Due to increased global warming and a stronger focus on renewable energy and all things environmentally friendly, cities and towns across the world are committing to enlarging their use of solar, wind, geothermal, biomass and hydro energies. This has been achieved to relative levels of success, however, only a handful can claim they are powered by renewable energy 100 percent.
Constructing and then maintaining a green-friendly portfolio requires more than stopping energy from the local fossil fuel burning plant and plugging into a wind or solar farm. There are a couple of factors involved for a municipality to acquire its energy from renewable sources, such as cost and the question of whether it integrates with the current system that is most likely supporting non-renewable energy.
The Cost versus Infrastructure Trade-Off
When Georgetown, an Austin suburb in Texas distributed bids for companies to serve its local power needs, the lowest bids came from wind farms. The electrical grid connects Georgetown to a Texas Panhandle wind farm hundreds of miles away. Georgetown needed to fill a gap in its energy portfolio, and upon research, the cheapest sources were both solar and natural gas. Although prices involved with both were similar, solar providers were able to give the town a long-term contract for a decent price, notes Chris Foster manager of resource planning and integration for Georgetown Utility Systems.
Lower costs per kilowatt-hour were also reported as a strong incentive for switching to renewable energy by officials in Burlington, Vermont and Greensburg in Kansas. In order for this less expensive power to be implemented properly, the specific community’s economics need to suit it. The main reason that it works for Burlington, the first U.S. city to be powered exclusively by renewables, is that the city owns a biomass McNeill generating station. The city also owns Winookski One – a hydropower plant located on the Winooski River as well as controls solar panels at Burlington International Airport, which contributes to a variety of renewables in the portfolio. Greensburg, Kansas is another city with economics that favor renewable integration due to their ten turbine, 12.5 megawatt wind farm that provides the entire town’s energy.
Successful renewable uptake within municipalities tends to be small cities which are located near strong sources of this renewable energy. Though Georgetown, Texas is not in close proximity to its wind farm, the city made investments towards the required infrastructure to bring renewable energy to their inhabitants. Other cities who may not have that luxury would require a combination of different energy sources that feed into the grid.
This combination would require changing from the existing model of one power plant and numerous transmission lines to micro utilities which would need a different method of thinking than most Americans are used to. For example, windmills and wind turbines dot the landscape in Europe, and in Germany there are solar panels everywhere, but that may not be as easily accepted in the U.S.
Distributing renewable energy into current power networks can present a significant challenge. In 2007, an EF-5 tornado flattened 95 percent of Greensburg. When trying to regain the power, the area had no existing infrastructure to leverage as it had been completely wiped off the map. This resulted in a unique circumstance, as a city usually has existing infrastructure to work around.
Ownership of utilities is also important. Burlington, Georgetown, and Greensburg run their own utilities. Additional cities and towns use utilities owned by external stakeholders who may not view renewable energy as a priority.
Another crucial link for cities in potentially becoming 100 percent renewable energy friendly can be in decreasing demand through energy efficiency. Studies demonstrate that it costs roughly 2.8 cents per kilowatt to reduce energy consumption – a lot less than it costs to generate the same amount of electricity utilizing coal, natural gas, wind or solar power. A positive strategy for cities is to decrease demand, spend less on energy and utilize the savings from energy efficiency programs to look into renewable energy investments with a longer payback period and lower return on investment.
Staying out of the Darkness
One issue in relation to renewable energy is that service can be irregular at best. In order for a town or city to achieve 100 percent renewability, they are required to purchase the power it needs when it’s available and trade power when it is not.
One approach to this is to have a wide portfolio of renewables. The strongest renewable portfolio is a one that is multifaceted. Both wind and solar energy can be created at high levels, at different times of the day and can be supported by biomass or geothermal energy.
A second approach is to possess the ability to house power for use when there is a lack of natural sunlight or wind. However, there is currently a lack of storage facilities and the small amount of storage on offer is expensive, contradicting the cost-effective allure of renewable energy.
Light at the end of the tunnel for renewable energy
Despite this situation, storage costs are beginning to decrease and third-party vendors are offering new financing models to the market. As more and more businesses are recognizing that energy storage systems are a necessary component of the sustainability picture, commercial property owners are reconsidering their skepticism towards the topic.
The first quarter of 2017 marked the largest quarter in history for the U.S. energy storage industry, based on a report from the Energy Storage Association. Primarily driven by large-scale utility installations in California, the megawatt (MW) hours of storage availabilities doubled in 2016. 2017’s list of significant announcements included Tesla’s deal to construct what is described as “the largest lithium-ion battery storage project in the world” in South Australia. The Tesla batteries will have the ability to store 100MW of power – enough to supply more than 30,000 homes.
Multiple different trends are coming together to make battery storage increasingly attractive. According to a report by McKinsey & Co, costs for battery packs have dropped from roughly $1,000 per kilowatt-hour in 2010 to $230 per kilowatt-hour in 2016. Simultaneously, energy rates are continuing to rise, and many states including California, New York, Massachusetts and Hawaii are looking for incentives to assist in pushing companies to discover methods for their consumption. Incentives are pushing more demand and bigger deals as companies are investing more in the numbers of batteries. Despite various energy storage technologies having a presence on the market for decades, new software and data analysis systems enable a property owner to effectively monitor the energy flow from the grid – potentially avoiding peak rates.
One company involved with battery storage systems is Stem which operates as a commercial service provider in the space. They install, maintain and operate the battery storage system, with the host company only having to pay a subscription fee. This pricing model eradicates upfront costs for property owners – one reason why Stem has been successful in attracting a large variety of clients like Whole Foods, Extended Stay America Hotels, and Adobe Systems. The majority of the 700 installations have been centralized in California and Hawaii, with expansions taking place in Texas and New York in 2017.
In 2016, LBA Realty installed a 1.3 megawatt battery system operated by Stem. It is reported to be the largest energy storage in the U.S. located in a 2.1 million square foot mixed use area in Irvine, California. The expectation of this system is that it will decrease the site’s energy costs by more than $90,000 in the first year alone. Along with the obvious financial benefits associated with the system, it also helps address the sustainability goals of tenants.
Kilroy Realty, a real estate investment trust company, is working with Stem’s rival Advanced Microgrid Solutions to install Tesla manufactured batteries in several office buildings in Southern California. Advanced Microgrid, which recently raised $34 million in their second round of financing, essentially rents space for these batteries and installs software to monitor energy flow, working through a Southern California Edison Initiative to decrease the demand for Kilroy Realty during busy, peak periods.
The energy storage system won’t house wind or solar energy – it only monitors the grid connection, but it maintains a relationship with Kilroy Realty’s “net zero” goals. Properties managed by Kilroy Realty are typically tall and located in urban areas, making solar or alternative energy production options difficult. Batteries represent an important part of the puzzle for obtaining net zero.
The large range of financial models has altered the equation for battery storage systems. Latest predictions by Navigant state that by 2025, 84 percent of projects in the “grid-tied” battery storage market will be funded by third parties or utilities. Navigant states that “The energy storage market is transcending from a nonessential but desirable addition to renewable energy projects into a standalone solution that provides customers and system owners significant value.”
The entrance of these tracking technologies has added more predictability to the market, enabling investors and property owners to better plan long-term savings. Property owners are also seeking guaranteed, reliable, energy savings that don’t cost anything. The new software platforms allow systems to actually execute on what they want to do.
As is the case with every emerging industry, there are still challenges facing the wider battery deployment. Modern battery systems are still more costly than generators for other applications like energy system backups. Government incentives also play a part in being a key driver for the market. Industrial space giant Prologis – which has distributed more than 165 megawatts of rooftop solar has been monitoring the energy storage space for several years searching for opportunities that align with their business portfolio so they can implement them and benefit from them.
There are no silver bullets with renewable energy implementation
Although there are varied opinions and thoughts from industry experts about renewable use, one agreed fact was that there is no one size fits all solution. The first step involved in executing a green strategy for your area is to analyze the resources available, understand the power sources and secure cooperation from the community.
Once a city’s leadership promotes developing a renewable energy portfolio and puts forward a clear plan on achieving it, this can become a reality. However, accomplishing 100 percent reliance on renewable energy resources needs a large element of dedication, time and effort. In 1984, Burlington made the first move when it turned on its biomass plant, making it to 100 percent renewable energy in 2014. Further supporting the need for both a clear plan and cooperation from the relevant stakeholders, is the fact that the ten – twelve years prior to Burlington achieving 100 percent was made up of a concentrated effort to get to that point.
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