Leveraging Coronavirus Stimulus to Take a Giant Leap Toward Decarbonization

At-a-Glance

While electricity demand has faltered during the global pandemic, the share of wind and solar generation has continued to increase. Wind and solar produced 10 percent of global electricity between January and June in 2020. In the European Union, renewables accounted for 33 percent of all power generation. According to the International Energy Agency, the EU’s renewable energy production was higher than its fossil fuel generation between February and early July of this year. The increased role of renewables has highlighted the investments necessary to make the transition to a 100 percent renewable power system faster and more economically efficient. To learn more, read “Leveraging Coronavirus Stimulus to Take a Giant Leap Toward Decarbonization.” 

Key Takeaways

  • While there are nuances depending on local circumstances, one significant takeaway is that the power system as a whole can handle a more rapid shift to renewables than grid operators have long assumed. 
    • “What we found was the energy system can cope really well with much more renewable power and that it’s possible to raise the ambitions around adding more clean energy,” said Sushil Purohit, president of Wärtsilä Energy.
  • Charting a more rapid and financially efficient transition to a 100 percent renewables future was a primary objective of Wärtsilä’s recent report, Aligning Stimulus With Energy Transformation, based on its Atlas modeling. 
    • The report demonstrates how using energy-related stimulus investments to support clean energy could speed decarbonization in five key countries: the U.S., the United Kingdom, Brazil, Germany and Australia.
  • According to the report, 54 percent of the $400 billion pledged has been targeted to benefit fossil-fuel-based energy, while 36 percent has been devoted to clean energy. 
    • In the U.S., more than 70 percent of the current $100 billion allocated for energy stimulus was pledged to fossil fuels, compared to less than 30 percent for clean energy.

Path to 100% Perspective

Beyond the issue of decarbonization, this is a missed opportunity to spark near-term job creation. According to a report by McKinsey & Company, every $10 million of government spending on renewables creates 75 jobs, while the same amount invested in fossil fuels creates 27 jobs. For the U.S., reallocating the $72 million of the COVID-19 energy stimulus currently earmarked for fossil fuels to clean energy would result in 544,000 new jobs, 175 percent more than would be produced in the traditional energy sector. In addition, these investments would result in 107 gigawatts of new renewable energy capacity and a 6.5 percent increase in renewable electricity generation, from 17.5 percent to 24 percent.

Ditch Nuclear And Save $860 Million With Grid Flexibility, U.K. Told 

At-a-Glance

According to the report from Finnish energy tech firm Wärtsilä, the U.K. would stand to save $860 million per year if, instead of new nuclear power, the government backed grid flexibility measures, such as battery storage and thermal generation. That equates to a saving of about $33 dollars per British household per year. Crucially, the analysis revealed that even if energy generation was to remain the same as it is today, Britain could increase renewables’ share of that generation to 62% simply by adding more flexibility. To learn more, read Ditch Nuclear And Save $860 Million With Grid Flexibility, U.K. Told.” Reading this article could require a subscription.

Key Takeaways

  • According to the Wärtsilä report, Germany at one point paid almost $1.1 million per hour to export 10.5 gigawatts of electricity. Such inefficiencies, Ville Rimali, growth and development director at Wärtsilä Energy said, were indicative of inflexible electricity systems—while countries that had built flexibility into their power grids had no such issues.
  • On the other hand, investing in nuclear power could, according to Wärtsilä, entrench an inflexible grid while making renewables such as solar and wind less cost-effective.
  • Wärtsilä’s recommendations appear to align closely with those of the International Energy Agency (IEA), which has stated that, as economies move away from fossil fuels, “power system flexibility has become a global priority.” Subsequently, according to a report released by the agency last month, much faster deployment of grid flexibility will be required if countries are to achieve their decarbonization targets.

Path to 100% Perspective

In the “Optimising the UK’s Shift to a Renewable-Powered Economy, Wärtsilä recommends a three phase strategy to accelerate a cost-optimal shift to 100% renewable energy and economic decarbonisation. 

  1. Support faster renewable energy deployment to achieve 80% renewable generation by 2030. 
  2. Increase investment in flexibility to unlock renewable energy and deliver a cost-optimal transition for consumers. 
  3. Future-proof today’s decisions to enable future technologies – such as Power-to-X – to achieve 100% renewable energy before 2050

 

Photo by Nicolas Hippert on Unsplash

Sempra utilities pitch demonstration program as first step to California hydrogen injection standard

At-a-Glance:

Sempra Energy subsidiaries Southern California Gas (SoCalGas) and San Diego Gas & Electric (SDG&E) plan to launch California’s first hydrogen blending demonstration program as a first step toward creating a hydrogen injection standard for the state. The first proposed project would begin with a 1% hydrogen blend in an isolated section of primarily polyethylene plastic distribution system and eventually could increase to as much as 20% hydrogen. The location of the project will be selected in early 2021 and the utilities plan to implement more such blending demonstrations in their service territories. To learn more, read “Sempra utilities pitch demonstration program as first step to California hydrogen injection standard.”

Key Takeaways:

  • Adding hydrogen to California’s resource mix could allow the state to build a much more efficient power system, and reduce the need to overbuild solar and battery storage capacity, according to Jussi Heikkinen, Director of Growth and Development, Americas at Wärtsilä Energy Business.
  • Blending hydrogen with natural gas is part of SDG&E and SoCalGas’ strategies to decarbonize their natural gas systems, according to Sempra — the utilities envision using excess renewable energy to produce green hydrogen, which can then be injected into the natural gas grid.
  • SoCalGas and SDG&E briefed regulators on the safety precautions they intend to take with the program, including ensuring that the blend is compatible with behind-the-meter appliances, implementing leak surveys, and creating a specific customer protocol and emergency response for hydrogen.
  • The proposed blending projects are an important first step in the right direction, Heikkinen said — but to reach a high level of decarbonization, it is necessary to blend fairly high shares of hydrogen into natural gas because of its lower density. In a 25% hydrogen, 75% natural gas blend by volume, for example, less than 10% of the resulting energy comes from hydrogen, he explained.”When we start blending, then we should go for higher blends as fast as possible. When you start to go beyond 50%, then you start to make a difference,” Heikkinen added.

Path to 100% Perspective:

There are some safety risks. Hydrogen is extremely flammable and burns very fast. Special caution needs to be taken when engineering a product using more than 25% hydrogen.

Special safety regulations for its use need to be in place before it becomes widely available. In some locations, these regulations are still under development. A bigger issue is that there is no infrastructure globally to produce, store, and distribute hydrogen at scale. It all needs to be built. This infrastructure will be expensive and will also take some time. Additionally, there is the risk that hydrogen will not be the fuel of choice, so there is some hesitation to invest in the necessary infrastructure. This in turn limits the attractiveness of hydrogen, so it’s a difficult challenge to solve.

 

Photo: Sempra

How to Build a Green Hydrogen Economy for the US West

At-a-Glance:

Out in Utah, a coal-fired power plant supplying electricity to Los Angeles is being outfitted to eventually be able to run on hydrogen, created via electrolysis with wind and solar power and stored in massive underground caverns for use when that clean energy isn’t available for the grid. This billion-dollar-plus project could eventually expand to more renewable-powered electrolyzers, storage and generators to supply dispatchable power for the greater Western U.S. grid. It could also grow to include hydrogen pipelines to augment and replace the natural gas used for heating and industry or supply hydrogen fuel-cell vehicle fleets across the region. To learn more, read “How to Build a Green Hydrogen Economy for the US West.”

Key Takeaways:

  • The Western Green Hydrogen Initiative (WGHI) is a group representing 11 Western states, two Canadian provinces and key green hydrogen industry partners. WGHI launched in November to align state and federal efforts to create a regional green hydrogen strategy including a large-scale, long-duration renewable energy storage regional reserve.
  • At the heart of this effort are two projects in central Utah. The first is the Intermountain Power Project, a coal-fired power plant operated by the state-owned Intermountain Power Agency, which supplies municipal utilities in Utah and California, including the Los Angeles Department of Water and Power. By 2025, Intermountain will be converted to turbines to supply 840 megawatts of power using natural gas blended with 30 percent hydrogen, a proportion that will rise to 100 percent hydrogen over the coming decades.
  • The second project is the Advanced Clean Energy Storage (ACES) project, which will invest roughly $1 billion to develop a nearby underground salt dome to store compressed hydrogen. ACES will provide up to 150,000 megawatt-hours of energy storage capacity, a scale that dwarfs the lithium-ion battery capacity being installed in California and across the Intermountain West.

Path to 100% Perspective:

Whether green hydrogen can cost-effectively replace natural gas for its myriad current uses will depend largely on the carbon-reduction drivers involved. But it will also require a redefinition of what it’s doing for the broader electrical system, said Jussi Heikkinen, Director of Growth and Development for the Americas division of Wärtsilä Energy Business. Wärtsilä’s engines power about one-third of the world’s cargo ships and a good deal of electricity generation, he said. It’s been making strides in converting its engines to run on 100 percent hydrogen and is developing hydrogen generation projects in the U.S. and Europe. In a study focused on California, Wärtsilä showed that zero-carbon hydrogen, or methane generated with carbon-capture technologies, to fuel power plants is a much less expensive alternative to building the battery capacity needed to cover the final 5 percent to 10 percent of grid power needed to reach its 100 percent carbon-free energy goals. “When there are huge load peaks, cloud cover or unusual weather, these plants kick in, and allow you to build a much smaller battery storage fleet,” he said.

 

Photo by Peter De Lucia on Unsplash

Missing Pieces of Decarbonization Puzzle Realized

Jussi Heikkinen, Director of Growth & Development, Americas
Wärtsilä Energy Business

These are exciting times as the renewable energy future is a focus for so many organizations and governments around the world, as indicated by attendance of the Wärtsilä sponsored webcast hosted by GreenBiz on November 19, 2020, Missing Pieces of Decarbonization Puzzle Realized. Emerging technologies are moving closer to reality, which makes ambitious energy goals more realistic and the path to 100 percent renewable energy is now within reach.

A place where the transition to renewables has progressed quite far already is California. The lessons learned along the way have been plentiful, but powerful nonetheless. The record-breaking heat wave that swept across the western part of the country and caused a series of blackouts in the Golden State, offered additional modelling opportunities to demonstrate the most effective mix of energy to accommodate any extreme weather situation during the transition, and to meet clean power mandates.

The big challenge facing California and the rest of the world is how to integrate renewables into the grid while building security of supply and a sustainable power system with an affordable plan for everyone involved.

That’s why Wärtsilä launched its Path to 100% initiative. We believe a 100% renewable energy future is possible, practical and financially viable so we assembled a community of experts to produce solutions based on science and engineering. This fall, we published a white paper that describes the Optimal Path to decarbonization for California using new hourly load data provided by this summer’s extreme heatwave.

In the whitepaper, Path to 100% Renewables for California, we modelled an approach for  California to reach its climate and clean power goals faster, at a lower cost to ratepayers, all while maintaining system reliability.

The “Optimal Path“ includes renewable carbon neutral fuels – hydrogen and synthetic methane. Curtailed renewable electricity is used in the process with water to produce hydrogen, and carbon is captured from air to produce synthetic methane with hydrogen. These fuels are used in power plants to provide a long term energy storage for seasonal and weather management needs. In the Optimal Path scenario, Renewable Portfolio Standard (RPS) commitments would actually be reached by 2040, five years ahead of schedule.

Generation costs in the “Optimal Path” scenarios are between 50 and 54 dollars per megawatt hour in 2045, while these costs would be almost 3 times higher if California opted to use only solar, wind and storage to build the power system. This cost difference is excessive and not beneficial for industries or households to pay. Additionally, carbon emissions are at net zero in 2045 in both scenarios.

How can California get on the Optimal Path to a renewable energy future? One recommendation is to recognize carbon neutral fuels – as presented above – to be counted as renewable for RPS purposes. This would enable the utilities to start looking for ways to invest and use such fuels to the benefit of California.

Another state aggressively pursuing renewable energy goals is Texas. Co-presenter and Electric Reliability Council of Texas (ERCOT) Principal of Market Design and Development, Kenneth Ragsdale shared the Lone Star State’s progress on integrating renewables into the power system.

Climate Imperative’s Executive Director, Bruce Nilles offered a big picture perspective on electricity generation capacity and the commitments needed to accelerate decarbonization.

To watch the recorded presentations from Wärtsilä, ERCOT as well as Climate Imperative and download presentation materials, register today for the Missing Pieces of Decarbonization Puzzle Realized webcast.