water consumption for its energy portfolio since 2009, although water has been a factor in energy planning for far longer than that. Since the 1980s, the Palo Verde nuclear plant has used treated wastewater from the city of Phoenix rather than fresh water, successfully offsetting 20 billion gallons of fresh water consumption each year.

One of Arizona’s largest utilities, the Salt River Project (SRP), provides both water and electricity services to the Phoenix metropolitan area. Oddly enough, SRP considers water in its electric planning, but does not consider electricity in its water planning. In its electric planning, SRP estimates the monetary and social costs of new water supplies needed for power plants, but doesn’t consider the explicit economic value of the water resource itself. Thus, despite SRP’s admirable work on the energy-water nexus, it’s not looking at the full picture.

While the electric side of the equation is making strides to bridge energy and water planning, the water side is farther behind. An illustrative example is the Central Arizona Project, a 336-mile aqueduct that delivers 500 billion gallons of water per year to Tucson and Phoenix. In addition to being the largest and most expensive aqueduct system ever constructed in the United States, it is also the leading electricity user in Arizona. Each year, the aqueduct uses 2.8 million megawatt-hours of energy (about a quarter of the energy produced by a coal-fired power plant) to move water across the desert and up mountains.

Some areas of Arizona are working to reduce water’s enormous energy footprint. For instance, the City of Tucson has a robust water recycling program. By using recycled water rather than drinking water for irrigation, the city saves enough water to provide for over 60,000 families each year, reducing the city’s reliance on more energy-intensive freshwater supplies.

Colorado

Colorado is another state working to unite energy and water planning. The state’s renewable portfolio standard, passed by voters in 2004, highlights renewable energy’s smaller water footprint. The state also encourages the Colorado Public Utilities Commission (PUC) to consider water resources in its electric planning and to include water usage when evaluating permits for new power plants. For the past three years, the state has required utilities to report water withdrawal and consumption information for all of their power plants.

Notably, it seems Colorado policymakers have realized the energy-water nexus is a two-way street. In addition to the state’s electric sector considering water use, the state’s water planners intend to include a segment on the energy-water nexus in their upcoming state water plan. Some Colorado cities have even stepped up to address the challenge.

Fort Collins quantified its greenhouse gas (GHG) emissions as part of its Climate Action Plan and, in the process, discovered that 26% of the city’s GHGs came from its water and wastewater facilities. Within two years, city officials were able to reduce electricity use for water and wastewater by over 7%. Having a comprehensive climate action plan that acknowledges the connection between energy and water enabled city planners to identify novel energy savings and tackle the energy-water interconnection head on.

While all of the western states are threatened by the effects of climate change and the energy-water nexus, some states are doing more to prepare than others. Western states should look to regional leaders, like Colorado and Arizona, as they develop policies to address this imminent challenge. Texas can learn from what other states in the West are doing. Our water and electricity planners should be looking at each other’s sectors as a matter of course and adopting innovative solutions that reduce energy’s water needs and water’s energy needs for a sustainable future—solutions I plan to investigate in my next post.

This is one of a group of posts that examines the energy-water nexus, Texas’ current approach to energy and water policy and what Texans can learn from other places to better manage its vital resources.

By Marita Mirzatuny

This commentary originally appeared on EDF's Voices blog.

Source: Department of Energy Solar Decathlon/Flickr

These days, the future is often in the news. It’s not uncommon to come upon articles about cars that drive themselves, vacation trips to space, and automated smart houses a la the Jetsons.

I don’t know much about space tourism or self-driving cars, but I do know that smart homes and the associated technologies are already allowing for the possibility of environmental benefits and economic savings that are nothing short of futuristic.

Our utility grid is the largest machine in world. Unfortunately, however, this machine exacts human and environmental costs all the way down the line — from extraction to combustion. But we’re at the beginning of an energy revolution in home energy management systems that may make consumers key players in solving these problems.

What are home energy management systems (HEMS)?

The platform for increased interaction between consumers and the energy grid will be home energy management systems (HEMS), devices that are part iPad-for-your-home and part thermostat. Some of these devices already exist – from apps that allow users to play games and earn rewards while saving electricity, to GPS-enabled programs that  cool down your house when you’re on your way home from work in the summer .

It has been forecast that the number of households with HEMS will grow to more than 40 million in 2020. (Companies like SONY and Hitachi are in the R&D phase with HEMS devices, while Nest and Check-It already have some on the market.) And if HEMS can be combined with services we already use — like utilities, security, cell and Internet, then more consumers will buy in.

Why aren’t more people using home energy management systems?

The problem, so far, is that technological advances in our electrical grid have tended to benefit the utilities more than the consumer. For example, by the end of 2015, approximately “45% of all U.S. households will be served by smart meters. But as few as 10% of those meters will be enabled for two-way communications” via HEMS.

Lacking that interactive connection with the energy grid,  consumers won’t fully benefit from HEMS’ capabilities, like providing them with real-time information on energy costs and usage, which will let people save money by using power when its costs are lowest, and even earning money by selling unused, locally generated power (say from rooftop solar panels) back to the utilities.

That’s where the future of energy usage is today. We’ve reached the point where we have the technical ability to create a true interactive smart grid that benefits consumers and utilities and the environment. But we haven’t yet put in place the state-by-state rules and regulation that will allow all that futuristic technology to take full effect.

There are market-based obstacles that can be overcome, and EDF is working in a number of states – from Illinois to California to Texas – to get the regulations needed for a true smart grid that will bring convenience, savings and environmental benefits to consumers, utilities and the environment.

By John Finnigan

If Ben Franklin lived today, he might say that nothing is certain but death, taxes and cyber-attacks.  Cyber-attacks occur when individuals or groups hack into another group’s computer information systems to steal, alter or damage key infrastructure.  Our nation’s electric grid is under constant attack according to a survey of electric utilities by U.S. House Representatives Henry Waxman and (now) Senator Edward Markey.  The grid was the greatest engineering achievement of the 20th Century, but cybersecurity was equally unknown to those grid engineers as it was to Ben Franklin.  We need to do more to protect our energy infrastructure.

The U.S. has finally called out China for repeated and pervasive cyber-attacks.  Mandiant, a cybersecurity firm, released an alarming report in February 2013 regarding the ongoing cyber-attacks by the Chinese army.  James Clapper, the Director of National Intelligence, described cyber-attacks as a soft war already underway and a dire global threat in his April 2013 World Threat Assessment to the U.S. House Permanent Select Committee on Intelligence.  In May of this year, for the first time, the Pentagon’s annual report to Congress on the Chinese military openly accused China’s military of repeated cyber-attacks on the U.S. government and defense contractors.

Cyber-attacks are underway not only by China, but also by Iran, Russia, Al-Queda, organized crime, industrial spies, ex-utility employees and rogue hackers.  The U.S. Department of Homeland Security investigated over 200 serious cyber-attacks against critical infrastructure during the first half of 2013.  The electric grid was targeted in over half of these attacks.  At the recent Black Hat security conference in Las Vegas, Cyrill Brunschwiler of Compass Security explained how the smart grid’s wireless network can be easily exploited to steal electricity and to cause massive blackouts.  Though innovation and new clean energy technologies are key to modernizing our antiquated energy system, the electric grid is more vulnerable to cyber-attacks with increased use of smartphones, tablets, mobile apps and electric vehicles to connect with our home electronic devices.  A July 2012 report by the Government Accountability Office (GAO) outlines the various threats to the electric grid.

Have any of these grid cyber-attacks succeeded?  Some experts blame cyber-attacks for the Northeast blackout of 2003 and a massive 2008 Florida blackout.  The Central Intelligence Agency (CIA) has reported that cyber-attacks against the electric grid have caused blackouts in several cities around the world.

Here are the key highlights of our country’s efforts to protect the U.S. electric grid:

• In 2002, the nuclear industry adopted cybersecurity standards; the Nuclear Regulatory Commission expanded these standards in 2009 with cybersecurity regulations for nuclear facilities.

• The Energy Policy Act of 2005 authorized the Federal Energy Regulatory Commission (FERC) to approve mandatory cybersecurity reliability standards for the grid.  FERC selected the North American Electric Reliability Corporation (NERC) to develop these standards.

• In 2006, NERC developed mandatory reliability standards for the grid.

• In 2007, FERC approved NERC’s Critical Infrastructure Protection (CIP) cybersecurity reliability standards.

• The Energy Independence and Security Act of 2007 authorized the National Institute of Standards (NIST) to develop technical standards for interoperability of smart grid equipment and software, including cybersecurity standards.  In 2009, NIST formed the Smart Grid Interoperability Panel (SGIP), a public-private partnership, to develop these standards.  In turn, SGIP formed the Cyber Security Working Group (CSWG).

• In 2010, NIST issued its initial cybersecurity standards for smart grid equipment and software, developed by the CSWG.

• In 2010, FERC issued Order 743, directing NERC to revise its reliability standards to cover all electric facilities necessary to operate an interconnected grid.

• In 2011, FERC clarified the reliability standards regarding actions utilities can take to keep the grid running during electric emergency conditions.

• In 2012, FERC approved NERC’s revised reliability standards for the electric grid.  In January 2013, NERC asked FERC to approve further revisions and FERC is reviewing these new revisions.

Source: InSerbia

• In February 2013, President Obama issued Executive Order 13636, which directs NIST to develop a Cybersecurity Framework with standards for the protection of critical infrastructure facilities, including the electric grid.

• In April 2013, the SGIP was formally established as an independent organization, known as SGIP 2.0, Inc.  The organization will continue to function as a public-private partnership, and will be funded by industry and NIST.  Cybersecurity standards will be developed by the Smart Grid Cybersecurity Committee of SGIP 2.0.  This committee is developing a user’s guide for the NIST cybersecurity standards.

• In July 2013, NIST released a preliminary version of its Cybersecurity Framework.

Here’s what our country still needs to do to protect the U.S. electric grid:

• Our leaders must ensure that federal budget cuts do not impair the Department of Homeland Security’s capability to protect our nation’s critical infrastructure.

• Our leaders must develop a clear, overarching cybersecurity strategy, governance methods and cybersecurity response procedures, as the GAO recently recommended.

• FERC and electric utilities must implement the GAO’s recommendations, detailed in its July 2012 report Cybersecurity: Challenges in Securing the Electric Grid.

• NIST must finish developing its Cybersecurity Framework and utilities must implement the standards.  NIST is scheduled to release the Cybersecurity Framework for public comment in October 2013, and to finalize the standards by February 2014.

• Electric utilities should comply with NERC’s voluntary cybersecurity recommendations.  Currently only 20% of electric utilities follow these recommendations.

• The public and private parties responsible for protecting our critical infrastructure facilities must adopt GAO’s recent recommendations for implementing better communication protocols.

• The Department of Homeland Security and the Federal Communications Commission must develop performance standards for cybersecurity measures for the communications network and the internet in a timely manner, as recommended by a recent GAO report.

• The Department of Homeland Security must implement the GAO’s recent recommendations regarding the Regional Resiliency Assessment Program.

• The Senate should pass the Cyber Intelligence Sharing and Protection Act of 2013, which better enables the government and companies to quickly share vital information needed to respond to a cyber-attack.  The electric utility industry provided input for this bill and is a strong supporter.  The bill passed the House on April 18, 2013 by a 288-127 vote.

As the U.S. improves its preparedness, we must strike the appropriate balance between security and privacy.  Preparation and privacy rights can co-exist and are not mutually exclusive.  This has been brought into critical focus by Edward Snowden’s release of top-secret National Security Administration surveillance practices.

We can and must improve the cybersecurity of our critical electric infrastructure.  As Ben Franklin also said: “By failing to prepare, you are preparing to fail.”  Let’s prepare to succeed in protecting the electric grid with effective cybersecurity measures.

By Tim O'Connor

This commentary originally appeared on EDF's California Dream 2.0 blog. 

For a window into two vastly different visions of our state’s future, take a look at the comments filed last week as part of the AB 32 Scoping Plan update process. The 2008 Scoping Plan lays out the approach that California will take to achieve its goal of reducing emissions to 1990 levels by 2020, and this is the first 5 year update.

EDF’s comments reflect what most Californians have already asked for – a laser focus on expanding emission reductions and providing ample clean energy opportunities for businesses throughout the state.

This includes:

• Increasing emission reductions from vehicles, goods movement and the agriculture sector;
• Developing diversified low-carbon fuels that yield cost reductions;
• Integrating clean energy and energy efficiency through programs like “time-of-use” pricing and On-Bill Repayment;
• And, extending the cap-and-trade program and low carbon fuel standard beyond 2020;

All of the opportunities outlined by EDF aim to fulfill the Scoping Plan’s mission: achieving the maximum technologically feasible reductions in greenhouse gas pollution in a cost-effective way.

A recent report by the California Air Resources Board (CARB) shows that refineries and other businesses are investing in the future by taking advantage of energy efficiency and savings opportunities under AB 32 – at a rate that has increased since the adoption of the 2008 Scoping Plan. A price signal for cap and trade beyond 2020 would reduce uncertainty, create a robust and stable market, and is key if California wants to continue driving these energy and money saving opportunities.

Comments filed by the California Chamber of Commerce (Cal Chamber) tell a different story.

Rather than encourage long term planning and a robust low-carbon economy, they've joined in lockstep with organizations like the Western States Petroleum Association (a representative of large oil including Exxon and Chevron) to try and hinder the state’s efforts to cut greenhouse gas pollution. Just as their frivolous lawsuit shows they would rather expend resources on litigation rather than innovation, they used the entirety of their comments to discourage CARB from using the Scoping Plan update as a tool to drive the state forward towards a clean-energy future.

Although they admit “the AB 32 mandate does not vanish in 2020,” they’re short on ideas that reduce greenhouse gas pollution in the state at the lowest possible cost.

They also fail to recognize that under the current cap-and-trade program, businesses have the tools and flexibility to reduce emissions through cost-effective means, and ignore the over 350,000 jobs created from California’s green economy.

A major part of the Cal Chamber’s argument is that California is going it alone, creating an unfair playing field for businesses in the state. They conveniently forget that Quebec will link with California’s cap-and-trade program in January 2014, and that there are complementary programs nationally and globally: RGGI has proposed severely lowering its emissions cap, and even China – the world’s biggest polluter – has started pilot emissions trading programs in an effort to potentially move towards a nationwide carbon cap in 2016.

While ideas like extending the market signal and expanding programs that help integrate clean energy and energy efficiency point us towards a bright future of innovation under AB 32, oil companies continue to stand in the way of progress and resist moving toward a robust, low-carbon economy. With apologies to Charles Dickens, this is a tale of two (very different) visions for California’s clean energy future.

By Tomas Carbonell

Source: Sage Metering

August is typically a quiet time of year, and particularly so for work that concerns the nation’s capital. But amidst the dog days of summer, federal regulators made a fairly significant move this month to preserve stricter emissions controls for thousands of large storage vessels used to temporarily house crude oil, condensate and other liquids.

Last Monday, the U.S. Environmental Protection Agency (EPA) issued a rule that keeps in place an important aspect of its oil and gas pollution standards (or New Source Performance Standards, NSPS) issued last year, including provisions for storage tanks that emit six or more tons of ozone-forming air pollutants annually. These standards were intended to help reduce ground-level ozone and methane emissions in areas where oil and gas production occur. EPA proposed revisions to these standards in April of 2013 in response to industry petitions for less stringent requirements that would have considerably diminished important gains made by the NSPS to protect public health and the environment. EDF and five other environmental organizations joined together to strongly encourage EPA’s reconsideration, opposing these revisions in detailed technical comments filed with the agency.

EPA’s final rule is good news in the fight for cleaner, healthier air.  Whereas the April 2013 proposal would have created a broad exemption from emission controls for thousands of recently-built tanks, the final rule ensures that operators of all new storage tanks that pass the six ton threshold will be required to reduce emissions by 95 percent.  Controlling emissions from oil and gas storage tanks is important.  Roughly 20,000 newly constructed tanks have been added in the field since August 2011 and these receptacles, if not properly managed, could be a large source of ozone forming pollution, as well as climate altering methane emissions.  Had EPA proceeded to establish a broad exemption for these tanks, millions of tons of additional ozone-forming pollution and hundreds of thousands of tons of methane would have been released into the atmosphere.

Ground-level ozone pollution (commonly known as “smog”) is a public health issue known to cause a host of respiratory problems. Exposure, even in low concentrations, can contribute to serious adverse health impacts, including decreased lung function and premature mortality. Children, the elderly, Americans with existing lung and heart disease, and those active outside are especially vulnerable. Oil and gas development is a significant source of pollutants that result in ozone formation and also a contributor to degrading air quality in several states around the country, including Wyoming and Colorado.

Proven, cost-effective technologies needed to meet EPA’s storage tank standards already exist and many leading companies in the oil and gas sector have been using such technologies for years, even though some industry groups pushed back against regulations. As part of EPA’s ruling, regulators mandated emission controls for all storage tanks added since August 2011 on a phased-in schedule (the new compliance date was pushed back from October 2013 to April 2015).

Despite this welcome news on storage tanks, the final EPA rule includes several other provisions EDF and its partner organizations have objected to in comments – including a 6-month delay in the compliance deadline for certain newer storage tanks and a provision allowing tanks that bring their emissions below a certain level to stop using emission control devices.  Going forward, EDF will continue to advocate for rigorous implementation of these standards, as well as the adoption of additional protective measures to reduce emissions of harmful pollutants from the oil and gas sector.

Elizabeth Floyd, a legal intern in EDF’s Washington, DC office, assisted in preparing this post.  

By John Finnigan

Source: Costco

The electric utility industry faces the risk of declining revenues as more customers install solar panels on their homes and businesses.  Solar power currently supplies 2% of the country’s electricity needs, and is projected to grow to 16% by 2020. In 2013, solar panel prices for commercial installations fell 15.6%, from $4.64/watt to $3.92/watt.  To protect their revenues, some utilities are raising electricity costs for solar panel owners – but with mixed results.  Credit ratings agencies are also expressing concern.  Is there real cause for alarm or are these companies crying wolf?  Judging by one customer segment – big-box retailers – the threat is real.

The Solar Energy Industries Association (SEIA) ranks U.S. companies based on their solar energy capacity, and the top five companies on the list are big-box retailers:

• Walmart tops SEIA’s list with 65,000 kW of solar power, which is enough to supply the annual energy needs of over 10,000 homes.  They recently installed ten new solar rooftop systems in Maryland, totaling more than 13,000 panels.  Walmart is the largest retailer in the U.S. and in the world by revenue, with 4,423 U.S. stores and over 10,000 stores worldwide. Walmart and EDF have been working together since 2004 to reduce the Walmart’s environmental footprint.  With more than 200 solar installations across the country, Walmart plans to have 1,000 solar installations by 2020.  Walmart’s goal is to eventually supply 100% of its energy needs with renewable energy.

• Costco ranks second on the list with 38,900 kW of solar power.  Costco is the fifth largest U.S. retailer and seventh largest in the world, with 425 stores in the U.S.  Costco has installed solar panels in approximately 60 stores, with an average size of 500 kW per store.  Solar power supplies about 22% of each store’s energy needs.

• In third place on SEIA’s list is Kohl’s, with 36,474 kW of solar power.  Kohl’s is the 20th largest retailer in the U.S. and the 44th largest retailer in the world, with 1,127 U.S. stores.  Kohl’s has solar panels installed at 139 of its stores, and will have solar panels at 200 stores by 2015.

• IKEA is fourth with 21,495 kW of solar power.  IKEA only has 38 U.S. stores, but its buildings can accommodate larger solar installations.  By 2020, the company plans to meet 100% of its energy needs with renewable energy.

• Macy’s ranks fifth on SEIA’s list with 16,163 kW of solar power.  Macy’s is the 16th largest retailer in the U.S. and the 36th largest retailer in the world, with 840 stores.  The company is increasing its solar installations by 25-35%.

The SEIA top 20 list also includes:

• Staples, #8 / 10,776 kW of solar power / 1,583 U.S. stores;
• Walgreens, #10 / 8,163 kW of solar power / 7,651 U.S. stores;
• Bed, Bath and Beyond, #11 / 7,543 kW of solar power / 1,143 U.S. stores; and
• Toys “R” Us, #12 / 5.676 kW of solar power / 871 U.S. stores.

As a whole, the top 20 big-box retailers have over 18,000 U.S. stores, representing enormous potential for solar power growth.  These retailers are only part of a larger group of commercial customers, which in total make up about one- third of U.S. electric utility sales.  But other commercial customers are turning to solar too.  The National Renewable Energy Laboratory reports that 40% of the nation’s 86,000 supermarkets are located in areas with grid parity (the cost of power from solar panels is equal to the cost of buying power from the utility).  Commercial customers are also making impressive strides in reducing their energy usage through energy efficiency.

What does this mean for electric utilities?  We can expect to see the following changes to the electric utility business model going forward:

• Utilities will need to address the operational challenges of higher levels of solar power on their electric grids;
• Utilities will seek to limit the number of customers eligible for net metering plans, where the customer is paid for the excess energy supplied by their solar panels;
• Utilities will seek to reduce payments received for solar energy produced by net metering customers, who currently receive the full retail rate for their excess energy in many  states;
• Utilities will seek to implement new, fixed charges for customers who install solar panels on their property;
• Utilities will start new businesses providing solar installation services for customers;
• Utilities will seek approval to own solar power installations located on their customer properties; and
• Regulators and utilities will consider adopting performance-based electricity rate plans. These plans would charge for electricity on the basis of service and performance, rather than the volume of energy sold to customers.

Source: Costco

These changes present a host of legal and regulatory challenges.  As a guiding principle, utilities must have an opportunity to earn a fair return in exchange for keeping the lights on.  Similarly, electricity rates for solar panel owners should fairly reflect the full costs of serving these customers, as well as the full benefits that solar power provides to the electric utility.  These changes will be disruptive for electric utilities, but will allow customers to choose affordable clean energy and new technologies.  We’ll all benefit from cleaner energy and a reliable electric grid.

By Jackie Roberts

GE and First Solar announced earlier this week an important step towards consolidation of the solar industry that will result in the loss of a new solar manufacturing facility  in Colorado and, potentially 350 jobs.  Clearly the announcement is frustrating for Colorado, a state we featured in EDF’s Clean Energy Economic Development Series, which highlights key road maps for maximizing economic development from clean energy markets.

But, the announcement includes lots of good news – which is probably more significant for the U.S.’s long-term solar power play as well as overall economic opportunity and job creation.  In 2009, GE purchased PrimeStar Solar, a company first seeded at the Department of Energy’s National Renewable Energy Labs (NREL), located in Colorado.  PrimeStar Solar (renamed Arvada research center) made significant advances in the efficiency of cadmium-telluride (CdTe) thin film solar panels.  This lowered the cost of thin film solar panels overall and made them more competitive with traditional solar panels.

CdTe thin film solar panels require less material than alternative technologies – which lowers their cost – but their efficiency continues to lag behind traditional, silicon-based solar panels.  The deal gives GE a large stock position in First Solar in exchange for giving First Solar the new CdTe thin film solar technology – essentially creating a key strategic partnership between the two companies.

Source: PV-Tech

First Solar, as the U.S. leader in solar power development, offers a unique ability to bring new technologies to scale.   Deploying and further developing CdTe thin film solar technology from Arvada is critical to further advances in panel efficiency, and First Solar is well positioned to deliver these advances with continued GE research, input and support.

Leading solar experts, such as the head of NREL’s lad, Dan Arvizu, continue to believe that vast opportunities exists for improving the efficiency of solar panels, particularly CdTe thin film.  Commenting on these opportunities last spring, Zachary Shahan, Director of CleanTechnica, summarized the global challenge as: “I guess the question this leaves us with is which technology or technologies will improve their real-world efficiencies using low-cost materials quickly enough to dominate the solar power market in the coming decades?”

By jointly harnessing their expertise in research and development, industry leaders GE and First Solar have the potential to dominate the solar energy industry, a good news story for the U.S.   We hope Colorado reaps some of those long-term economic, environmental and health benefits, and we know that the prospect of having a homegrown, global powerhouse in solar power guarantees long-term benefits for the country as a whole.

By Kate Zerrenner

As we’ve highlighted in previous posts, water and energy regulators often make decisions in silos, despite the inherent connection between these two sectors. Texas is no exception.

Two very important and intertwined events are happening in Texas right now.

First, the state is in the midst of an energy crunch brought on by a dysfunctional electricity market, drought, population growth and extreme summer temperatures. An energy crunch signifies that the available supply of power barely exceeds the projected need (or demand) for electricity. Texas’ insufficient power supply makes the whole electricity system vulnerable to extreme weather events. An especially hot day (with thousands of air conditioning units running at full blast) could push the state over the edge and force the Electric Reliability Council of Texas (ERCOT), the institution charged with ensuring grid reliability, to issue rolling blackouts.

Second, Texas is still in the midst of a severe, multi-year drought, forcing state agencies to impose strict water restrictions throughout the state. The drought has already had a devastating impact on surface water and many communities are facing critical water shortages.

Although Texas has always had to deal with extreme weather events, we can anticipate even more intense weather as climate change advances. The new climate ‘normal’ makes extreme heat waves, like the historic 2011 Texas summer, 20 times more likely to occur. These extreme weather events heighten the urgency of the energy-water nexus.

As of July 31st, ten municipalities were identified as ‘emergency’ areas, meaning they could run out of water within 45 days or less. At the same time, regulators are concerned that water-intensive conventional electricity generators (i.e. coal, natural gas and nuclear facilities) may not have enough water to feed our energy needs.

The energy and water shortages go hand-in-hand, but that doesn’t mean ERCOT and the Texas Water Development Board (TWDB), the state agency charged with keeping Texans’ faucets running, are talking to each other. Texas needs to move quickly to assess future energy and water ‘co-management’ plans (‘co-management’ is the key term here!).

Water’s energy needs

(Source: TCEQ)

TWDB’s water plan, Water for Texas 2012, recognizes that a significant supply of energy will be required to provide the state with enough water. Water treatment and wastewater management are extremely energy-intensive, consuming the amount of electricity used by around 100,000 people annually.  Here’s another way to think about it – drinking water systems, including waste water plants, can account for up to one-third of a city’s total energy bill. If the drought continues, Texas’ water plan estimates that annual economic losses from not meeting the state’s water needs could result in as much as $11.9 billion annually and $115.7 billion annually by 2060 – and over one million jobs lost.

Energy’s water needs

In 2009, EDF and the University of Texas published a study revealing that Texas’ power plants consumed roughly 157 billion gallons of water annually – enough to meet the needs of over three million people each year.  In 2010, fossil fuel power generation consumed roughly 4% of the state’s water supply and consumption is projected to increase to 7.4% by 2060.

As the population of Texas rises and the drought persists, meeting the energy and water needs of cities and power plants becomes harder and harder. This is an economic issue for the state that demands serious attention from its leaders in a more comprehensive way.

Solutions

What’s the solution? Well, it may be as simple as prioritizing water and energy efficient technologies.  Better coordination, and possibly integration, of energy and water planning could lessen some of the vulnerabilities we’re facing in Texas—vulnerabilities heightened by our reliance on water-intensive energy sources and our state’s largely independent electric grid.

EDF’s State of the Energy Crunch in Texas report identifies several water-free solutions to the energy supply problem. Customer, or demand-side, resources – such as demand response, energy efficiency and rooftop solar panels – can help Texas address both energy use and water consumption.

Demand response, which rewards those who reduce electricity during peak times, is a zero-water resource that addresses the energy crunch and the state’s fragile water supply. It enables customers to control their energy use and decide whether they want to reduce energy use during high, or peak, energy demand and expensive times (like 6:00 pm when everyone heads home and powers up their oven, TV, water heater, etc.).

Energy efficiency is another viable solution. By reducing the amount of energy homes, commercial buildings and industrial facilities consume, overall electricity and water use is reduced at the same time.  On top of that, energy efficiency makes our electricity more reliable, decreases our dependence on costly, and often foreign, fossil fuels and reduces the impact of harmful pollution from power plants.

In addition to implementing new technologies, ERCOT and TWDB must collaborate to co-manage Texas’ energy and water needs.

Texas electricity planners are already studying how prolonged drought might affect the state’s electric grid. Together with electricity planners from across the West, ERCOT worked with the U.S. Department of Energy (DOE) to develop a report that looks at how water shortages might affect the electric system. Through its ongoing work with ERCOT and others, the DOE hopes to develop a tool that will help electricity planners understand how drought affects long-term electricity planning.

ERCOT’s work with the DOE is a great first step, but it’s a two-way street. TWDB and ERCOT’s forecasts should be developed in coordination to create plans that are inclusive of both the energy and water sectors. It’s imperative that decision-makers ensure communities and ecosystems are not deprived of adequate freshwater supplies as the drought and energy crunch persist.

Simply put, Texas has the potential to adopt technologies and policies that will significantly cut down on water use, reduce the need for fossil fuel power plants and help Texans save – and even earn – money. By lining up the incentives to enable novel energy and water savings, we can make sure Texas’ lights—and faucets—stay on through the next record-setting summer.

This is one of a group of posts that examines the energy-water nexus, Texas’ current approach to energy and water policy and what Texans can learn from other places to better manage its vital resources.

By EDF Blogs

By: Matt Golden, Senior Energy Finance Consultant, Environmental Defense Fund

This week, the U.S. Department of Energy (DOE) released a new report that will serve as a data analysis tool for the energy performance of commercial and residential buildings. By providing a standardized approach for the evaluation of energy data, the Building Energy Data Exchange Specification (BEDES) will help optimize energy efficiency efforts.

BEDES provides a common language for key data elements to help a range of stakeholders communicate more effectively. The use of established formats, terms and definitions will allow for smoother interaction between contractors, software vendors, finance companies, utilities, and Public Utility Commissions. As a result, information can be shared and aggregated without laborious scrubbing and translation, which will help more rapidly answer the key questions related to energy savings and financial performance that remain barriers to energy efficiency adoption at scale.

We are pleased that the Investor Confidence Project (ICP) was highlighted as one of five key projects aligned with BEDES goals, and prioritized for collaboration as the project moves forward.  The Executive Summary (page 4) of the report clearly expresses some of the key data issues and potential solutions that this ambitious project will attempt to solve.

ICP has defined a standard set of documentation that defines an “Investment Quality Energy Efficiency” project through its lifecycle, from baselining through commissioning and measurement and verification (M&V).  However, we have long believed that many of the key data elements would be significantly more useful if expressed as standardized XML versus the current range of formats. ICP applauds this important effort and looks forward to collaborating with fellow stakeholders and the DOE and Lawrence Berkeley National Laboratory (LBNL) team.

The beta version of BEDES and the BEDES Scoping Report are both available online.

By Kate Zerrenner

We’ve discussed the potentially grave impacts of the Texas Energy Crunch in a number of our previous blog posts. Time and time again, we repeat that the cheapest, cleanest and most reliable energy resource is the energy we save through energy efficiency. But our energy efficiency programs in Texas are still modest compared to other states. Beyond politics, there is another key issue limiting our state’s energy savings: Texas does not treat energy efficiency as a ‘resource.’

Traditionally, energy efficiency is left ‘invisible’ to utilities and grid planners—so they lose count of its many benefits. Treating energy efficiency as a resource, instead, puts it on a level playing field with other energy resources, such as power plants. This allows utilities to realize the unique benefits energy efficiency has over other energy sources.

Energy efficiency can reduce harmful greenhouse gases, save people money and create jobs – and it is extremely competitive with other energy resources. When the energy saved through efficiency is weighed against new energy resources, efficiency upgrades to buildings and homes generally weigh in at just one-third of the cost of building a new fossil-fuel power plant. On top of that, energy efficiency upgrades can eliminate the need to install or replace other expensive electric grid equipment. This cost-savings is one of the many benefits generally overlooked by utilities and electric grid planners.

Part of what prevents electric grid planners from counting efficiency as a resource in Texas is the way that the energy market is structured. When Texas deregulated its energy market in 1999, the aim was to increase options for customers and lower prices. Efficiency programs were not included in the new market structure. Instead, they were left for transmission and distribution utilities (TDUs), the “wires” companies that deliver electricity from power plants to customers, to manage. With efficiency left out of the restructured energy market, the Public Utility Commission of Texas (PUC) and other state leaders tend to view efficiency programs as subsidies that exist outside of the market.

According to a recent report by the South-central Partnership for Energy Efficiency as a Resource (SPEER), Texas can give energy efficiency a more equal footing with conventional fossil fuel resources, such as power plants, by allowing it to bid into the state’s wholesale electricity market. The market is administered by the Electric Reliability Council of Texas (ERCOT), which oversees the operations and planning for Texas’ electric grid. Moving energy efficiency to the domain of ERCOT would allow it to participate as a resource in ERCOT’s operation of the electric grid. This would open up more competition in the market and spur new investment to help lower energy prices.

Source: Triple Pundit

The notion of moving energy efficiency programs into the electricity market is an interesting idea. The Texas PUC is currently debating whether changes should be made to the state’s electricity market structure to overcome Texas’ ongoing energy crunch, or what electricity planners refer to as “resource adequacy” issue (i.e. not having enough electric supply to meet the greatest demand for energy and definitively avoid a blackout). One option is to move away from an energy-only market (our current structure) by adding a capacity market. In an energy-only market, power plants are paid only for the energy they actually produce. Adding a capacity market would also pay power plants for the maximum amount of energy they could produce, if called upon to do so.

Capacity markets put an obvious price on the cost of adding new generation resources. Because of this feature, it’s usually easier to understand the benefits of demand-side resources in a capacity market. A demand-side resource, also known as a customer-side resource, is simply a source of electric power owned and operated by an electric customer. The most common example of a demand-side resource is rooftop solar panels. Energy saved through efficiency upgrades, such as better insulation and more efficient heating and air conditioning systems, and through demand response (which rewards those who reduce electricity during peak times) both count as demand-side resources. While a capacity market makes it easier to include these resources, it can also be expensive to implement. A capacity market pays energy generators for merely existing, and these costs could potentially be passed on to customers. It’s no surprise that a switch to this market structure has seen resistance in Texas.

A third alternative is a capabilities market, which emphasizes reliability and flexibility – not just the ability to produce energy. This type of market would be able to tap into resources that are much more flexible in responding to rapid changes in energy demand. The Regulatory Assistance Project (RAP) has developed a framework that examines what a capabilities market would look like. RAP suggests that Texas will need a more flexible market structure that can incorporate demand-side resources to meet its electricity needs as the Texas Energy Crunch increases.

Working energy efficiency into the electricity market is a complicated issue, but it’s also an important one. The electric infrastructure in this country is in dire need of an upgrade. Texas, in particular, is grappling with serious resource adequacy issues in addition to a multi-year drought and extreme weather – both of which are expected to get worse due to climate change. The PUC and ERCOT have made it clear that they want to act. Now is the time to be thoughtful and bold—to prepare the state for what’s coming. Whatever market structure or changes Texas leaders decide to adopt, energy efficiency should have a seat at the table as an equal.

By Steven Hamburg

Concerns about the methane problem associated with the U.S. natural gas boom are mounting with each study released. This week scientists with the National Oceanic and Atmospheric Administration (NOAA) and the University of Colorado (UC) at Boulder published a new paper on methane leakage in the journal Geophysical Research Letters. It reports an alarmingly high level of methane emissions in the Uintah Basin of Utah — 6.2 to 11.7 percent of total production for an area about 1,000 square miles. Findings are based on readings from airplane flights that measured methane in the air on a single day and estimated the proportion of those emissions that came from the oil and gas infrastructure —production, gathering systems, processing and transmission of the gas out of the region. The authors calculated the uncertainty of their measurements, finding a 68 percent chance the leak rate is between 6.2 and 11.7 percent, and a 95 percent chance it is between 3.5 and 14 percent.

This follows two other regional studies conducted by scientists at the same organizations. One released last May in the Journal of Geophysical Research reported a 17 percent methane leak rate for the Los Angeles Basin, which has received quite a bit of attention although, as I’ll explain below, the figure can be misleading.  The second study, conducted over the Denver-Julesburg Basin in 2008, found 4 percent of the methane produced at an oil and gas field near Denver at that time was escaping into the atmosphere. Taken together, these studies are troubling. They should be regarded as alarm bells ringing in our ears. Action by policymakers and industry is needed now.

Any amount of methane lost from the natural gas supply chain should be eliminated whenever possible. That’s because methane retains heat much more effectively relative to carbon dioxide: Over the first 20 years, an ounce of methane traps in heat 72 times more efficiently. Even small amounts vented or released as “fugitives” – unintentional methane leaked as gas moves from the field to your doorstep – can reduce or eliminate the climate advantage we think we’re getting when we substitute natural gas for coal or oil.

That said, in order to understand how to reduce the leaks we must recognize that each study offers a snapshot of emissions at a specific time, across a specific basin. Different industry sources make up the emissions profile in these areas, including distinct amounts of oil and gas production, and varying components of the natural gas supply chain (production, gathering, processing and local distribution).  By comparison, the latest estimates from the U.S. Environmental Protection Agency suggest that 1.5 percent of total U.S. natural gas production was lost to venting or leakage in 2011. We have a lot of work to do to understand the apparent disparities between different estimates and studies.

Though Environmental Defense Fund was not involved in any of these studies, we can offer some important context based on our own experience doing research on this critical issue.

Methane emissions can occur from natural gas produced both from oil and gas wells. In order to get a clear understanding of the problem, it is necessary to pay careful attention to the details of each study.  In the Los Angeles study, for example, the authors report a 17 percent leakage for the oil and gas industry, but fail to highlight that the vast majority of total hydrocarbon production in the basin is oil. This led some to the mistaken conclusion that 17 percent leakage applies to the natural gas industry as a whole.

Certainly, this finding still indicates more should be done to better control methane emissions associated with oil production in the Los Angeles Basin.  But it also points to a limitation with methane leak rates: Percentages quoted are not comparable between basins. Regional differences matter.

Further, oil and gas production in the Los Angeles Basin study only accounted for 8 percent of the region’s total methane emissions, compared to 48 percent from natural gas distribution and geologic seeps. The Los Angeles study underscores the importance of looking at the total picture when assessing sources and remedies of methane pollution.

The Uintah study is a slightly different story.  In this case, the basin is made up predominantly of natural gas producing wells, but the overflight captured more than just production activities.  Emissions from gathering, processing, and other various ancillary activities taking place in the basin were also captured in the overflight, with no way to attribute the high emissions among these various elements of the natural gas supply chain.

In other words, there is as of yet no data to tell us whether the emissions are coming from production, gathering, processing or other activities.  We know that industry-wide, the production process known as well completions (the process after hydraulic fracturing when a well is cleared of fluids and sands) may contribute about 10 percent of the total methane emissions if operators are not using “green completion” technologies that capture emissions for sales or beneficial reuse. Under recently enacted federal regulations, which EDF fought to adopt, green completions will be required nationally for any new hydraulically fractured natural gas well starting January 2015. There’s no data on whether operators in the Uintah were using green completions at the time of the study, but there is reason to suspect they were not. The Uintah study authors cite a U.S. Government Accountability Office report that notes higher rates of methane flaring and venting at the time of the study than in surrounding production basins.

More investigative work is needed before we can claim to understand what is driving these apparently large emissions. We don’t know everything we need to about the production and distribution practices employed in the Uintah Basin when this research took place, but there is no reason for the public to remain in the dark.  Producers, gathering and processing companies, and pipeline companies in the Uintah Basin must provide citizens with a clear accounting of what they were doing at the time these measurements were made, what they are currently doing and what they will do to end polluting practices and reduce methane pollution.  Likewise, federal and state regulators governing air rules in Utah need to take a hard look at their regulatory and enforcement practices, and provide evidence to assure the public that they are employing necessary procedures to prevent air pollution from the oil and gas infrastructure.  The evidence would suggest they are lagging. It appears there is a lot of work to do in Utah, and companies and regulators alike should not waste a moment in getting after it – including steps to routinely survey emissions in active basins to measure progress over time.

As to what these studies mean for our nation as a whole, one  need is additional data — a comprehensive and consistent look at methane emissions at various locations across the country — in order to properly characterize methane across the U.S. natural gas supply system. That’s why EDF, along with close to 100 academic, research and industry partners, is working on a series of 16 studies to directly measure methane emissions across the supply chain. Together, these sixteen studies will provide the most complete national picture of methane emissions to date.

The first study, led by the University of Texas and involving nine natural gas producers, will be published in the coming weeks. The UT study is not based on emissions from a single location but on measurements from diverse regions with data collected at the actual source. Direct measurements in the UT study focus on methane lost at the well pad and other natural gas production points, and will provide insights into how effectively specific industry practices can contain methane emissions. But it won’t offer a complete picture of methane emissions across all of the natural gas system. We’ll need the entire series of studies, a project that will continue through 2014, before we can draw comprehensive conclusions about the scope of the problem and the full range of options for minimizing methane emissions.

The Uintah and Los Angeles studies tell us that methane emissions appear to be a serious problem in some regions. Additional data will tell us more about where emissions are occurring and what can be done to reduce them.  But we know enough to get started fixing the problem. There is no reason to wait.

By Kate Zerrenner

This week the Texas Legislature convened for its third Special Session in a row, yet the state’s electricity market still sits at a crossroads.  The Public Utility Commission of Texas (PUC), Texas’ governing body for electricity, has been at a stalemate since Commissioner Rolando Pablos stepped down in February.  The two remaining commissioners, Chairman Donna Nelson and Ken Anderson, seem to be waiting on a third deciding member to step up and address the looming Texas Energy Crunch.  With the PUC divided and the legislature nearly adjourned, the state looks to Governor Perry to appoint a third commissioner to the PUC—breaking the longstanding stalemate on Texas’ power supply.

When appointed, the new commissioner will be in unique position to champion innovative, common-sense solutions to solve the Texas Energy Crunch.  One of the most expedient and cost-effective ways to bolster the state’s electricity supply is to reduce the amount of energy needed to fuel our commercial buildings and homes through energy efficiency upgrades.  In an upcoming post, I’ll discuss innovative ways to weigh the benefits of energy efficiency upgrades versus new fossil-fueled power plants.  For now, though, let’s review where energy efficiency stands in Texas today.

Texas prides itself on establishing the nation’s first energy efficiency resource standard  in 1999.  The standard applies to transmission and distribution utilities, so-called “wires” companies, which are still regulated by the state.  The standard is meant to reduce energy use to offset costly power line upgrades required to send electricity to Texas’ rapidly growing population.  Unfortunately, since 1999, Texas has fallen behind on energy efficiency.  Other states now have more aggressive energy-reduction targets that make ours look mediocre.  At the same time, Texas imposes energy efficiency program cost caps that make it difficult for utilities to meet even our modest energy efficiency goals.  Texas now ranks a sad 33rd on the American Council for an Energy Efficiency Economy’s (ACEEE’s) state rankings.

Source: LoneStarMike

Texas has the potential to do better.  We should look to the states leading the charge for greater energy efficiency (and beating out Texas in the rankings).  Michigan, for example, set vigorous energy efficiency goals in 2008.  Since then, the state’s largest utility has seen some impressive results.  Customers participating in the utility’s efficiency program have  saved enough electricity to power 142,000 homes for a year—not to mention $365 million in electricity bills.  The driving force behind Michigan’s energy savings is the state’s ambitious energy efficiency goals and streamlined policies.  Weighing in at less than half as ambitious, Texas’ energy savings goals pale in comparison to a state like Michigan.  On top of that, Michigan integrates energy efficiency into their electricity resource planning and provides utilities an option to decouple profits from sales, so they aren’t penalized for the energy they don’t sell.

My message to the new Texas commissioner, as well as all current commissioners and legislators, is this: Creating a market for energy efficiency is cost-effective and prudent.  The cheapest, cleanest, most reliable electricity is the electricity we don’t use.  Energy efficiency creates jobs and saves water—which is more important than ever in this era of prolonged drought.  Simple, cost-effective energy efficiency upgrades can reduce the amount of energy we use (and pay for) every day without affecting our comfort.  Investing in efficiency means taking advantage of innovative technologies in our homes and businesses that make our electricity more reliable, affordable and efficient.

We need, and expect, bold leadership from Texas’ new PUC commissioner.  Leadership that will help unleash the full potential of energy efficiency (a solution that Texas has championed in the past) as a low-cost common sense solution to our state’s Energy Crunch.

By John Finnigan

Source: ENR New York

The Wall Street Journal recently reported that electricity prices in West Texas skyrocketed over 20% this year.  West Texas is home to the Permian basin, one of the world’s largest oilfields, and energy producers use hydraulic fracturing, or “fracking,” here to unlock vast new oil and gas supplies.  The increased drilling, oil refining and natural gas processing uses large amounts of electricity.

Cheaper electricity supplies are available, but cannot be delivered to West Texas due to transmission bottlenecks, or “congestion.”  The only power that can be delivered is from older coal plants.  This leads to transmission “congestion” charges (i.e., higher energy supply costs caused by the transmission bottlenecks), which commercial and industrial consumers must pay as a surcharge on their monthly electricity bills.  Using these older coal plants leads to more pollution as well because these plants burn fuel less efficiently and have higher levels of toxic air emissions.

The typical solution is to build new transmission lines to access cheaper electricity supplies.  But a better and cheaper approach is to pay consumers for voluntarily reducing their electricity usage when energy supplies are tight.  Known as “demand response,” this solution:

• creates a new market where consumers can respond to wholesale electricity price signals by deciding whether to use higher-priced energy or to be paid for voluntarily reducing their usage;
• defers investment in new fossil fuel power plants and costly transmission upgrades;
• lowers electricity prices for all consumers, not just those who are paid for voluntarily reducing their usage; and
• keeps our air cleaner and preserves our scarce water supplies by running older, dirtier coal plants less often.

“Everything is bigger in Texas,” but not demand response.  Although it has more potential demand response than any other state, Texas has actually implemented only a small amount of demand response – which is used to avert rolling blackouts during electric emergency conditions.  Other regions of the country use demand response to much greater advantage.  Voluntary demand response programs in PJM, the electricity market in the northeast, have paid consumers nearly $2 billion in demand reduction revenues since 2007.

Demand response would lower electricity prices not only for West Texas but throughout the state.  Electricity prices are a function of supply and demand.  Texas tries to maintain adequate electricity supplies through an “energy-only” wholesale market, which procures electricity supplies in real-time with no long-term planning.  Texas is the only region in the U.S. using this method.  Other regions ensure adequate electricity supplies by using either administrative mandates or an energy market combined with a “capacity market” (a market-based approach using long-term planning).

Texas has inadequate electricity supplies (the “energy crunch”) to meet projected electricity demand plus a healthy safety margin.  Texans learned this lesson the hard way when consumers experienced rolling blackouts during a cold snap in February 2011 and the extreme heat and drought in July and August 2011.  The Electricity Reliability Council of Texas (ERCOT), which runs the Texas wholesale electricity market, hired The Brattle Group to study how to ensure adequate electricity supplies.  Brattle advised ERCOT that energy supplies could be increased by, among other things, re-designing the market to enable much higher levels of demand response.  This could be done by implementing a capacity market, such as the forward capacity market used in PJM or the new and innovative “flexible capacity” market under consideration in California.

ERCOT can relieve high West Texas energy prices and assure adequate electricity supplies for the state as a whole by enabling much higher levels of demand response.   Let’s bring the Lone Star State a new market-based solution where Texans, as a whole, can earn billions of dollars in payments for voluntarily managing their electricity use.  As part of the bargain, we’ll also get adequate electricity supplies, lower electricity prices, cleaner air and better water management.

By EDF Blogs

By: Matt Golden, Senior Energy Finance Consultant, Environmental Defense Fund

New Energy and Loan Performance Data Project Uses Latest in Data Science to Help Capital Markets Engage in Efficiency Lending

Environmental Defense Fund’s Investor Confidence Project (ICP) and the Clean Energy Finance Center (CEFC), in partnership with state and local lending programs, financial organizations and a range of additional stakeholders, are collecting, aggregating and analyzing loan performance and energy savings data from energy efficiency upgrades in residential and commercial buildings.

The Energy and Loan Performance Data Project represents the first concerted effort to combine data from some of the largest US energy efficiency programs in an attempt to develop an actuarially significant dataset to help engage the capital markets.

Nearly 40% of US energy is consumed by both residential and commercial buildings.  Realizing all of the available cost-effective energy efficiency savings would require roughly $279 billion of investment, resulting in more than $1 trillion in energy savings over ten years.  However, currently, only 1% of all US investments are made in energy efficiency projects.  Our goal for this project is to help lay the foundation that will enable organizations to tap into this vast potential market.

Currently energy efficiency investors of all types, including building owners, energy service companies, insurance providers and even utilities, are hampered by an inability to easily and accurately predict loan performance.  This results in high transaction costs, as well as risk premiums, that increase the cost of capital.  One of the main challenges is the small quantity and low quality of data that investors can utilize when evaluating investments in energy efficiency assets.  This lack of data standards and access to large datasets has been cited by a broad range of stakeholders, including capital providers, policy makers, building owners and contractors, as impeding large-scale investment in building retrofits.

In collaboration with the University of Chicago's new Data Science for Social Good fellowship program, EDF and CEFC will identify how stakeholders use loan and project performance data, determine gaps that may exist in the current datasets and deliver high-quality analytics to support the advancement of energy efficiency finance and investment through actuarial data.

Many key stakeholders in the energy efficiency sector support this new project, including the New York State Energy Research and Development Authority (NYSERDA).  NYSERDA’s Treasurer, Jeff Pitken, stated that “making our program loan performance history publicly available and aggregated with history from other programs will lower the cost of capital for these programs and allow more favorable financing terms to be offered to participating consumers.”

Beyond loan performance, the project also seeks to provide the ability to analyze performance risks.  This will allow investors to realize more predictable returns, which will lead to more lending at better rates.  Performance prediction is especially important for innovative energy financing models, such as On-Bill Repayment and Energy Service Agreements, and better analysis will enable the widespread adoption of these structures.  From an operations perspective, better data analysis offers the ability to continuously improve project commissioning – thus leading to increased energy savings.

The Energy and Loan Performance Data Project will be collecting data sets from some of the largest residential and commercial programs across the country.  We will be combining these sources with public sources, such as census data, to provide publicly-available data that we hope will accelerate investments in energy efficiency.  Data will be anonymized and modified to protect privacy, but will include the following elements:

• Loan Repayment Performance
• Underwriting Criteria and Deal Structure
• Project Attributes, Energy Conservation Measures and Predicted Performance
• Energy Performance Data (Realization Rate)

We are inviting energy efficiency and finance organizations with data and/or data expertise to participate in this endeavor (especially those who can contribute significant amounts of data).  The project will adhere to rigorous privacy standards to ensure that no proprietary information will be disclosed to the public.

Please help us make this project a success.  If you have a use for this type of data and analytics, or if you have data to contribute, please take a few moments to let us know how we can help by filling out this brief survey.

This commentary originally appeared on EDF's California Dream 2.0 blog.

By: Kate Daniel, EDF Climate Corps Fellow

Kate Daniel, Climate Corps Fellow

Great news for California and the future of energy efficiency in Sacramento.

Today I took part in an announcement by Sacramento Mayor Kevin Johnson unveiling the nation’s largest Property Assessed Clean Energy (PACE) project in the country — and potentially a huge boost for businesses in the state’s capital.

Launched by Clean Energy Sacramento, the property owners of Metro Center, Metzler Real Estate, will now be able to take advantage of PACE financing to fund $3.1 million in energy efficient upgrades, including high efficiency rooftop units for heating and cooling and a state-of-the-art building management system. Ultimately, these upgrades will save $140,000 in annual utility costs for the property.

This project is not just good news for Metro and Metzler, but for the entire Sacramento region. Here’s how it works: Under the PACE program Metzler will receive private funding from Ygrene Energy Fund, who covers the upfront costs of the project Metzler pays the costs back on their property tax bill while Johnson Controls will design and implement the upgrades.

Why PACE?

For starters, PACE – and other innovative financing mechanisms like on-bill repayment (OBR) – offers several key advantages over traditional energy financing. First, the financing is tied to the property itself, rather than to the owner. This means that if the owner wanted to sell the building, it would not have to pay off the balance of the financing, but rather transfer to the next owner’s property tax bill. By doing this, PACE addresses a key obstacle in commercial real estate markets: frequent ownership turnover where owners are hesitant to make long-term investments.

It also means qualification for the financing is based on the value of the Metro Center property, not Metzler’s credit. Many properties can qualify for PACE financing that would not otherwise be able to obtain the capital necessary for a retrofit. PACE also addresses the biggest barriers to energy efficiency retrofits in commercial buildings. An annual survey by the Institute for Building Efficiency shows that available capital is the most common obstacle to making energy improvements. With PACE financing, the upfront costs of the project are financed externally, and don’t draw from funds that could be used for other projects or investments.

The next most frequently cited barrier to taking on energy efficiency is making a sufficient return on investment. This is where Clean Energy Sacramento’s low-interest rates come into play. Property owners also have the ability to extend the financing as long as 20 years, far longer than most real estate or construction loans. These features of the financing make individual payments lower, so the company can realize the benefits of energy savings immediately.

Lastly, PACE financing can address the split incentive problem, when property owners aren’t motivated to pay the costs of upgrades that save money for their tenants, who pay the utility bills. Under most commercial leases, property owners are able to pass on property taxes to tenants, so the current tenants would make the PACE payments, while still realizing savings on their utility bills.

Clearly, the Metro Center upgrade is a good deal for Metzler and the Center’s tenants, who realize the direct benefits of energy savings and increased property value and comfort.

Fortunately, the City of Sacramento gets why this is important to the rest of us. Energy retrofits keep contractors busy and working. The Metro Center project itself will create 50 jobs in the Sacramento region and upgrades to Metro Center will make the space more appealing for tenants, attracting and retaining businesses in the area – all without spending public dollars.

The Metro Center project is a telling example of just how much a well-executed PACE program can provide for a community. Through my EDF Climate Corps fellowship, I’ll be working to help make these types of projects a reality across the region.

By John Finnigan

Maryland Governor Martin O’Malley continues to lead the way on climate and clean energy policy.  On Thursday, he unveiled Maryland’s new Greenhouse Gas Emissions Reduction Act (GGRA) Plan.  Gov. O’Malley’s plan raises the targets for renewable energy, energy efficiency and peak energy demand reduction, while re-affirming Maryland’s membership in the Northeast Regional Greenhouse Gas Initiative (RGGI).  The plan adds new climate programs relating to transportation and forestry, and a new aspirational goal to make Maryland a zero-waste state.

Maryland is particularly vulnerable to climate change with 3,000 miles of shoreline along scenic Chesapeake Bay.  The state ranks 42nd in total area, but 10th in coastline area.  Gov. O’Malley has addressed climate change since his early days in office.  In 2007, he established the Maryland Climate Change Commission to address the causes and effects of climate change in Maryland and develop an action plan.  The Maryland Climate Action Plan (Plan) was issued in August 2008, and Gov. O’Malley has labored diligently to implement the plan since that time.

The new Plan  calls for increasing the renewable energy portfolio standard from 20% to 25% by 2022, as well as the energy efficiency and peak demand reduction targets (with the new, higher targets to be announced at a later date).  Like a true leader, Gov. O’Malley aims high and is unafraid to be different.  His call to raise these clean energy standards comes at a time when some states have been unsuccessfully pressured by the fossil-fuel industry to consider lowering their clean energy standards.

In addition to the 2008 Climate Action Plan and the new GGRA Plan, Gov. O’Malley’s key accomplishments include:

• (2008) Amendment to the Maryland Renewable Energy Portfolio Standard doubled the existing standard to require that 20% of Maryland's energy be created by renewable resources by 2022, including 2% from solar energy;

• (2008) EmPOWER Maryland Act set an energy efficiency target and peak demand reduction target of 15% by 2015;

Source: CBS Baltimore

• (2008) Maryland Strategic Energy Investment Program was created using revenues from the Northeast RGGI to offset ratepayers’ electricity bills and invest in energy efficiency programs;

• (2009) Maryland Greenhouse Gas Emissions Reduction Act requires Maryland to cut greenhouse gas emissions 25% below 2006 levels by 2020; and

• (2013) Maryland Offshore Wind Energy Act of 2013 created a fund to build 200 megawatts of wind energy, which Gov. O’Malley intends to use to construct one of the nation’s first offshore wind energy farms off the coast of Ocean City.

EDF applauds Gov. O’Malley for his leadership on progressive and effective climate and clean energy policy.  Maryland is showing how states can take meaningful steps to reduce greenhouse gas emissions despite the lack of a comprehensive federal climate and clean energy strategy.  Gov. O’Malley is balancing environmental protection with economic growth – Maryland’s unemployment rate is below the national average and the U.S. Chamber of Commerce has named Maryland the number one state in the country for innovation and entrepreneurship the past two years.  Gov. O’Malley is acting true to the Maryland state motto of “manly deeds,” and we hope that other elected officials will take note.

By Kate Zerrenner

If you’re like so many conscientious consumers, you’ve experienced the disappointment that comes when you realize the lean turkey breast you bought has 300% of your daily value of sodium, negating the benefits of its high-protein and low-fat content.  Instantly, food choices feel more complex; you’ve learned the hard way that the pursuit of a low-fat diet is not the same as a healthy diet.

The Energy-Water Nexus shows us that our energy choices are much like our food choices: The environmental benefits of an energy diet low in carbon emissions might be diminished by increased water consumption (or waste), and the unforeseen tradeoffs between the two resources (i.e. more sodium in lieu of less fat, can hurt us in the long run).

Water Intensity

As we have mentioned before, roughly 90% of the energy we use today comes from nuclear or fossil fuel power plants, which require 190 billion gallons of water per day, or 39% of all U.S. freshwater withdrawals (water “withdrawal” indicates the water withdrawn from ground level water sources; not to be confused with “consumption,” which indicates the amount of water lost to evaporation.)

The water intensity of these energy resources brings us face-to-face with the realities of energy and water overconsumption.  High electricity consumption means more water withdrawals, placing extra strain on the water system.  At the same time, emissions from power plants contribute to climate change, which increases the amount of water required to produce energy and intensifies severe drought.

It’s important to realize that our energy choices have a part to play in these dire situations.  Let’s look at a breakdown of how energy resources stack up in terms of water consumption and discuss their carbon footprints:

Source: KQED.org

Wet-cooled concentrated solar power plants use slightly more water than coal and natural gas; however, concentrated solar power plants can be designed to use dry-cooling, thereby reducing water demand by more than 90%.  Additionally, solar thermal produces zero carbon emissions.

• Coal generally requires more water than nuclear, and generates more greenhouse gases emissions and other pollutants than any other energy source (about 2.15 lb CO2 per kWh electricity), making coal something like the chili cheese fries of energy.

• Unlike coal and natural gas, nuclear energy releases no carbon emissions, but still requires an abundant water supply – think about that high-sodium processed turkey.

• Natural gas emits about half the carbon emissions of coal (about 1.22 lb CO2 per kWh electricity) and requires less water than coal, but still needs an enormous amount of water for drilling activities and conversion to electricity.

Texas

If you need an example of a state that is currently coping with realities of the energy-water nexus, look no further than Texas.  The state is currently in the midst of a multi-year drought, yet the vast majority of the electricity Texans use comes from sources that contribute to this prolonged drought (namely, natural gas, coal and nuclear).  With nearly 90% of Texas’ electricity coming from these three sources, we have a serious problem.

Here’s a breakdown of fuels used in electricity production in Texas:

Source: Energy Information Association

These water-intensive power plants consume thousands of gallons of drinking water per day, while roughly 90% of the state remains in drought conditions.  The ongoing water shortage has prompted 65% of Texas counties to impose water use restrictions, and even forced some communities to truck in fresh drinking water several times a day.  And don’t forget, Texas’ vast fleet of coal and natural gas generators contribute to our shameful ranking as number one carbon emitter in U.S.

No matter what, when it comes to fossil fuels, there will always be a hidden environmental consequence—much like the sodium hiding in your ‘lean’ turkey.  There are, however, guilt-free, low-water options: renewable energy and energy efficiency.

Solutions

Wind and solar energy consume little to no water and generate negligible carbon emissions.  Texas, already an international leader in the use of wind power, should increase use of its clean energy sources to cope with the continuing drought and the ongoing Texas Energy Crunch.

At the same time, the state should look to energy efficiency to reduce water use and cut carbon pollution.  The more we invest in energy efficiency, the more we cut our overall energy use—saving enormous amounts of water and reducing harmful power plant emissions.  After all, the cleanest source of energy is the energy (and water) we don’t use.

However, Texas, and other states, has a long way to go before decision-makers tactically conserve its water supply and utilize the best available energy technologies, and I intend to take a more in-depth look at Texas in my next post.  Stay tuned!

This is one of a group of posts that examines the energy-water nexus, Texas’ current approach to energy and water policy and what Texans can learn from other places to better manage its vital resources.