Fuel Included isn’t just about electric cars, but about the transition to a low carbon lifestyle. One of the easiest ways to reduce your carbon footprint is to use less energy, and that can be as simple as wasting less energy around the home. A beneficial side effect is that you save money too.
A useful technique to investigate where heat is lost from your home is to use an infrared camera to show up areas that are cold and which typically indicate gaps around windows or doors, but which are not as obvious as draughts. The approach is known as Thermography but one of the most important early uses of infrared cameras was mounted on the nose of an aircraft for target location, so-called Forward Looking Infrared (FLIR) cameras. For this reason, and because the leading manufacturer of such cameras is known as FLIR Systems, the term FLIR is often used as a generic term for thermographic cameras.
Figure 1: FLIR Camera as delivered (Image: T. Larkum)
FLIR cameras have historically been very expensive to buy (though they are now coming down in price to typically about £1000) so there is a healthy rental market for them. Recently a group of colleagues at work clubbed together to hire one for a week and so I got a chance to try one out for a weekend for about £30.
Figure 2: FLIR Camera close-up (Image: T. Larkum)
The camera arrives in a big industrial box (see Figure 1) but it is actually quite small, about the size and shape of a radar gun (see Figure 2). It works much like a modern digital camera, with images recorded on internal memory that can be downloaded via a USB lead to a PC. A neat feature is that every image is recorded twice, as a conventional colour image and as an IR image.
Figure 3: Composite image of patio door showing cold spot along bottom edge (Image: T. Larkum)
I used the IR camera to do an ‘audit’ of the house, at night and in cold weather for maximum contrast. I imaged all the walls and doors, inside and out. I also checked each of the radiators to make sure they were working correctly. The IR images are coloured to show different relative temperature, from black (the coldest part of the image) through blue, green, yellow, orange, and red then to white (the hottest part of the image). So a gap around a door will show, say, dark blue while the rest of the door and frame are yellow and red. Similarly a cold spot in a radiator will show, say, green amongst mostly red.
Figure 4: Composite image of back door showing cold spot at cat flap and along right edge (Image: T. Larkum)
The images clearly showed up problems with our two back doors. The patio door had a very clear dark blue patch along the bottom (see Figure 3); we were already aware of a draught from this area. The main back door had a dark blue patch along the lock side, and another around the cat flap (see Figure 4). These are issues that I have noted to return to on another day to see if I can fix them with some draught proofing.
The FLIR camera was easy to use and I recommend it to anyone who wants to know more about where their home is leaking energy.
Investment bank says wide deployment of battery storage will hasten the demise of fossil fuels and utilities that remain focused on centralised generation. It tips rapid fall in costs and a $400bn storage market by 2030.
citi reportInvestment bank Citigroup predicts that the wide deployment of battery storage technologies will hasten the demise of fossil fuels across the globe in the coming decade, including oil, coal and gas.
And it also warns that the battery phenomenom will be even more profound than the solar revolution currently sweeping the globe, and will sweep aside any traditional utilities that remain focused on centralised generation.
The predictions of Citigroup analysts are a reprise of predictions it made in August last year, when it predicted that battery storage costs could fall to around $230/kWh by 2020, and eventually be as low as $150/kWh. The global market for battery storage could be worth more than $400 billion by 2030.
The significance of its latest update is that these forecasts, and their potential impacts, are included as part of its analysis of the 10 major investment themes for 2015.
The issue is therefor rapidly moving beyond those with a narrow focus on utilities and energy markets, it is now part of mainstream financial thinking, and because of that will have a profound influence on capital flows across the globe.
Citi says improvements in battery storage both in terms of operational performance and economic terms should expand and accelerate the trend for corporates and households to become self-sufficient in terms of electricity generation.
It cites six areas where fossil fuels and traditional utilities focused on centralised generation are at risk.
These are
Renewables: Storage would reduce both the cost of intermittency and the physical grid constraints that prevent deeper renewables penetration. The result would be a boost to the growth of renewables.
Coal: If storage can be competitively used to “firm” intermittent resources, renewables can become a true substitute for baseload generation. In many markets, baseload is dominated by coal-fired power. And because of growing policy pressure to displace coal in markets ranging from the US to China, policy is likely to emphasize the substitution of firm renewables for coal-fired generation.
Oil: Where oil is still used in the global power sector, it is often used in a peaking capacity. If storage is also deployed as a utility-scale peak shaving asset, storage might start to push out the stubborn oil-based generation still holding on as peaking capacity.
Natural gas: In the near to medium term, natural gas’s complementarity with renewables makes gas a winner in any scenario with increased renewables, as gas continues to be the best option to balance intermittency in many places. But it too would pose challenges to the utility model in many countries, as any former base load fuel supply would bring lower returns to the utility based on lost peak/ high priced demand load.
Gasoline: If storage were developed that promoted the growth of electric vehicles, this would significantly erode gasoline demand let alone demand growth, which, along with strong North American production of oil and gas, would put pressure on oil prices.
The structure of power markets: Electricity is one of the few non-storable commodities. Large scale storage could change that, linking spot prices to forward prices in a transformation that would make electricity markets trade more like oil or gas markets. The implications for power forward curves and asset finance would be significant.
Picking the winners in battery storage is a bit more complicated, because – like the solar industry – battery makers will be squeezed by severe pricing pressure from users on the demand side, and unavoidably high procurement costs on the supply side.
That means that profits will come from new business models, away from the simple sales of hardware, towards a service model that includes after-market services, in the same way that the biggest profits are being made in the solar leasing business rather than manufacturing.
Citi says the storage battery market is likely to develop as an infrastructure business that involves the supply of services and solutions, not just hardware and the winners will be those who come up with solutions that increase the convenience for users and make a long-term commitment to infrastructure.
It says that the rise of distributed solar generation and battery storage does not necessarily mean the death of the utility model.
It notes, for instance, that energy distributors could be well placed, as SA Power networks recently suggested. But those who rely on the dispatch of power generators in the grid are at risk. This is partly behind the thinking of European utility giant E.ON and NRG in the US in adapting their business models.
“Our key takeaway is that US utilities will eventually adapt and join the party,” the Citi analysts write.
“Why? Three main reasons include
1) it makes economic sense to do so,
2) it helps diversity the utilities fuel mix to help insulate them from volatility and
3) it is a good hedge against upcoming EPA environmental legislation.”
In its report last year, Citigroup suggested that many countries would be at “grid parity” for solar systems with battery storage by 2030, including Australia, parts of the US, Italy, Spain, Germany, and Portugal, while Japan, South Korea and the UK may not be far away.
Its latest report underlines the main themes that are likely to influence battery storage.
Chief among these is the potential of a global and binding agreement on greenhouse gas emissions being reach in December at the UN Climate Change Conference in Paris. That would require a bigger push for energy efficiency, demand response, renewables and e-mobility, making battery storage a crucial piece of the energy system puzzle.
But even if that agreement was not reached, new environmental targets in the US, and battery storage mandates in the US (over and above the 1.3GW plan for California) will drive deployment.
And on the technology front, the increased penetration of electric vehicles should continue to push down the cost of batteries for cars with parallel effects for energy systems battery costs.
It cited projects such as Tesla’s Giga-factory in Nevada with plans for 2020 battery production (in GWh) from that plant alone to exceed today’s global production. Over and above this, a number of independent companies all have ambitious commercial plans.
“The more they grow in customer numbers and partnerships, the more likely it is that battery storage costs will be declining,” the analysts write.
The UK’s minister for energy has said that her government is not planning any framework of incentives for energy storage, but said nonetheless that public funds can help “bridge the gap” between ideas and commercialisation.
Amber Rudd, a minister at the Department for Energy and Climate Change (DECC), attended an event hosted in Westminster, London by the Electricity Storage Network, a UK trade association which has suggested the country needs a target of 2GW of energy storage deployed by 2020.
The UK currently has a few programmes in place to examine the feasibility of energy storage as well as several pilot projects at residential and larger scales. In terms of programmes currently running, a small amount of funding, around £3 million, has been put into research and feasibility studies into early stage technologies. Meanwhile, four different energy storage technologies will compete in an £18 million trial funded by the department.
However as Ray Noble of the Renewable Energy Association recently pointed out, there is no unifying national policy framework in place to support increased deployment in the UK as yet. This looks unlikely to change drastically in the short term with the country heading for a general election in May this year. Rudd’s chief scientific adviser at DECC, John Loughhead, also said at the event that setting a national a target for energy storage, or for any specific storage technology type could be a less useful mechanism than “targets for the services storage can provide”.
‘Under review’
The minister was asked questions by attendees on topics including the possibility of feed-in tariffs (FiTs) for energy storage, the failure of recent capacity market auctions intended to shore up UK energy security to award a significant number of contracts to storage and the scope for developing a ‘national storage strategy’ in line with similar moves in solar and community energy.
Referring directly to the 6MWh battery inaugurated late last year in Leighton Buzzard by companies including Younicos and S&C Electric, Rudd defended the government’s targeted funding of a handful of projects and research schemes rather than setting up overarching subsidies or mandates as have been introduced in Germany, California or Japan. Rudd said the Leighton Buzzard project was
“a very good example where the public purse plays an important role, bridging that venture capital gap in terms of an idea and something commercial and the bit in between is just too expensive for the market to support”.
On most topics Rudd remained resolutely non-committal, replying for the most part with assurances that the topic in question would be “under review”.
Rudd discussed the four current trial schemes at the event. The selected project developers included Moixa Technology, a provider of battery storage and energy management systems mostly for the residential market and RedT, a flow battery system company which is trialling integration of renewables at remote communities on islands off the coast of Scotland.
A trial deployment of Moixa’s residential storage systems have been supported by the UK government in a competitive demonstration scheme. (Image: Moixa)
Supporting framework
Simon Daniel, chief executive of Moixa, behind one of the four competitive demonstration projects, asked Rudd what kind of support storage could see lent to it in the form of FiTs or similar schemes. Rudd replied that it was a question for the future, once trials have been underway for longer and said this topic too was “under review”.
One attendee alluded to the recent failure of the capacity market auctions to foster significant levels of storage deployment before asking what specific incentives might be applied to storage as a flexibility resource for electricity networks. In the wake of the auction, one developer of pumped hydro storage had described the capacity auction as “evidence of a broken market”.
Rudd said it had been decided by her department not to use the capacity market to finance and support storage, since the use of storage for supply-demand balancing is at an early stage. The minister’s reply appeared to contradict words her cabinet colleague, energy and climate change secretary of state Ed Davey, who, prior to the capacity market auction, had touted the potential for storage to benefit from that process.
International picture
Dr Jonathon Radcliffe, a senior research fellow in energy storage at the University of Birmingham, asked Rudd what could be done to ensure the UK did not fall behind competitively to other markets. Radcliffe said it was understandable the government did not want to back a specific technology at this early stage of the market, but said other territories had already gained a head start and could further extend their lead.
Again Rudd said the topic would be “under review”.
Later, Radcliffe told PV Tech Storage that he did have
“…a bit of concern that the government targeted energy storage as one of the ‘eight great technologies’ a couple of years ago as an area to support because there’s good capability in the UK to develop the technologies and we can make some money out of it, as well as improve the energy system, essentially from deploying it in the UK”.
Renewables have the power to transform not just the world’s energy markets, but global economics and geopolitics.
But wind and solar alone cannot deliver a world of clean and free fuel. Both are, by their very nature, variable, so to realise their true potential other technologies need to be harnessed.
Improving connectivity to other countries is one relatively simple solution, but in a world where governments are becoming increasingly preoccupied with energy security, its attractions are somewhat limited.
Managing demand more effectively using smart grids and appliances is another.
But the technology with the most revolutionary potential is energy storage.
As Jimmy Aldridge at the UK’s Institute of Public Policy Research think tank says:
“This is the most exciting area within the energy sphere and it’s totally transforming the way we interact with the grid.”
‘Huge disruption’
There are some very obvious ways in which storage can help communities and companies across the world.
Blackouts in developing economies can cause havoc.
In South Africa in 2008, for example, power cuts caused some of the country’s biggest gold and platinum mines to close, leading to a rise in global commodity prices, not to mention huge disruption to the lives of millions. Such unreliable power grids also hamper foreign investment.
Energy storage can not only provide back-up power in case of power cuts, but also help electricity grids run at average rather than peak load, therefore reducing the chances of cuts in the first place.
To this end, Puerto Rico, for example, has set a 30% storage requirement for any new renewable capacity.
But it’s not just developing countries that can benefit. The US government estimates that hundreds of power cuts between 2003 and 2012 cost the country up to $70bn (£45bn) a year. Tens of storage systems are already operating in many states, while California has set a target of 1.3GW to help meet its renewable objectives.
The UK has already built its first grid-level storage battery while Italy, Hungary and Saudi Arabia among others are likely to follow suit.
Storage is also proving invaluable for isolated communities that have no access to the national grid, with islanders in particular enjoying continuous power without the need for additional diesel generation.
Sonangal, the Angolan National Oil company announced cuts in capital expenditure. The industry paid little attention. Since the current crisis began, cuts in cap-ex have been all around us. But this move, from a National Oil Company, marks a significant shift that we should all recognize.
Early in the current cycle, the international operators were first to take decisive action. This is business as usual as the price of oil goes down. The Operators pull back on planned expenditure, put a few projects on hold and trim some fat in their workforce. It’s rough if you find yourself out of a job, and I sympathize with anyone in that position, but it’s not a long term problem.
Global exploration has slowed and this is markedly evident in the drilling market: Some offshore rigs which once were operating at full capacity are now standing idle as prices have fallen from $650k per day to $350k per day.
The oil field services companies take a heavy hit early on, as do other businesses that swim in the slipstream of big oil. When the oil stops flowing, so does the money. But the results are mostly limited to a few poor quarters of financial performance before things return to normal.
But in Angola, we see the start of something altogether more sinister. This is a National Oil Company making decisions that will drastically affect their ability to meet demand in the future.
The issue is not restricted to Angola. The industry is heavily populated with countries that are structurally dependent on robust oil prices. There is a long list, which includes Venezuela, Iraq, Nigeria and to a lesser degree Russia.
As oil prices have fallen and remained low these nation states are simply running out of cash reserves. In some cases the situation is already acute. Venezuela has reserves to cover a very limited period and Angola’s reserves will cover just six months on current spend. As an immediate consequence, these governments are being forced to make swinging cuts as they refocus increasingly scarce capital reserves on essentials such as food and medical supplies. One of the easiest ways to preserve capital is to stop investing in major capital projects. The biggest and most expensive of these capital projects are their investments in oil and gas exploration.
These countries have enough issues without cheap oil muddying the waters. This month saw Venezuela deploy a new exchange rate system that aligns official rates more closely with the real black market rate for dollars. It is an indication of willingness to address real problems but in itself it will solve very little. Their woes will continue for as long as oil remains at these levels. When it recovers, they will only be left to handle the legacy issues caused by decades of fiscal mismanagement.
In Mexico, oil prices have compounded the economic misery of recent years. Again, most of the cut backs resulting from the country’s recent $8.5bn budget slash will come at the expense of planned exploration projects. Geology works much the same way in Mexico as it does everywhere else: long term contracts for easy oil are fine, short term shale plays are out of the question.
Every time capital expenditure is reduced, the gap in future supply and demand deepens.
Back to Angola. Their national budget for 2015 was based on an oil price of $81; when that budget was resubmitted by the cabinet a few weeks ago, it lowered the benchmark to $40 and included a $14bn reduction in cap ex.
Without this investment, capacity for future investment will continue to drop. In 12-24 months, both their supply and their production capacity will have been depleted by underinvestment, just as the opportunity arises to capitalize on soaring prices. This predicament will be common to every oil dependent nation currently running out of dollars.
In the middle of all this carnage, Saudi Arabia is continuing to invest. The Middle East is the one area that remains buoyant even now. When prices rebound, and the remainder of the market finds itself hopelessly underinvested, the Saudis will be there with surplus capacity and the prices will be what you’d expect to see in a seller’s market.
At that point, Angola will be forced to regret the cuts in investment that left them floundering.
You and I will be the losers at the gas station back home, but bad news at the pump translates to good news for the wider economy and the oil and gas job market. When this dip ends, the rebound will be higher than the speculative prices of 2007.
I’m not a betting man, but my advice to anybody willing to take a gamble is go long on oil. You are going to see a major return.
300 pounds: That’s how much coal was not burned in a distant power plant in December as a result of the solar panels we installed on our house in Wyoming this fall.
Being December, it was our lowest monthly generation period, with low sun angles and periodic snow covering our panels.
An astonishing 1000 pounds of coal is burned to provide electricity for a typical US household per month.
Research shows that people most often take action on the environment based on a direct experience (Kollmuss and Agyeman 2002). In the case of climate change, ocean water isn’t lapping at our front door, nor did a hurricane recently flood our house.
Nor will we ever face these threats on the wind-swept plains of Wyoming.
But the health of the environment and our love of wildlife and open spaces is something that we care deeply about and also what drew us to settle here many years ago.
Home Solar Amidst an Energy Boom
Living in one of the epicenters fueling America’s energy boom has been a wake-up call. For the past 15 years, we’ve watched the slow unraveling of the sagebrush ecosystem: natural gas and oil extraction causing declines in species like sage-grouse and mule deer that depend on these systems (Naugle et al. 2011, Sawyer et al. 2013).
Even seemingly protected Yellowstone National Park, which sits nearly in our backyard, is warming at unprecedented rates. Recent temperatures have become as high as those experienced from 11,000 to 6,000 years ago (Shuman 2011) at a time when the concentration of carbon dioxide in Earth’s atmosphere has reached 400 parts per million (ppm), levels not seen since the Pleistocene (Pagani et al. 2010).
Wanting to join others as a part of the solution in reducing dependence on fossil fuels led us to consider installing solar panels on our home.
The Copelands’ home solar project (Photo: Creative Energies)
We studied the economics of the newest panels available and calculated that with the 30 percent federal tax incentive it would take 5 years to pay off the loan and 13 years to break even (Wyoming doesn’t have additional state tax incentives, but many states do). After that, all electricity we generated would be “free”.
Initially, I was pretty hesitant. Did it really make sense to take out a loan for solar panels or to take any “extra” money that we have for family vacations or college and put it into investing in solar?
The winning argument was to think of it like a bond fund, only we are the investors, and the project is solar on our house. When completed, our investment will result in nearly free electricity and the satisfaction of knowing that our electricity came from clean sources. Plus there’s the incalculable value of what it teaches our children. Even if we only break even financially, isn’t that still worth it?
Oil. The commodity. We know what it’s worth – at least we thought we did – but what does a barrel of the black stuff get you in real life? Before we get theoretical, let’s first consider how much oil you use.
If you’re in the United States, that figure is approximately 2.5 gallons of crude oil per day; roughly one barrel every seventeen days; or nearly 22 barrels per year. That’s just your share of US total consumption of course; the true number is harder to discern – minus industrial and non-residential uses, daily consumption drops to about 1.5 gallons per person per day. Subtract the percentage of the population aged 14 and below and the daily consumption climbs back above 2 gallons. This is big picture, and it’s quite variable, so let’s go further.
Most of the nation’s daily crude consumption stems from transportation. If you’re an average driver in an average car, your crude consumption is in the order of 12 barrels per year. However, if your car is more than ten years old, chances are that figure is closer to 15 barrels annually. Does an electric car offer significant savings? Of course it does, but for an unconventional comparison let’s assume all of the electricity is sourced from oil – in truth, petroleum is not a very efficient fuel and accounts for just 1 percent of electricity generation in the US. Under this assumption, a Tesla Model S, with an 85 kilowatt-hour (kWh) battery and a range of 260 miles, will consume approximately 8 barrels of crude per year.
Frequent flyer? Say 2,000 miles per year on a US carrier? Add about two-thirds of a barrel of crude to your annual consumption.
A 3,000-mile cruise on the MS Oasis of the Seas may sound relaxing, but at roughly 4 barrels of crude per passenger, the carbon footprint alone is worth reviewing.
What about residential use? Using similar assumptions to the electric car example above, we can calculate our annual home electricity use in barrels of crude. In 2013, an average American home consumed 10,908 kWh of electricity, or approximately 20 barrels of crude. The real number – considering oil’s role in electricity generation – is far lower at around one-fifth of a barrel.
Petroleum products are active in nearly every facet of our daily lives; food and consumer chains are no exception. Take a look at bottled water for example. It’s an energy intensive business, one with an estimated energy expenditure of 32 million barrels of oil per year – for 33 billion liters of bottled water purchased in the US. The production of the single-use polyethylene terephthalate (PET) bottles alone requires the energy equivalent of almost 17 million barrels of oil.
Obtaining an accurate picture of your daily oil consumption is truthfully quite difficult. Your consumption is dependent on my consumption, which is dependent on someone’s consumption halfway around the globe to make a simple analogy. Moreover, consumption is largely bound by perception and the barrel is still a relatively abstract measure – few will ever lay hands on one. So for the sake of understanding, let’s look at what else a barrel gets you.
According to Chevron, one barrel of oil produces: 170 ounces of propane; 16 gallons of gasoline; one gallon of roofing tar; a quart of motor oil; 8 gallons of diesel fuel; 70 kWh of electricity; four pounds of charcoal briquettes; 27 wax crayons; and 39 polyester shirts.
For good measure, it can power a 42’’ plasma television for about a year and a half – again, it’s not very efficient. It can charge your laptop PC every day for over 7 years, or your iPhone for more than 240 years.
Finally, on the open market, a barrel of West Texas Intermediate will fetch around $50.
Dubbed “the UK’s first eco town”, the NW Bicester development in Oxfordshire will run a range of ultra-low emission vehicle initiatives including an electric car club for the first phase of its development.
The NW Bicester project is being developed by A2Dominion, which is teaming up with ultra-low emission vehicle leasing company Fleetdrive Electric to encourage sustainable travel choices at NW Bicester.
The aim is to get some 10% of residents switching to ULEVs by 2017.
These initiatives include subsidised electric vehicles (EVs) for champions within the community to share their experiences of using EVs, pop-up neighbourhood test drive events and “try before you buy” flexible leasing options through Fleetdrive Electric.
As well as boasting an electric car club, car charging points will be available communally and optionally available to all homes on the first Exemplar phase. Cycle stores will come as standard for each home and the development will have safe, segregated cycle-ways and pedestrian routes linking directly into the town’s existing network.
The partnership is being launched at a special event on Thursday 26 February at the John Paul II Centre in Bicester that will enable Bicester stakeholders and residents to find out more and also test-drive a range of ultra-low emission electric vehicles including the Tesla Model S, BMW i8 and i3, Audi e-tron, VW e-Up!, e-Golf, Mitsubishi Outlander PHEV and Nissan LEAF.
Louise Caves, strategic partnership manager for NW Bicester, said:
‘Travel accounts for some 32% of a typical UK carbon footprint with private car use alone accounting for 18% of this. As lead developers of the UK’s first eco town, A2Dominion is committed to shaping a range of options and initiatives designed to encourage people’s choice of travel to be as environmentally friendly as their home.
‘We’ve planned for a range of alternative modes of travel to minimise CO2 emissions and enable residents to make sustainable transport choices and built features into the design to make travel by foot, public transport, bike or electric car an easy option.’
Shareholders ask the five largest US oil companies – Valero, Exxon Mobil, Marathon Petroleum, Phillips 66 and Chevron – to disclose the risks their operations and facilities face from rising sea levels and storm surges
[Published 26 Feb] Investors and nonprofits on Thursday asked the five largest US oil companies to disclose risks to their facilities from climate change.
In letters signed by Calvert Investments, Pax World Management, Walden Asset Management and other investors, as well as nonprofit advocates Ceres and the Union of Concerned Scientists, the groups express concern about “the lack of public disclosure of physical risks due to climate change”, such as from storms and flooding.
The letters are tied to a report, released by scientific advocacy group the Union of Concerned Scientists on Wednesday, that concluded that coastal refineries owned by each of the companies – Valero, Chevron, Exxon Mobil, Marathon Petroleum and Phillips 66 – are in danger of potentially costly disruptions due to rising sea levels and storms.
“To be clear, oil companies are going to suffer from climate change too, and they’re not doing enough to disclose that to investors,”
said UCS’s Gretchen Goldman, lead analyst at the Center for Science and Democracy and the author of the report.
“Refineries have low profit margins and are situated on vulnerable coastal locations. Any disruptions in refining operations could have material impact on companies’ cash flows.”
The US has 120 oil and gas facilities within 10 ft of the high-tide line, Goldman said.
According to the report, which used storm surge modeling and geospatial data to map risks of flooding at coastal refineries in low-lying areas, Valero’s Meraux refinery in Louisiana faces the starkest physical risk among the refineries studied.
Exxon Mobil CEO Rex Tillerson, Chevron CEO John Watson, ConocoPhillips CEO James Mulva, Shell president Marvin Odum and BP America president Lamar McKay are sworn-in to testify before a US House of Representatives subcommittee hearing on energy in 2010. (Image: Michael Reynolds/EPA)
With forecasts that sea levels in the Gulf of Mexico could rise 3-4 ft (about 1 meter) by the end of the century, parts of the refinery are likely to be inundated by 2050, Goldman said.
That’s not even including the risk from storms. Storm surges from hurricanes already have reached as high as 28 ft (8.5 meters).
“Even today, a category 3 storm could put the facility under water,” Goldman said.
The Meraux refinery, previously owned by Murphy Oil, suffered $330m in damages due to hurricane Katrina, noted Gabriel Thoumi, a senior sustainability analyst at Calvert Investments, which signed the letter to oil companies.
Elon Musk’s electricity empire could mean a new type of power grid
Earlier this week, during a disappointing Tesla earnings call, Elon Musk mentioned in passing that he’d be producing a stationary battery for powering the home in the next few months. It sounded like a throwaway side project from someone who’s never seen a side project he doesn’t like. But it’s a very smart move, and one that’s more central to Musk’s ambitions than it might seem.
To understand why, it helps to look not at Tesla, but at SolarCity, a company chaired by Musk and run by his cousin Lyndon Rive. SolarCity installs panels on people’s roofs, leases them for less than they’d be paying in energy bills, and sells surplus energy back to the local utility. It’s proven a tremendously successful model. Founded in 2006, the company now has 168,000 customers and controls 39 percent of the rapidly expanding residential solar market.
Fueled by financing systems like SolarCity’s, government subsidies, and a rapid drop in the price of photovoltaics, solar has been growing fast. But with that growth, some of solar’s downsides are coming to the fore. Obviously, the sun isn’t always shining when you need power, and sometimes the sun is shining when you don’t need power. The former is a problem for the user, who needs to draw on the grid when it’s cloudy or dark; the latter is a problem for the grid, which needs to find a place for that excess energy to go. When there’s a lot of solar in the system, it can get hard to keep the grid balanced.
That’s part of the reason that California, with one of the most aggressive renewable energy mandates in the country, recently declared the most aggressive energy storage mandate as well, with a goal of 1.3 gigawatts of storage by 2020. As other states adopt intermittent renewables like solar and wind, they’ll need to install energy storage too, providing a ready and waiting market for Tesla’s batteries.
Tesla Powerwall display (Image: T. Larkum)
This has been part of the plan for the Gigafactory all along. At an event in New York last fall announcing plans for SolarCity to build a gigantic PV-panel factory, Musk and Rive mentioned that every SolarCity unit would come with battery storage within five to ten years, and that the systems would supply power at a lower cost than natural gas. Those batteries will come from the gigafactory, currently being built in Nevada. Once the factory comes online, the strong demand for energy storage will allow it to immediately ramp up production and achieve economies of scale. Tesla CTO JB Straubel (who has said that he “might love batteries more than cars”) says that the market for stationary batteries “can scale faster than automotive” and that a full 30 percent of the gigafactory will be dedicated to them.
Indeed, SolarCity has already begun installing Tesla batteries, mostly on commercial buildings like Walmart stores, which have to pay higher rates when they use lots of power during peak hours. Tesla’s batteries let them store up solar power when they don’t need it, then use it when rates are high, shaving 20-30 percent off their energy bills, according to Ravi Manghani, an analyst at GTM Research.
SolarCity is also running a pilot project with 500 homes in California, according to the company’s director of public affairs, Will Craven. The project uses Tesla’s 10-kilowatt-hour battery packs and can power homes for about two days in the event of an outage, Craven says.
The prospect of cheap solar panels combined with powerful batteries has been a source of significant anxiety in the utility sector. In 2013, the Edison Electric Institute, the trade group for investor-owned electric companies, issued a report warning that disruption was coming. “One can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent,” the report said, likening the speed of the coming transition to the one from landlines to cellphones 10 years ago. Suddenly regulated monopolies are finding themselves in competition with their own customers.
They haven’t had to deal with this on the residential side yet, primarily because people can sell excess power back to the utilities at fairly high rates — a practice called net metering. But that’s hurting utilities, too, and some have tried to lower the price at which they buy back power, which has been met by furious protests from people leasing panels. If utilities lower the buyback rate too much, however, and batteries get cheap enough, people may just unplug from the grid altogether — or more likely, install systems that let them rely on it only rarely — prompting what those in the industry call “the utility death spiral.” It’s quite a bind: by fighting net metering, utilities would help make battery storage more economically viable, driving the transition to a distributed grid.
Manghani believes utilities aren’t doomed, but they may undergo a radical transformation, becoming something closer to service providers and minders of an increasingly distributed grid rather than the centralized power producers they are today. Such a system would require lots of batteries to help balance the load and supply extra power during peak times, which is why GTM estimates the market will grow from $48 million today to about $1 billion in 2018.
This is the position SolarCity is taking as well. Last April, Peter Rive, SolarCity’s CTO, wrote that the company had no interest in prompting mass defections from the grid.
“When batteries are optimized across the grid, they can direct clean solar electricity where (and when) it is needed most, lowering costs for utilities and for all ratepayers,” he wrote.
Utilities are in the best position to direct that electricity, he said, inviting utility operators to contact him. Will Craven, Solar City’s director of public affairs, calls it “infrastructure as a service.”
“Utilities aren’t doomed, but they may undergo a radical transformation”
It would be a tricky transition, but some utilities may be open to it. During an earnings call last year, Straubel, Tesla’s CTO, said they were working with utilities.
“The long-term demand for stationary energy storage is extraordinary,” he said. “We’ve done a huge amount of effort there and have talked to major utilities and energy service companies.”
Another potential bright spot for utilities is Tesla itself. If electric vehicles take off, demand for power will go up, helping compensate for people whose homes are relying less on the grid.
All this is very good news for Musk, who starts to look less like a carmaker and more like the architect of a vertically integrated energy company, with SolarCity making solar panels that send power to Tesla batteries, both in the home and on the road.
“They’re not just carmakers,” Manghani says. “They’re part of the electricity network. At least folks in the energy industry are very well aware of Tesla as a battery maker.”
