Utilities Face ‘Perfect Storm’ From Falling Renewables Costs

by Giles Parkinson.

Originally published on RenewEconomy

A new report from leading utilities analysts at investment bank UBS suggests that energy utilities in Europe, North America and Australia are facing a “perfect storm” from the falling costs of renewables, energy efficiency and falling demand, and may not be able to sustain their business models.

The report – entitled; Can utilities survive in their current form? – is the latest in a series of assessments, reviews and analysis that point to the severe disruption to the centralized generation model, and the demand and supply dynamics that have governed the industry for the past few decades. To briefly summarise the UBS response to its own question, the answer is No.

UBS says the biggest impact on the current utility model will occur in developed markets, where renewables in general and distributed solar in particular will take more of an already depleted “demand pie.”

This, says UBS, will cause profits to fall and could force utilities, particularly generators, to look at greater exposure to renewables and distributed generation, and to other downstream services. It comes to a similar conclusion on this as the CSIRO Future Grid forum, and echoes some of the strategic decisions currently being mooted German energy giants RWE and E.ON.

“We expect the renewables onslaught to continue and that the going will only get tougher for conventional generators,” the UBS analysts write. “We believe they will need to examine and change their traditional business model to survive the renewables era.”

These new business models could include a greater focus on rooftop solar, energy efficiency, and consumer offerings that combined solar, storage, and electric vehicle infrastructure, as well as energy efficient appliances.

UBS says the economic for solar panels looks set to work best in Australia, the southwest US, Germany, Italy and, with a time lag, in Spain.

It notes that the combination of decreasing costs of solar and rising electricity bills means that “end-user” grid parity has been achieved in several key European market, and in Australia and the south-west of US.

This means that consumers can reduce the cost of their bills by more than the cost of the solar system – and rooftop solar systems are having the added impact of pushing thermal generation down the merit order, as Stanwell has testified in Queensland.

“As unsubsidised solar replaces conventional generation … in Europe, the US and Australia by shaving off the peak demand, it has started to reduce pool electricity prices,” UBS notes. And utilisation rates will also fall. This would lead to a 50 percent fall in profits from conventional utilities in Europe by 2020, based on current deployment forecasts.

UBS says the prices will fall so low that capacity will have to be removed to allow prices to recover. However, that capacity may be superseded anyway by the emergence of storage, potentially another blow to conventional generation.

Interestingly, UBS conducted a survey of 65 utility companies in Europe, Asia, America, Australia and Brazil – and the biggest number of utilities who viewed renewables as a threat where conventional generators in developed markets.

More than 50% of generators thought this way, compared to less than 5% in emerging markets. The percentages were virtually reversed when asked about the opportunity for renewables.

Must be something about sunk investments. Indeed, most developed market generators said renewables would lower their profits, while in emerging markets they thought renewables would increase their profits. UBS noted that the problems for conventional generators in developed markets would likely increase, given that penetration rates are still relatively low.

In Germany, however, households are expected to generate 29 percent of their needs from rooftop solar by 2020, and commercial businesses up to 18 percent. In Italy and Spain, commercial businesses are expected to generate more than one quarter of their own electricity requirements.

This article, Energy Utilities Facing ‘Perfect Storm’ From Falling Cost Of Renewables — Report, is syndicated from Clean Technica and is posted here with permission.

The Solar Opportunity Awaits

by John Farrell.

U.S. grid parity chart
U.S. population at grid parity chart.

The coming of solar grid parity offers an opportunity for millions of Americans to go solar affordably. But it also means a potential transformation, a democratization of an electricity system long dominated by centrally-controlled utilities and centralized ownership and production of electricity. When solar can undercut grid electricity prices, it may also undercut this 20th century system of centralized ownership, bringing economic sunshine and self-reliance to communities along with solar electricity.

This is the third of five parts of our Rooftop Revolution report being published in serial. Read Part 1 or Part 2. Download the entire report and see our other resources here.

Millions of People, Thousand of Megawatts

When solar grid parity arrives, it won’t mean that everyone can go solar. The most likely participants in the residential sector will be folks who own their own home. Even then, there will be some homes whose roof is unsuitable for solar power for one reason or another (e.g. shading). The following analysis takes the year of solar grid parity for the nation’s largest cities and translates it into megawatts of solar power potential.

We used the following assumptions to calculate the residential solar rooftop potential for each metropolitan area:

  • Only non-vacant, owner-occupied properties were considered. Nationally, about two-thirds of homes are owner-occupied and not vacant, with major metropolitan areas varying from 50 to 70%.1
  • We estimated approximately 1,000 square feet of total roof space per home.
  • We assumed that only 27% of this space (in the aggregate) would be suitable for solar, based on national studies of rooftop solar potential.2
  • We assumed that 1 kW of solar could be installed for every 100 s.f. of suitable roof space.

With these assumptions, we can use our previous analysis of the year of solar grid parity (based on the average residential retail electricity rate) to estimate the potential capacity of solar power that could be installed on home rooftops at grid-beating prices each year until 2027.

A very conservative solar megawatt grid parity estimate

The above chart is quite conservative. For one, the data only reflect the 50% of Americans that live in the largest 40 metropolitan areas. Additionally, we used average grid prices and did not factor in time-of-use pricing or “economic grid parity.” Finally, residential solar is only a fraction of the total solar market. In California, the largest U.S. solar market, residential solar represents approximately 30% of the installed capacity in the California Solar Initiative program.3 Thus, the grid parity potential numbers above are a fraction of the actual solar potential when considering commercial and public sector property as well as communities smaller than the 40 largest cities.

Additionally, rooftops aren’t the only place for solar, and the availability of other locations could further expand the grid parity opportunity. The following infographic illustrates the opportunity for solar over parking lots, near highways, and underneath existing transmission lines. It still doesn’t factor in solar placed on the ground near existing buildings.

solar land space

Jobs and Economic Development

Solar provides an unparalleled economic opportunity for local power generation and local economic benefits. Each megawatt of solar power generates as many as eight jobs and $240,000 in economic activity, and most solar power projects can be built right next to or on top of the building that will use the electricity.

Previous studies by the National Renewable Energy Laboratory indicate that locally owned renewable energy projects multiply the job and economic benefits of renewable energy projects.

With a potential for 30,000 megawatts of residential solar in the next 6 years, communities across the country could gain over a quarter of a million jobs and create over $18 billion in economic activity.

Value to the Electricity System

There’s also ample evidence that distributed solar power has much greater value to the grid than simply electricity output. The delivery of power during peak periods (covered by time-of-use pricing) is just one element. The ability of solar to avoid transmission access charges, supplant long-distance power sources, reduce stress on the distribution system during peak power events, and hedge against fossil fuel price fluctuations can vary from $0.03 to $0.14 per kWh. Solar also has environmental benefits (relative to existing power production) that provide additional value.4

Local Ownership Boosts Economic Benefit of Renewables

The following chart illustrates how utilities are recognizing the value of solar power, illustrating the willingness of a municipal utility to pay more for local solar power because of its various grid and local economic benefits.

Value of Local Solar Power to Palo Alto MUNI

Key to PA

Democratizing the Electricity System

Perhaps the greatest benefit of the solar grid parity opportunity will be its political impact. As millions of Americans become self-reliant energy producers, it will create an enormous constituency for continued support of distributed renewable energy development and distributed solar in particular. As an illustration, the following residential rooftop solar installation might have the capacity to produce 3 kW of electricity, but the two adults likely to live in the residence represent two solar voters.

solar 3kw roof

References

  1. 2010 American Community Survey 1-Year Estimates. (Census Bureau, 2010). Accessed 12/8/11 at http://tinyurl.com/7ndxhg4.
  2. Paidipati, Jay, et al. “Rooftop Photovoltaics Market Penetration Scenarios.” (Navigant Consulting, Inc., for NREL: February 2008). Accessed 8/13/08 at http://tinyurl.com/6qplow.
  3. Applications by Sector. (California Solar Statistics, 1/10/12). Accessed 1/11/12 at http://tinyurl. com/86a7awr.
  4. Farrell, John. Distributed Solar Power Worth Far More Than Electrons. (Institute for Local Self-Reliance Energy Self-Reliant States blog, 4/12/11). Accessed 1/13/12 at http://tinyurl.com/3tqmerh.

This article, The Solar Opportunity, is syndicated from Clean Technica and is posted here with permission.

Global Solar PV Installations Will Double, Hit Grid Parity By 2020

by Silvio Marcacci

.

Worldwide Solar PV Installed Capacity and Revenue chart via Navigant Research

Continually declining solar photovoltaic (PV) prices will continue to power an international market surge, with annual installations doubling by 2020 en route to grid parity around the world.

This bright outlook shines through Navigant Research’s most recent Solar PV Market Forecasts and estimates solar PV will be cost-competitive with retail electricity prices without subsidies in nearly every electricity market by 2017.

Even though each international energy market presents different conditions for solar PV’s growth, Navigant expects overall solar energy costs  to continue falling while overall installations and industry revenue keep climbing.

Low Solar PV Costs Unlock Grid Parity

Solar PV panel oversupply and government incentives have combined to send costs spiraling down to often unsustainable levels in recent years, sparking market consolidations and bankruptcy. According to Navigant, module costs fell from $4 per watt in 2006 to as little as $1 per watt in some markets by 2012, and will continue declining between 3%-8% per year to reach a global average of $1.50-$2.19 per watt by 2020.

This dramatic price decline has also made solar PV appealing to developing nations and an entire new class of homeowners and businesses. Under Navigant’s outlook, new annual installations of solar PV will double from 35.9 gigawatts (GW) new capacity in 2013 to 73.4GW in 2020.

“Lower prices for solar PV modules are opening up new markets for distributed PV, while also helping the technology reach grid parity more quickly in high-cost retail electricity markets,” said Dexter Gauntlett, Navigant analyst.

New Markets, New Revenue, Surprising Trends

And all those new installations will also bring much more revenue, often by new markets. Navigant estimates annual worldwide solar PV revenue will pass $134 billion by 2020, led by growth in the Asia-Pacific region. Of course, China will dominate worldwide growth, and is expected to pass 100GW installed solar PV capacity by 2020.

But if China’s solar surge is predictable, the type of installations is not. Distributed generation, while an exciting prospect for resiliency, is expected to account to less than half of all installations in 2014 and non-distributed systems (greater than 1 megawatt in size) will represent more than half the worldwide market through 2020.

The shift away from non-distributed generation is somewhat surprising, considering major markets like Germany and China are retooling their financial incentives toward on-site installations while solar leasing companies like SolarCity and SunRun offer homeowners the option for rooftop solar with little or no upfront investment and many states tweak policies to free the grid for small-scale solar systems.

But perhaps this shift is best seen in context compared to the total growth of large systems. Navigant previously estimated distributed solar installations would reach $118 billion by 2018 – meaning small solar PV will keep growing, just not as fast.

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This article, Global Solar PV Installations Will Double, Hit Grid Parity By 2020, is syndicated from Clean Technica and is posted here with permission.

About the Author

Silvio Marcacci Silvio is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.

Nuclear Prices Itself Out Of The Market — Graph

by Giles Parkinson

.

Originally published on RenewEconomy

The extent to which nuclear is being priced out of electricity markets has finally been revealed by the pricing mechanism unveiled by the British government in the deal to subsidise the Hinkley C nuclear.

The UK government will pay £92.5 for each megawatt hour produced from Hinkley ($A154/MWh), around double the prevailing market price. This is after the UK supplied a loan guarantee for 65 per cent of the estimated $24 billion capital cost. The “strike price” – a fancy name for a feed in tariff – also has an escalator to take into account the impact of inflation, so the cost will rise in coming years.

So how does this compare with rival clean energy technologies? Pretty badly as it turns out.

This graph below, published by Craig Morris in Renewable Energy World reveals that the rates that will be offered for new nuclear from 2023 in the UK are far above what solar and wind currently cost. And, as Morris points out, the rates for solar and wind will go down by then, not up! Even offshore wind is getting £95/MWh from 2018 in the UK, but only for 15 years and without any loan guarantees.

.nuclear-fit

This second graph below is even more interesting. It takes into account all the expensive PV that was installed with really high feed in tariffs at the start of Germany’s energy transition before the price of solar fell dramatically. From 2023, when the Hinkley reactor is due to be switched on, nuclear at this price still fairs poorly, and as the cost of those tariffs continue to decline, the cost of nuclear will continue to rise. It’s probably as good an illustration as any as to why Germany are not interested in new nuclear power station, and few countries are.

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This article, Nuclear Prices Itself Out Of The Market — Graph, is syndicated from Clean Technica and is posted here with permission.

About the Author

Giles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.

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7 Ways To Reduce Your Electricity Bill

by Zachary Shahan

7 Ways to Lower Your Electricity Bills
7 Ways to Lower Your Electricity Bills

Originally published on Cost of Solar.

A lot of people are looking to save money these days. No one knows what the future holds, and we all know that the world has been marred with economic troubles in the past decade or so. A major household expenditure for most of us is our electric bill. And our electricity usage is a great place to start when we’re looking at how to lower our bills.

How To Lower Electric Bill, Action #1 — Go Solar!

I’m going to go ahead and start with the most obvious — the most effective way to lower your electric bill is very likely by going solar. Sure, you have to pay for those solar panels, but they are cheaper (in the long run) than electricity. The average household that goes solar is likely to save tens of thousands of dollars over the course of their solar panel system’s lifetime.

Furthermore, if you have a solar leasing option in your area, you can consider going solar without purchasing the system at all, allowing you to save money on your electric bill from day one. The average middle-class family that goes solar using a solar leasing model is projected to save $600 a year, according to one recent study.

Luckily, electricity usage, electricity costs, and sunshine are all pretty predictable factors. So, you can estimate how much you’d probably save by going solar, or you can get help with that, and then you can decide if you think it’s worth the investment or not.

Check out the specific projections for your home or business.

How To Lower Electric Bill, Action #2 — Switch To LEDs!

Now, beyond the big boy, probably the next best step you can take is ditching your incandescent light bulbs for LEDs. Yes, previously, CFLs were the hot green option for lighting. However, the cost of even more-efficient LEDs has come down tremendously in recent years, and a couple of $5 or $10 LED options are probably your best options for low-cost, high-efficiency, green lighting.

Another positive of LEDs is that they don’t contain any mercury. While cutting electricity use by switching from incandescent light bulbs to CFLs surely reduces mercury pollution from coal power plants, CFLs do contain a tiny amount of mercury, which puts some people off. LEDs, on the other hand, are a completely different technology and don’t require or contain any mercury.

Now that the cost of LEDs has come down so far, I think they will quickly grow in use and replace both incandescent and CFL bulbs. Since 2008, LED costs have fallen 85%, and we’ve gone from about 400,000 LED lights installed in the US in 2008 to approximately 20 million today, 50 times more! Join the LED revolution!

How To Lower Electric Bill, Action #3 — Cut Your AC/Heating Needs

Air conditioning and heating are major electricity hogs for a large number of people. However, a big reason for that is simply because we’ve gotten lazy about adjusting to our environment, or even gone in the opposite direction.

How many times have you been somewhere on a hot day in which the air condition was on so high that you had to put on more clothes to warm up? It’s all too common, and maybe you even have the AC set in such a way in your home. Give it some thought. Rather than paying a fortune to freeze yourself, or even to keep it cooler than your body really needs, lower your electric bill by simply raising your thermostat. Our bodies are made to adjust to our surrounding environment. Let your body do its job. And if you want to go even further, turn on a fan to keep cool so that you can turn the temperature on the AC up even further, or can even turn it off altogether. Blowing air on yourself takes a lot less energy than turning hot air into cold air.

On the flip side is of course the use of heating. In reverse from the above, you can lower your electric bill (or your heating bill, if they are separate) by simply letting your body adjust more to a cooler environment, by putting on more clothes (rather than walking around in your underwear in the middle of winter), and by using a blanket from time to time.

How To Lower Electric Bill, Action #4 — Don’t Use Electricity When You’re Not Using It

Unfortunately, most of us keep things plugged in for hours or even days between the times we actually use them. This includes TVs, computers, DVD players, DVRs, Xbox and PlayStation consoles, our air conditioning or heating (when we are out), toaster ovens, and much more. These things are then using electricity even when you are not using them. I’ve read that DVRs and gaming consoles are especially electricity needy even when not in use.

Simply unplug these things when you aren’t going to use them for several hours or perhaps even days. (And, in the case of the AC or heating, turn it off when you are going to be out for awhile.) If you’re concerned this is too complicated for you, there are several energy-saving plugs out there that can help you to cut this standby electricity usage without you doing a thing.

How To Lower Electric Bill, Action #5 — Have An Old Fridge? Ditch It

Old refrigerators (like the one you might have in your garage) are huge energy hogs. If you’ve got one of these around “just because it would be a waste not to use it,” perhaps it’s time to realize that it is a waste using it. Get rid of it.

In fact, if you have multiple fridges of any age, consider scaling back to just one. Refrigerators are big energy consumers. They eat up electricity like Homer Simpson eats up donuts. Chances are, you need much less space in the refrigerator than you think. Look into it, give it some thought, and scale back.

If you just have one refrigerator but it’s really old, you may still end up saving money by upgrading to a new one. Look into it. Do the math. Or at least have a math-loving friend do it for you.

How To Lower Electric Bill, Action #6 — Upgrade

For the most part, new appliances and electronics are much more energy efficient. If you’ve got a really old ______, it may save you money to finally upgrade. This goes for TVs, refrigerators, computers, and much more. Naturally, of course, with an upgrade you also get a newer, better product. Who doesn’t love that?

Again, this option requires doing a bit of math to see if the new product or products is/are worth the investment. But a little math is fun, so give it a shot!

One upgrade you probably haven’t yet done and which is likely to save you a lot of money is getting a learning thermostat. These new thermostats are an excellent way to save a lot of electricity and money without doing anything.

A bunch of other upgrades you can incorporate to lower your electric bill can be found here and here.

How To Lower Electric Bill, Action #7 — Move

Moving isn’t always the best option to solve your household problems, but sometimes it is. Moving into a smaller place or moving to a newer and more energy-efficient place could be a good solution for you. Give it some serious thought. Moving can also provide you with an opportunity to make numerous life changes you’ve been waiting to make. It’s a great opportunity for starting fresh and doing a lot of things you’ve been putting off for too long.
These are my top 7 suggestions for how to lower your electric bill. Give them a shot!

Have more? Please chime in with your suggestions in the comments below!

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This article, 7 Ways To Reduce Your Electricity Bill, is syndicated from Clean Technica and is posted here with permission.

About the Author

Zachary Shahan is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he’s the Network Manager for their parent organization – Important Media – and he’s the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.

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