While Australians are no strangers to the many innovations coming out of Silicon Valley, the scope of the changes that are happening across the rest of the United States is vast.
Some of the hot trends I noticed during a recent study tour of the country included using renewable energy to increase system resilience in the wake of Hurricane Sandy, businesses directly investing in large-scale renewable energy and utilities becoming more customer-focused.
General state of play
While many discussions were filled with uncertainty over the November election, those I spoke to expected the US to meet its commitments under the Paris climate agreement through the following:
- Electricity supply from coal is naturally decreasing due to the age of plants and the gap is being met by cheap gas (from fracking), wind and solar.
- Further coal retirement is expected from the federal Clean Power Plan.
- Fuel economy standards will be expanded to include trucks.
- States such as California, New York and much of New England are taking more substantive action.
About 30 states have a Renewable Portfolio Standard (RPS), which is like a renewable energy target, and inter-state cooperation is huge in the US. About 11 states are capping and trading emissions among themselves in different groupings. States are free to join or leave the groupings based on their government’s leanings.
Research and development funding is strong and has bipartisan support. This has made the US leader in the development of electric vehicles, hydrogen fuel cells and more.
System resilience after Hurricane Sandy
When Hurricane Sandy swept across the country, power outages lasted up to a week in some places and many lives were lost.
But rather than another round of the renewable energy blame game — which we saw recently following a short-lived blackout in South Australia — the state of New York set about trying to build an energy system that was smarter, cleaner, more resilient and affordable.
The solution set out in New York’s Reforming the Energy Vision program is a series of microgrids, where battery storage and distributed renewable energy generation combine to help keep essential services running in the event of a catastrophe.
The state ran a competition inviting communities to submit ideas for microgrids, and is in the final phases of selecting a winning project from a shortlist of finalists. The vision also sets out legislated targets such as 50% renewable energy and emissions reduction of 40% by 2030. Richard Kauffman, the state’s “energy czar”, believes that avoided expenditure on infrastructure and more efficient regulation and energy efficiency may make the initiative cost-neutral.
Last year major tech companies such as Google, Apple and Yahoo announced 3GW of renewable energy projects between them. They have three major motives for moving beyond simply paying utility bills and into the renewable energy purchasing world: price certainty; supply certainty and diversification, and; branding.
- Price certainty Big tech companies with big data centres come with big power bills, and they are having a hard time predicting what direction future electricity prices will take. Renewable energy has proven to be a great way to provide proactive control over costs and long contracts mean that companies can plan for their futures knowing what they’ll be paying for power – a smart hedging move.
- Supply certainty and diversification The most reliable grid can occasionally experience failures, and every minute a data centre is down means huge losses to tech companies. As a result, some are using onsite solar and fuel cells to ensure an incredibly reliable local fuel supply, where the grid is just the back-up power source.
- Branding These companies know that Americans want to see more renewable energy, and they want to see clean, modern companies using clean, modern power. These sorts of future-looking investments can be a great opportunity to position a company as a leader.
The challenge for such companies is convincing chief financial officers to diversify away from core business and into renewable energy investment. Two years ago the Rocky Mountain Institute, a renewable energy organisation in the US, set up the Business Renewables Centre (BRC) to start creating financing products aimed at large companies getting into the renewable energy business. The centre acts as facilitator between large companies, financiers and wind and solar developers, to help them figure out innovative ways to team up, all while speeding up the transformation of the electricity sector and cutting emissions across the country.
Utilities becoming more customer-focused
Utilities operate slightly differently in each US state but the general model is that they operate as a monopoly electricity retailer with some network ownership and in some cases some power plant ownership as well.
Large energy customers such as data centres and even Las Vegas hotels are seeking ways to contract directly with renewable energy suppliers as a way of managing big power bills. Amazon for example has signed a deal with its utility where the utility procures renewable energy and builds a transmission line to the company’s data centre.
A group of utilities have set up a research centre and are finding ways to be more customer-focused to meet demand for innovation.
The Green Mountain Power utility in Vermont is experimenting with leasing Tesla Powerwalls to customers and retaining the right to remotely drain the battery into the grid if required for system stability or peak demand. They are also leasing energy efficient heating systems to customers who pay lower bills immediately.
Despite all these advances, there are obviously still many challenges to address, including costs, community sentiment and variable output. I will be watching with interest and looking for new developments that might be useful in Australia to drive our own energy transition.
Clean Energy Council policy manager Alicia Webb was part of a three-week renewable energy study tour with the US State Department in September.