The Fossil Future of Thermal Generation

by chris | Jul 11, 2017 | Energy

The calls for a 100% renewable energy market in NZ are often met with large amounts of criticism, “We are 85% renewable already”, “Thermal back up is required for periods of drought and low wind”, “Going 100% renewable will only increase prices as more generation will be required” etc etc etc.

Quite frankly, this is an outdated way to think of the market based on large scale generation models and long distance transmission.

New Zealand in transition

Unlike most other countries, NZ is well positioned to further reduce reliance on thermal generation, given our geography, population spread and isolated energy system i.e. we are not importing or exporting electricity to other countries like many do in Europe or North America.

A good first step could be to remove thermal baseload generation from the market, in recent time this has been achieved with Otathuhu closing in 2015, much of the “slack” was taken up by new and efficient running of Geothermal stations.

But how do we take this further, how do we remove the requirement for Huntly et al while still retaining large users such as NZ Steel and Rio Tinto?

Battery Storage and the New Zealand network

From my perspective the largest potential lies in battery storage whether it be fixed assets or leveraging the electric transport fleet in years to come.

If generators / network companies considered either installing large scale industrial batteries at remotely located or congested sub-stations or operating networks of small scale batteries installed across thousands of residential homes, massive amounts of money would be saved by not having to build new hydro dams or geothermal plants.

Ever increasing costs of maintaining such a large transmission and distribution system for such a small population is surely a compelling event for infrastructure owners to invest in new technologies and new business models to sustain revenue into the future. If we apply Moore’s law to batteries, they will half in price and double in capacity in the next 18 months which should see them become extremely viable.

Considering the above, the case for thermal becomes much less compelling.

Examples from abroad

In recent times, Germany has made huge steps to curtail the reliance on thermal generation with numerous renewable generation initiatives. The following article was written by Yaniv Vardi, CEO of Panoramic Power and highlights a number of valuable points that New Zealand might take on board.

In a world facing pressing challenges from climate change and rising carbon emissions, entire countries are becoming laboratories to test potential solutions. Nowhere is this truer than in Germany, where their aggressive plans to address climate change, encoded in the ambitious Energiewende, call to phase out nuclear and carbon-based energy sources and invest in renewable energy sources – such as solar and wind.

The Energiewende plan envisions a non-nuclear Germany that cuts its carbon emissions by 80% by 2050. As lofty a goal as this may be, the plan is on pace to meet and even exceed benchmarks. Even though not everyone is on board, and some claim the Energiewende is overzealous and could strangle business in favor of pushing an unrealistic energy policy, progress well underway.

What is the Energiewende, and what has it done so far?

The Energiewende is a sweeping plan for “the full-scale transformation of [German] society and the economy” along the lines of renewable energy. Passed in 2010 in its most recent form – but with social and political roots that stretch back 20 years prior – the Energiewende schedules a complete phase-out of nuclear-generated energy by 2022, an 80% cut in carbon emissions by 2050 and supports additional investment in renewable technologies such as wind and solar.

The Energiewende has three main components: proliferation of renewable energies, reduction or compete phase out of nuclear- and carbon-based energy sources and increased energy efficiency.  Germany is well on its way to completing these goals successfully and in a timely fashion. Currently, the first two components are well underway, while early progress has been made toward heightened efficiency. By 2014, 27% of German electricity was generated by renewable sources. Since 2011, Germany has halved its consumption of nuclear energy and shut down nine of its 17 nuclear reactors.

On its surface, the Energiewende appears to be working. It doesn’t mean, however, that the policy isn’t free of critics. Some have vocalized sharp critique, casting doubt on the viability of the energy plan. But do these arguments hold water?

 

The continuing energy debate

Not everyone is sold on the promises of the Energiewende. Some, like economist Heiner Flassbeck, argue that an energy system primarily supported by wind and solar, without any aid from nuclear sources or fossil fuels, is ultimately not tenable.

Flassbeck’s critique is related to what critics call “the intermittency problem,” that wind and solar don’t always generate electricity at reliable levels. If the renewable sources fail to produce enough energy to meet the nation’s demand, and Germany successfully phases out all nuclear- and carbon-based energy sources, there would be no fallback to generate the additional energy needed. Critics say removing that backup would be a crucial mistake.

However, proponents argue that intermittency can be solved with greater grid connectivity – geographical diversity, they suggest, should often balance out any shortages – and the development of better storage technologies. At present, wind energy must be used as it is generated; if cost-effective storage methods emerge, the intermittency of wind power becomes less of a concern.

In addition, alternative sources have proven themselves to be sufficient. Just last year, German solar power providers generated so much electricity that they actually had to pay to offload it. And while naysayers may declare this the product of a ham-fisted public policy that actually dims the long-term viability of commercial energy production, the fact that there’s enough clean energy production to bring this hypothetical conflict to life, is itself encouraging.

Energiewende critics also raise concern about inflated electricity costs. In Germany, utilities are required by law to pay energy producers that sell back to the grid. Those payments are set at fixed, above-market prices, which utilities pass on to consumers in the form of a surcharge on their electric bill. As a result, German consumers experience higher than average energy costs. In 2016, the surcharge amounted to 22.1%.

In the U.S., consumers pay less per kilowatt hour, a fact favored by critics of Germany’s energy policy. Despite the heightened electricity rates, German consumers are still widely in favor of the Energiewende. More than 80% of respondents of public opinion polls said they were in favor of a low-carbon and nuclear-free economy. Higher energy costs, it seems, do not deter the Germans in their bid for a cleaner energy system.

Toward a viable, national energy management model

Despite critics’ appeals to hold tight – at least for the time being – to the nuclear- and carbon-based status quo, Germany’s energy efficiency policy is making a compelling case study for a more sustainable model.

The methods may be bold, but they seem to be working. Germany reduced greenhouse gas emissions by 27% and produced 27.4% of its electricity from renewable sources. Renewable energy made up 13.5% of the market as well – all while shuttering nuclear facilities and growing the overall economy by 1.9% (the fastest rate in the G7).

While Germany is phasing out non-renewable energy sources like coal at a slower pace than nuclear energy, the Energiewende is setting the stage for a new system founded on renewable energy technologies. As storage methods improve and proliferate, and distribution networks become more connected, the problem of intermittency should become less and less burdensome – in other words, high-producing regions will be able to support low-producing regions.

While the Energiewende is aggressive bordering on single-minded, it has already demonstrated its viability as an energy system capable of supporting an advanced, forward-thinking economy. Even as the German policy has implemented drastic changes in a relatively short amount of time, the German economy has continued to grow unabated. If the world is serious about combating climate change and meeting the targets of the Paris climate accord, Germany’s Energiewende is a model to emulate, not dismantle.

Yaniv Vardi is the CEO of Panoramic Power, a leader in device level energy monitoring and performance optimization

Utilising Energy for Competitive Advantage

by chris | Feb 13, 2017 | Energy

For many businesses, energy can make up a large portion of the cost of doing business however in many cases it is not subjected the same level of scrutiny that other expense areas do. Often getting a better price through procurement is seen as good enough or all that can really be done when it comes to managing energy as businesses are so focused on their core purpose or there is not an available resource to execute an energy management plan.

Retail pricing is increasing

Over the last 12 months or so we have seen over the counter retail pricing slowly increasing. The 15-20% energy savings of 2 or 3 years ago are now a distant memory however customers are still able to contract similar or slightly improved pricing compared with their expiring agreements.

What can be done? It’s like the old saying, give a person a fish and eat for a day, teach a person to fish and they can eat for a lifetime.

Long-term energy savings

Energy management can be seen in the same way, getting a better “deal” is only a short-term fix and should be part of a much wider strategy. Understanding how and where energy is being consumed, measuring and reporting on energy, understanding how energy use is impacted by changes in production and or environmental conditions can lead businesses to make informed strategic decisions about their longer-term goals so that these align with their wider business plans.

In our experience, customers who understand and measure where energy is being used to instigate change can achieve savings of 10% or more.

More detailed analysis can be done that will identify cost-effective savings in the range of 20-25%, and total savings of up to 40% including large capital measures. Once implemented, these savings can be forever rather than just for a 2 or 3-year energy retail contract term.

Measurable energy efficiency drives results

While many businesses track their site level energy costs and kWh volume, and have a fair idea about what systems are the most energy hungry, many customers cannot point to concrete data that underpins their view.

In a recent survey conducted by IPSOS on behalf of EECA, respondent businesses stated that energy efficiency is not seen as a top priority, however I would ask, what risk are you taking if the competition takes a different view?

The top 6 priorities were listed as:

1. Employee Safety
2. Longevity
3. Achieving Growth
4. Brand Development
5. Employee Relations
6. Productivity

Around 50% of respondents said that improving energy efficiency would have a direct impact on the above.

If we apply the principle of Moore’s law (computer chips will run twice as fast and halve in price every eighteen months) to energy, technological advances will bring product efficiencies in time but at this stage replacing a HVAC system or production line like we would replace our iPhone every couple of years remains out of the question. But that’s changing fast.

Smart energy monitoring is here!

The Internet of Things gives us the ability to assign a unique internet identifier to a virtually unlimited number of devices anywhere in the world. That means we can monitor the performance, or activity, on a unit by unit basis: collecting device-level energy data is much easier and more affordable.

Smart energy metering has now mostly been rolled out in New Zealand so customers can access half hour meter reads. While this provides a plot summary it cannot deliver the whole story.

A common barrier for businesses implementing an energy management strategy is that measuring consumption behind the revenue meter and at a high level of granularity has in the past been expensive and relatively difficult.

With the Internet of Things beginning to enter the large commercial and industrial space this is a thing of the past. Total Utilities can provide Panoramic Power’s nonintrusive, cost effective, and scalable metering solution along with a range of consulting services based on an OPEX pricing model.

Safer, cheaper, better — with the Internet of Things

Gaining visibility of device level behaviour leads to a better understanding of usage cycles and patterns. It can also change the way in which regular maintenance is carried out. While the change to preventative maintenance is a huge improvement on responsive maintenance this still leaves a lot to be desired in terms of cost management and efficiency.

Benchmarking similar pieces of equipment, systems or comparable locations can be a good way to understand when maintenance should be carried out however a device level data lead model of predictive maintenance can be adopted if customers can measure granular energy usage and operational up / down time.

A data-led energy strategy may lead to;

• Real and measurable long term energy savings.
• Improved environmental conditions.
• Increased staff productivity.
• Improvements in health and safety through predictive maintenance.
• Reductions in insurance premiums by monitoring energy intensive equipment that stores perishable or fragile products.
• Marketing value for green credentials.

Having an energy management strategy could be the difference in making more profits than your competitors, winning more competitive contracts, or securing longer term tenants through a lower delivery cost, a more productive work force or a more comfortable environment.

So, what can you do?

Total Utilities can be your virtual energy manager providing a pragmatic and full end to end approach in helping your business transform energy from just a cost of doing business to a strategic and competitive advantage.

For more information on the services that we provide, click the links below:

Energy Monitoring and Targeting
Energy Management and Strategy
Energy Procurement
Energy Audits and Feasibility Studies
NABERSNZ ratings

To discuss your specific requirements and how we might assist your business please contact me on 021 650 336, [email protected] or Pushkar Kulkarni on 021 273 4337, [email protected]

New Standard in Energy Contracts

by chris | Nov 7, 2016 | Energy

Unfair contract terms provisions were introduced in March 2015 as part of changes to the Fair Trading Act. The provisions are designed to protect consumers from contract terms that create a significant imbalance of rights or obligations between the company and the consumer.

Energy Contracts in New Zealand

The Commerce Commission has now completed its review of retail energy contracts (including retailer feedback) to ensure that they meet minimum standards required by the fair trading act. While focused heavily around the consumer market the results of the review will have an impact on commercial customers.

This is mainly in the area of liability and automatic renewals with opt out clauses along with contract termination fees that are applied to auto renewed contract terms. A review of these clauses has been long overdue, as an adviser and consultant this is an area that we have always held a negative view and retailers have been at times very stubborn when proposed changes are requested. For our customers, clauses such as this have always been highlighted and further contextual information requested especially around liability.

Commissioner Anna Rawlings said,

The majority of the nine energy companies included in the review had made real efforts to comply with the provisions before they were introduced. However, we did identify 59 terms that we considered potentially unfair. Many of the terms were common across the contracts, particularly those that limited the liability of the company, allowed the company to unilaterally vary the contract or automatically renewed fixed term contracts unless the customer opted out.

The commission ruled on these areas as follows:

• Liability needs to be balanced between the retailer, customer and distribution provider.
• “Opt Out” contract renewals are not unfair per se but the commission does not look fondly on them.
• Termination fees cannot be charged on auto renewal agreements given that the customers have not signed a new contract term.

Of the retailers that had auto renewal terms in their small commercial contracts, some have dispensed with opt out renewals completely whereas others have agreed not charge termination fees.

Regarding the wider terms that were highlighted, in some instances the companies were able to provide information to the Commission to show that the term was necessary to protect the legitimate business interests of the company. In all other cases, the companies accepted the Commission view and have amended or agreed to amend the terms concerned.

Rawlings further commented,

We are pleased that the energy retail companies constructively engaged with us and were receptive to our concerns, avoiding the need for the Commission to consider court action. Most New Zealanders have a standard form consumer contract with an energy retail company or live in a house that is covered by one. Our review covered 90% of the energy retail market in New Zealand and New Zealanders can now be more confident about the fairness of those contracts, which is a great outcome.

With the review of telecommunication contracts in February and energy contracts now complete, the commission is now investigating gym membership and credit contracts.

Total Utilities reviews all contract terms and conditions prior to submission of recommended contracts to customers, this includes comments where applicable around required quantities, assignment, termination and force majeure along with project-specific needs.