Securing Benefits from Transportation Electrification

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​In a presentation for the New Mexico Public Regulation Commission’s Transportation Electrification Summit, David Farnsworth discussed the value of electrification as a flexible grid resource as well as the benefits from data tracking and use of advisory services.

Surf’s Up: Catching the IIJA Wave

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I’m learning how to surf. For my birthday, my kids got together and bought me a surfboard. One day last summer I spent about three hours in the waves off of Popham Beach in Maine trying to figure things out. After about 60 attempts — no kidding — trying to catch a wave, I finally caught one. But I had help. I got tips from my kids, and from other surfers about things, like when to paddle hard and where to place myself on the board. When I finally caught that wave, all that paddling and the soreness in my neck and shoulders faded away. I was lifted and carried forward at easily three times the speed while the others alongside me and I were effortlessly propelled forward toward the shore by the energy of that wave.

I was recently reminded of my first day surfing as I read an order from the North Carolina Utility Commission (NCUC) in which it recognized that it too could use a little help better understanding the implications of the wave of federal funding — $1.2 trillion over eight years) — that is about to reach the states.

The Infrastructure Investment and Jobs Act of 2021 (IIJA) makes available billions of dollars for investment in utility infrastructure, including support for electric vehicle charging, smart distribution grid improvements, energy storage, and water system resilience and security. Referring to the IIJA, the NCUC opened its order with a “preliminary conclusion”:

It is in the public interest for the public utilities of this State to fully and carefully consider taking advantage of these available federal grants and loans, in order to promote adequate, reliable, and economical utility service to the citizens and residents of the State.

The order poses basic questions like:

  • Which federal programs could assist utilities in meeting their obligations?
  • What actions does the NCUC need to take to facilitate access to the funds?
  • What other organizations will utilities need to coordinate with?
  • What actions are other state agencies taking or considering?

More than a dozen utilities and others provided comments to the NCUC in this docket. The order not only brought together these parties, encouraging their insights and testing their ideas, but it also created a larger public conversation about the best ways to spend federal dollars for utilities in North Carolina.  It is the Commission’s role to ensure that the power sector develops in a manner that promotes the public good, and the NCUC recognizes that responses to the questions posed in the three-page order will enhance its expertise to best promote that public good.

Other states should consider taking a page from the NCUC’s playbook. It will create the opportunity to be more informed and better positioned to make decisions you very likely will need to make. Why wait until you are constrained by limitations associated with having to review a filing in a contested case? After all, who would be better situated to render a decision: a commission that has reviewed diverse comments and participated in discussions regarding the best ways to use federal dollars for the benefit of its state prior to having to review an actual proposal, or a commission that hasn’t?

Riding a wave requires help. Adopting the North Carolina approach will better position your utility commission to ride the oncoming wave of federal funding for the benefit of your utility sector and state economy.

Grid Operations and Why They Matter for Air Quality — Part 1

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In a training for the Mid-Atlantic Regional Air Management Association (MARAMA), Nancy Seidman discussed regional transmission and opportunities for collaboration among air quality regulators, state energy offices and utility commissions.

Foundations of Retail Electricity Rates

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​In a presentation to an Energy Systems Integration Group task force, Mark LeBel explored utility pricing principles and rate-making best practices for today’s power sector.

EU can stop Russian gas imports by 2025

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The Russian government’s decision to invade Ukraine puts into sharp contrast the deep entanglement between energy, security and geopolitics. Now more than ever, the European Union needs unity and resolve in its response and a focus on resilience in the face of interlinking crises.

Authors from Ember, E3G, Bellona and RAP have collaborated to identify the indispensable role clean energy solutions play in rapidly ending the EU’s reliance on fossil gas imports from Russia.

Key findings of our analysis:

  • Clean energy and energy efficiency can replace two-thirds of Russian gas imports by 2025. Europe can cut Russian gas imports by 66% by delivering the EU’s Fit for 55 package and accelerating the deployment of renewable electricity, energy efficiency and electrification. This is equivalent to a total reduction by 101 billion cubic meters. An urgent uplift in policy is now required to achieve the necessary level of implementation.
  • New gas import infrastructure is not required. Security of supply and reduction of Russian gas dependence does not require the construction of new EU gas import infrastructure such as liquified natural gas terminals. Alternatively sourcing 51 billion cubic meters of gas imports via existing assets is sufficient.
  • Coal power does not need to be extended. The above measures would enable the EU to achieve the necessary decrease in fossil gas demand without slowing the decline of coal-fired electricity generation.

To achieve urgent reductions in the use of fossil gas in Europe, it is important for decision-makers to identify and tackle counterproductive policies. The authors recommend 10 key measures to realise the additional potential for reducing gas use identified in this analysis:

  • Increase ambition and fast track adoption of the “Fit for 55” package. This is relevant in particular for the Renewables Directive, Energy Efficiency Directive, Emissions Trading System and the Energy Performance in Buildings Directive.
  • Clarify financial resources to support clean energy solutions. Ensure that allocated funding under the EU’s Recovery and Resilience Facility is used to that effect. Establish a facility for early, front-loaded release of Multiannual Financial Framework funds where the delivery of gas savings can be accelerated.
  • Make energy efficiency an energy security priority and scale action. Energy efficiency has the largest potential to reduce cost impacts on consumers. Consider opening existing funding resources such as the Connecting Europe Facility for scaling national energy efficiency programmes.
  • Remove any incentives that currently deepen or perpetuate gas consumption. Examples include financial support for gas heating systems and special tax regimes or exemptions for industry. Replace them with investment support for clean heating, in particular for low- and middle-income families. Innovative schemes such as on-bill financing, tax credits or heating appliance lease schemes should be supported.
  • Support the rollout of renewables and heat pumps. Establish concrete investment programmes, reduce administrative burdens and accelerate support for critical enablers such as grid infrastructure, demand-side flexibility and better use of transmission networks and storage. Integrated regional markets can buffer fluctuating renewable resources across larger regions.
  • Make low-carbon supply chains an energy security priority. A skilled workforce and input materials to the low-carbon supply chain are critical to delivering this vision. The EU can enhance and scale Member States’ efforts and can establish a cooperative approach with the United States and other partners on scaling supply chains.
  • Ensure equity in the energy response. Governments must ensure the costs and benefits of the transition are shared fairly among consumers. Increased carbon revenues or windfall profit taxes can be earmarked for investments in renewables and efficiency, as well as bill support for vulnerable customers. Enabling access to energy services can unlock bill savings for low-income families. Regulators should address energy poverty by designing fair network tariffs and ensuring suppliers of last resort are properly financed.
  • Put in place a European Commission task force. This could drive and monitor a whole economy approach so that supply chain bottlenecks can be anticipated and efforts streamlined across different parts of the Commission.
  • Conduct analysis to identify latent potential that can be fast tracked. In particular, analysis should be identified for industrial end use of gas, or inefficiencies in gas use (transformation losses, methane leakage) to line up even higher gas savings post 2025.
  • Avoid gas infrastructure or contractual gas lock-in. The “substitution” effect from Russian gas to other sources is expected to decline sharply after 2025, meaning that additional import or other gas infrastructure will face rapidly declining utilisation.

Energiewende im Krisenmodus braucht sozialen Zusammenhalt

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Der Krieg und das Leid der Menschen in der Ukraine halten uns alle in Atem, bringen uns aber auch als Gesellschaft näher zusammen. Die große Hilfsbereitschaft in den Grenzregionen und auch in Deutschland macht uns zusammen stark. Wie Bundespräsident Steinmeier in Litauen sagte: „Die Einigkeit und die Geschlossenheit (der Nato und der Europäischen Union) sind der Schlüssel zu unserer Stärke.“

Krisen und Kriege sind schmerzhaft und teuer. Um diese Zeit zu überstehen, braucht es den Zusammenhalt, der den Menschen die Grundbedürfnisse sichert, für die geflüchteten und die verletzlichen Verbraucher:innen innerhalb unserer Gesellschaft. Da dieses Leid eben auch unsere Energieversorgung betrifft, müssen wir hier zusammenstehen, mehr als in der Vergangenheit.

Denn in diesen Tagen wird es deutlich, dass fossile Energien teuer sind und wohl teuer bleiben werden. Der Abschied von diesen teuren und schmutzigen Ressourcen kostet allerdings ebenfalls Geld und Zeit. Für den einzelnen geht jede Umstellung auf eine Wärmepumpe und höhere Energieeffizienz mit hohen Investitionskosten einher, welche wir uns trotzdem leisten können müssen. Denn die zusätzliche Rechnung, die Deutschland durch die gestiegenen Gaspreise stemmen muss, wird sich wohl auf einen hohen zweistelligen Milliardenbetrag im Jahr belaufen.

Für einzelne Verbraucher:innen mit Gasheizung bedeutet das etliche hundert Euro im Jahr zusätzlich, bei schlechten Gebäuden und damit hohen Verbräuchen können es auch leicht mehr als 1000 Euro werden. Die Mehrwertsteuer erhöht die Kosten noch weiter. Im Vergleich dazu führt die beschlossene Senkung beziehungsweise Überführung der EEG-Umlage in den Bundeshaushalt zu einer Entlastung des durchschnittlichen Haushalts um gut 200 Euro im Jahr.

Durch die gleichzeitig stark steigenden Strompreise werden die Stromrechnungen der Verbraucher:innen wohl trotzdem nicht sinken. Sowohl für den Gas- als auch der Stromsektor sind das Mittelfristbetrachtungen, das heißt, sobald die hohen Großhandelspreise vollständig in die Endkundentarife eingepreist sind.

System und Regulierung sind unsozial geprägt

Diese Kostensteigerungen lassen sich mittelfristig nur durch mehr erneuerbare Energien und eine größere energetische Unabhängigkeit bekämpfen, mit Freiheitsenergien, wie Herr Lindner sagte. Dazu gehört die schnellere Verbrauchsminderung durch Effizienzmaßnahmen und eine beschleunigte Elektrifizierung, insbesondere im Wärmesektor durch Wärmepumpen und Wärmenetze. Ein fortgesetzter Einbau von Gasheizungen in Neubauten und ein weiterer nachfrageorientierter Gasverteilnetzausbau passen dazu nicht. Hier bedarf es einer sofortigen Richtungsänderung, die die Verringerung unserer Import-Abhängigkeit einleitet als auch die langfristigen Energiewendekosten begrenzt. Kosten, die am Ende sonst alle Verbraucher tragen, im Verhältnis die vulnerablen Verbrauchergruppen aber stärker betreffen.

Unser Energiesystem und dessen Regulierung kann jedoch kaum mit sozialen Absicherungen oder Hilfen aufwarten, eher ist das Gegenteil der Fall. Beispiele sind:

Auf der anderen Seite fördern wir mit Milliarden Euro Kaufprämien für E-Pkw, Pendlerpauschalen und Wallboxen wie auch energetische Sanierungen in Eigenheimen, während die bedürftigsten Verbraucher:innen in den energetisch schlechtesten Gebäuden wohnen (müssen), auf deren Energiestandard oder Energieträger sie keinen Einfluss haben. Unser Sozialsystem versucht, die Mehrkosten der Bedürftigsten mittels Arbeitslosengeld II und durch Einmalzahlungen zu kompensieren. Damit bleiben jedoch die Wohnsituationen wie auch Hilfen für die unteren Einkommensgruppen insgesamt außen vor.

Die Folgen der hohen Gaspreise werden noch unterschätzt

Es ist richtig, den Umstieg auf nachhaltige und saubere Lösungen zu fördern, jedoch im Sinne einer gemeinsamen Stärke, wo es nötig ist. Dazu gehören neben den Anreizen auch Besteuerungen und das Ordnungsrecht. In der Krise wird sich deutlicher denn je zeigen, wie weit wir das Ordnungsrecht über den Artikel 14 des Grundgesetzes bemühen und Eigentum über Gebote und Verbote verpflichten. Abweichend davon spielt im selbstgenutzten Eigentum die Sichtbarkeit der mittel- bis langfristigen Kosten die wichtigste Rolle.

Wenn es sich jedoch um vermieteten Wohnraum handelt, greift dieser Ansatz zu kurz. Die Energiekosten werden für fast jeden Mieter stark steigen. Die bisher diskutierten Größenordnungen von Pro-Kopf-Rückzahlungen oder Vorhaben für eine CO2-Kostenteilung mit dem Vermieter werden daran nur wenig ändern. Trotzdem diskutiert Deutschland maßgeblich die Spritpreise. Sowohl die Opposition als auch die FDP wollen die Preise durch Steuernachlässe auf breiter Basis senken, obwohl aus volkswirtschaftlicher und geopolitischer Sicht ein schnellerer Abschied geboten ist.

Wie wenig ausgewogen diese Forderungen sind, zeigt sich im Vergleich. Die Rohölpreise haben sich „nur“ verdreifacht, während es beim Großhandelspreis Gas aktuell fast eine Verzehnfachung innerhalb eines Jahres ist. Die Auswirkungen in den Gas-Tarifen sehen wir erst in einigen Monaten, jedoch mit viel weiterreichenden sozialen Folgen.

Auch ein reiches Land wie Deutschland wird sich ohne anderweitige, massive Steuererhöhungen kaum eine Kostenübernahme für fossile Energien in der Breite leisten und gleichzeitig die Förderung von Einsparungen und erneuerbaren Energien erhöhen können. Angedachte Entlastungen müssen sich daher stärker an den sozialen Auswirkungen und den Langfristzielen orientieren. Preissignale zu mindern, stellt jedoch das Gegenteil dar. Wenn unsere Gemeinschaft die gemeinsame Stärke besitzt, die unser Bundespräsident bekundet hat, schaffen wir es, die Krise als Chance zu nutzen.

Es ist dringlicher denn je, die Verteilung der Kosten und die Ausgestaltung der Unterstützungen in der begonnenen Transformation fair und sozial zu gestalten. Nutzen wir diese Chance. Jetzt.

Eine Version dieses Artikels erschien in Tagesspiegel Background.

How Europe can rapidly reduce its gas dependency

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“We cannot solve our problems with the same thinking we used when we created them,” Albert Einstein famously said. Yet this is exactly what the European Commission appears to be doing in its forthcoming strategy for more affordable, secure and sustainable energy, a leak of which emerged a few days ago.

The Commission rightly identifies the energy price crisis as rooted in the EU’s exposure to global and volatile gas prices. It also points to energy efficiency and renewable energy investments as the ‘best answer for the future.’ But the strategy then proceeds to more of the same cure: Fossil gas imports, this time from different third countries such as Azerbaijan, Qatar and Turkey. This approach is at odds with the Commission’s own projections showing that by 2030 fossil gas use must decline by 30% compared to 2015.  To bet on short-term gas contracts in a global commodity market is a risky undertaking, as the current geopolitical situation painfully demonstrates.

History repeating

What are the problems? The leaked strategy mentions ‘low-carbon gases’ and significant EU funding for such gases to lower dependence on fossil gas. Low-carbon gases include blue hydrogen, which is made from fossil gas and would actually increase Europe’s dependence because of the inefficiencies involved in the production of blue hydrogen. The International Renewable Energy Agency clearly states in its recent report on the geopolitics of hydrogen: ‘Blue hydrogen would follow the patterns of gas markets, resulting in import dependencies and market volatilities’. In short, investing more in gas as a strategy to move away from gas would worsen, not improve the situation.

Then, there is the issue with biogas. The EU’s quota for food-based biofuels was capped when indirect land-use effects became evident. Yet the Commission rushes unnecessarily into setting a biogas target for 2030 without checking consistency with other elements of the Green Deal – namely competition for land use, methane reduction commitments, air pollution and soil protection. This means a doubling of biogas use within the next eight years – implied by the 35bcm target – which would put more pressure on our soils and potentially result in harmful agricultural practices. Any renewable methane pathway also carries the risk of undermining its climate benefits through methane leakage, as the gas is a strong climate forcer. Finally, a biogas target seems to come prematurely given that an independent review of the sustainable biogas potential in Europe reflecting the new LULUCF (Land Use, Land-Use Change and Forestry) targets of the Fit for 55 package has not been undertaken.

The only biogas that provides a climate benefit by not straining land resources is produced from wastes and residues, which are limited in availability and will be needed to decarbonise aviation and shipping. Claims that biogas could remotely replace current fossil gas use at the level needed and across all uses are therefore unconvincing. Biogas will instead need to become a niche fuel, alongside hydrogen, reserved for replacing fossil fuels in applications where electrification is not an option.

A positive path forward

Luckily there is another way forward. The EU’s fossil import bill increased by 70% between December 2020 and December 2021, currently reaching around 380 bn euros. This amount happens to be as high as the additional clean energy investment needs estimated by the European Commission in its Impact Assessment underpinning the higher 2030 targets. In one case, it would go to investments on energy efficiency, renewables and electrification and the jobs that come with them, in the other case, money is lost on buying fossil fuels. This comparison reveals that the current crisis is as much a fossil gas demand crisis as it is a supply crisis.

Therefore, let’s move beyond the current strategy of replacing gas with more gas and instead start from the demand side. Most of Europe’s gas is used for low-temperature heating, which can be replaced with existing technologies. The Commission’s Energy System Integration Strategy of 2021 rightly identifies energy use reduction and electrification of home heating as key levers, findings backed up by recent reports from the International Energy Agency and McKinsey. This building heating transition is expected to reduce gas consumption in buildings by more than 40% compared to 2015 levels and contribute nearly two-thirds of the overall reduction in gas consumption over the same period.

Towards an EU framework for electrification

Decarbonising heating in Europe still relies heavily on biomass, not all of which comes from sustainable sources. This is because, unlike in the transport sector, there is no multiplier in the Renewable Energy Directive that would incentivise the use of ambient heat extracted by heat pumps.  The proposed directives on renewables and gas should be used to both push for the electrification of heating and to direct gaseous fuels to areas where they cannot be. The European Parliament and the Council can now introduce the necessary amendments to change the incentives accordingly.

The old recipes cannot make supply more secure, more affordable or cleaner.  Let Europe’s response to the current crisis be ramping up support to ensure the exponential growth of solar and wind and the use of green electricity to replace fossil gas.

Michaela Holl is a senior associate at Agora Energiewende.

A version of this article originally appeared on Euractiv.

Europe needs smart charging of all EVs now

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A recent pan-European survey found that consumers prefer electric vehicles (EVs) over conventional cars. Last month’s EV sales surpassed those of diesel models in Europe for the first time. Charging the growing number of EVs at our homes, workplaces and public parking lots ‘smartly’ is essential to lower the cost of integrating electric vehicles into the power system and capture the numerous benefits EVs offer.

Smart charging of an electric vehicle means shifting charging to a time when it is cheapest for consumers and best for the grid. This managed charging unlocks broader benefits, such as efficient grid operation and integration of increasing shares of renewable energy, by adjusting the demand for charging to the actual supply. Europe is also seeing a growing market for digital smart charging services — services that will improve its use of power systems.

By contrast, without smart EV charging, millions of euros will be lost in costly, unnecessary power system upgrades, as recent studies from France and Germany suggest. Several legislative proposals in the Fit for 55 package have opened a critical window of opportunity to ensure smart charging is the default choice, thus saving money, energy and emissions.

Without smart EV charging,
millions of euros will be lost in costly,
unnecessary power system upgrades.

First on the agenda is a regulation that will establish a European framework for electric vehicle charging infrastructure on public roads, the Alternative Fuels Infrastructure Regulation. The EU Parliament and Council will soon vote on the proposal. By providing a public charging network Europe-wide, this regulation can boost the market for smart charging services, keeping pace with the benefits created by rapidly growing shares of EVs. For this to happen, the regulation needs to require smart charging capabilities at all charging points as well as retrofits of older ones.

Smart tariffs to complement technology and infrastructure

Being able to shift EV charging to cheaper hours can help consumers save hundreds of euros a year through a growing selection of smart tariffs and services. And smart charging is easy: Based on time-varying price signals, smart charging devices and apps determine when and at what speed EVs charge. Drivers do not need to compromise their mobility needs, as they can override these settings at any time. One powerful grid benefit of consumers charging at least cost is the use of renewable energy that might otherwise have been curtailed, thereby boosting the use of clean resources. Europe’s recent electricity reforms have recognised this correlation by mandating that Member States offer more smart tariffs to consumers. Transport legislation needs to follow: The time is now to build on the benefits of more dynamic tariffs and require smart charging infrastructure to be the default, so that smart charging services can prosper.

Transport legislation needs to make charging smart, wherever you go

To make sure smart charging is the default option for all EV drivers in Europe, all charging points need to be ready for smart charging services with smart meters, digital connectivity and third-party access. These requirements should apply to all public charging points covered by the new Alternative Fuels Infrastructure Regulation, including high-power chargers and not only the ‘normal,’ lower speed chargers as the EU Commission suggests in its legal proposal.

All chargers, slow and fast, for cars and for trucks, are easier to use and integrate into the grid if they are smart. This allows charging vehicles to adapt to varying grid conditions, the actual available grid capacity and local renewable energy production. As the charging market grows, intelligent fast chargers will also make it easy to share available power among groups of chargers in hubs. As a recent study on truck charging along motorways shows, managing power flows smartly is key to reducing costs without affecting service levels. Setting smart charging requirements through the Alternative Fuels Infrastructure Regulation for all chargers lays the foundation for market growth for these and other innovative solutions.

The EU Commission rightfully proposes that existing chargers also need to be retrofitted accordingly. Ensuring existing chargers can also deliver the value of smart charging services offers consistency across the pan-European charging network.

A coherent framework for a smart clean transport eco-system

The importance of equipping charge points to deliver smart charging services also extends to private infrastructure and buildings, as most EV drivers will charge at home or at work. By increasing ambition in the Energy Performance of Buildings Directive and the Renewable Energy Directive, decision-makers can help complete the smart charging landscape.

European decision-makers will soon consider requirements in Europe for equipping buildings and homes with charging points or, at the very least, pre-cabling them for upcoming infrastructure needs. Sufficient ambition in the upcoming Energy Performance of Buildings Directive can extend this obligation to all home parking spots, making all charging equipment smart and, therefore, future proof.

A solid definition of what smart charging can offer to Europe’s future energy markets, grids and consumers is crucial to make smart charging the default choice. The Renewable Energy Directive proposal makes a fair start, but an earlier version of the Directive’s Article 20 offered greater recognition of the potential of smart charging to create societal benefits.

Harmonising smart charging at work, at home and at public charging stations creates an EU-wide digital market for smart charging services. That makes it easier to reap the benefits of smart charging, not just for EV drivers, but also for energy markets and for grid operators that can use the inherent flexibility in EV charging to run their grids more efficiently. While revising these files, it is important for lawmakers to pass on the benefits of smart charging to the actual end user, the EV driver. Focus on the user’s interests is crucial. This means increasing customer choice through market mechanisms and building trust, as opposed to models where EV charging is fully controlled by grid operators, such as it is currently the case in Germany.

The time is now

E-mobility should be accessible to all, wherever one is in Europe. Members of Parliament and other stakeholders have the chance to amend the charging infrastructure laws under review to make sure benefits of smart EV charging reach all, at minimal cost, and thus accelerate the energy transition. Creating a European market for smart charging services and matching user preferences to energy system needs will drive down costs for all. These developments will, in turn, persuade even more consumers to switch to electric, turning petrol and diesel vehicle sales into relics of the past.

A version of this article originally appeared on Euractiv.

Photo: Ivan Radic via Flickr.

Equity and Access – Examples from Regulatory Proceedings

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​Nancy Seidman shared promising examples of improved stakeholder access with the Massachusetts attorney general’s working group addressing equitable access to the state’s Department of Public Utilities proceedings.