PG&E’s bankruptcy will have a dramatic effect on all electricity users in northern California — as well as utility investors, California taxpayers, and the solar industry in general. Moreover, the bankruptcy of one of the largest utilities in the country is a harbinger of the need to change the traditional utility business model. Not only are utilities experiencing competition from businesses and homeowners installing their own solar and storage systems (for less money), but utilities are also experiencing much greater than expected costs related to maintaining their transmission and distribution services. Devastating fires are more common, people are living in more fire-prone areas, our need for electricity is increasing … and this situation is likely to get worse.
Although PG&E has been my biggest competitor for almost 20 years, they have established a reputation as the best (some would say “least bad”) investor-owned solar utility in the country. Compared to almost all other utilities, PG&E has been ahead of the curve with solar, net metering, energy storage – influenced to a large degree by a far-sighted California Public Utilities Commission and state government. They are also staffed by committed and hard-working employees throughout their organization.
Nevertheless, PG&E’s financial problems raises substantial issues for solar and non-solar customers alike. Meeting the conflicting needs of taxpayers, electricity customers and investors is a daunting legal and political challenge. To help sort through these issues, my guest on this week’s show is Angela Lipanovich, President and Founder of Estriatus Law. Among the topics we will cover include:
- What happens in a corporate bankruptcy, and how did PG&E fare in their 2001 bankruptcy?
- How do bonds taken out by PG&E affect electricity rates?
- Would these bond repayments affect net metering reimbursements?
- Would a bankruptcy judge force affected homeowners and businesses to accept less money for their losses?
- What would be the electricity rate impact for every $10 billion in PG&E’s liabilities?
- A bankruptcy judge can renegotiate corporate debts – what affect could that have on PG&E’s Power Purchase Agreements?
- How must utilities change their tree trimming and maintenance practices to prevent future fires?
- What is a practical long term solution to California’s expensive electricity?
To learn more about the implications of PG&E’s bankruptcy, Listen Up to this week’s Energy Show with Angela Lipanovich.
You know what they say: “Video killed the radio star.” Well I’m going out on a limb and adding video to this week’s podcast. But since my fans say I have a perfect face for radio, I’m not worried that this video podcast will affect my Arbitron ratings. Nevertheless, my guests on this video podcast are much more telegenic, so I encourage you to click through to this video link.
A few months ago I had the pleasure of organizing and moderating a panel discussion about microgrids for the MIT Club of Northern California. Basically, a microgrid is a combination of solar, batteries, inverters, software and control electronics that allow customers — both residential and commercial — to operate independently of the grid. Interest in microgrids is skyrocketing for two reasons. First, the grid is becoming less reliable, while at the same time our society is becoming more dependent on electricity. Second, time of use electric rates now peak in late afternoons and evenings, making it much more profitable to store daytime solar generation in a battery and using that energy during peak electric periods.
There are four factors limiting the growth of the microgrid industry:
1. The first is good energy policy that makes the economics of microgrids work for customers. Bernadette Del Chiaro, Executive Director of the California Solar Storage Association, joined us on this panel. Without a doubt, Bernadette is one of the best solar and battery policy experts in the entire country.
2. Next we need functional and affordable batteries. Peter Gibson, the head of North America Energy Storage Solutions for LG Chem, is the battery expert. LG Chem is one of the biggest battery manufacturers in the world. Their residential battery storage products are in such demand that they cannot make them fast enough.
3. Inverters are the heart of a microgrid. Lior Handelsman, Co-Founder of SolarEdge, shared his insights into the future of microgrids powered by smart inverters. In the way of background, SolarEdge is the inverter market leader, and has done a terrific job with software that is critical to successful microgrids.
4.Finally, cooperation from electric utilities is key to the widespread adoption of microgrids. New Community Choice Aggregation utilities have the potential to lead the way; the CEO of Peninsula Clean Energy, Jan Pepper, joined us. And I was especially happy to include another spice in our discussions.
Listen up to this Week’s Energy show to learn about how each of these industry leaders are working today to deliver migrogrids to both residential and commercial customers. Please click through to this video link for the entire MIT Microgrids panel discussion.
The bad news about global warming continues unabated. This fall the United Nations Intergovernmental Panel on Climate Change (fondly referred to as the IPCC) sent up an emergency flare. According to Amjad Abdulla an IPCC board member and chief negotiator for the Alliance of Small Island States, “The report shows that we only have the slimmest of opportunities remaining to avoid unthinkable damage to the climate system that supports life, as we know it.“ Obviously, small island states are at the most immediate risk. But if the earth’s warming trend continues, many populated areas around the globe will essentially be uninhabitable.
I read the entire report. It’s complex, dense, hard to understand and full of bureaucratese. There were two conclusions in the report that were especially surprising to me. First, unless the world acts immediately and intensively, there is almost no chance that global warming will be less than 1.5 degrees Celsius. The reason is that there is a lot of inertia in the earth’s climate system — we are already on a rapid warming trend. The second conclusion is that an immediate worldwide investment of roughly $900 billion per year will be required to stay below this 1.5% threshold.
On a positive note, I learned a lot of new TLAs (Three Letter Acronyms). My personal belief is that our grandchildren will be saddled with the economic and sociological disruptions that global warming will cause. Nevertheless, there is a large portion of our population that remains skeptical about global warming and its potential impacts. One reason for this global warming divide relates to economics. Some industries — particularly those dependent on fossil fuels — will be negatively impacted (“harmed” is the non-bureaucratic term). On the other hand there will be many industries that will benefit…not only solar and wind, but also from all the jobs created from the transition away from fossil fuels: EVs, heat pumps, more extensive electrical infrastructure, control systems and as yet undeployed new energy technologies.
As an solar enthusiast, I’m obviously biased. But the consequences of global warming are so severe that even the skeptics should consider immediate action as a form of an insurance policy. In case the skeptics are wrong about global warming, an investment now can avoid a disaster later. For more about the IPCC’s recommendations to stabilize and reverse global warming, listen to this week’s Energy Show.
Energy storage is critical to our ability to eliminate the use of fossil fuels. Basically, we need a way to store the abundance of daytime solar and use this energy at night. Although lithium ion batteries have been getting most of the attention, fuel cells provide another way to convert fuels into electricity.
A fuel cell is an electro-chemical cell that converts the chemical energy from a fuel into electricity through a reaction of hydrogen or another hydrocarbon fuel, such as gasoline or natural gas, with oxygen. The history of fuel cells goes back over a hundred years — in fact, their first commercial use came from NASA to power orbital space craft. Fuel cells are different than batteries because a battery produces energy from a chemical reaction that is already in the battery, whereas a fuel cell requires a continuous source of fuel and oxygen to sustain the chemical reaction. The great thing about fuel cell technology is they can continue to supply energy for as long as fuel and oxygen are supplied.
However, fuel cells can either be clean and renewable power sources — or just as polluting as fossil fuels — depending on their fuel source. Currently, most fuel cells use hydrogen as their fuel. Although the chemical reaction of hydrogen with atmospheric oxygen is emission-free (the only byproduct is water), the source of the hydrogen is problematic. Almost 100% of the hydrogen gas used for fuel cells and industrial processes comes from reforming natural gas. As a result, just as much CO2 is produced when hydrogen is used as a fuel, as if the natural gas were to be combusted directly. Nevertheless, future processes in which ordinary water is electrolyzed into its components hydrogen and oxygen can indeed produce hydrogen perfectly cleanly — as long as solar or wind are used to power the process.
More and more fuel cells are finding their way into the conventional power and transportation industries. Bloom Energy is successfully selling their natural gas-powered fuel cells to customers that need a reliable source of backup power. And Toyota has rolled out their Murai hydrogen fuel cell car in areas that have sufficient hydrogen filling stations (most of which are in California). For more about the underlying technology and opportunities for fuel cells, tune in to this week’s Energy Show.
These days you can’t watch TV, read a news story or listen to the radio without seeing catastrophic fires, hurricanes, and high temperatures. The world is getting hotter. To illustrate, Death Valley recorded the hottest month ever recorded on Earth. Temperatures averaged 108.1 degrees day and night, all of July 2018. That beat last year’s record monthly temperature. This is not just a U.S. only story, it’s a worldwide issue. During the month of July 2018 record high temperatures were set on every single continent in the northern hemisphere (it was winter in the southern hemisphere).
Politicians, policymakers and leaders all over the world created the Paris Climate Agreement in 2016 — which every country in the world joined except for outcast Syria. Syria stepped up to the Paris Climate Agreement in 2017 — and then during the same year President Trump withdrew from the Agreement. The U.S. is the only country in the world that is not a signatory of the Paris Climate Agreement, the intention of which is to avoid a likely slow motion global warming disaster. We have been euphemistically describing this problem as “climate change.” Yes, the climate is changing, and it is getting hotter. So I am back to describing this looming catastrophe as “global warming.”
There are a few scientists who still believe that this global warming is not caused by mankind, is part of a natural cycle, or is not really a problem (Iceland could be the new Costa del Sol). Nevertheless, according to ongoing temperature analyses conducted by climate scientists at the NASA Goddard Institute for Space Studies, the average global temperature on Earth has increased by about .8 degree Celsius which is 1.4 degrees Fahrenheit since 1880. Two thirds of the warming has incurred since 1975 at a rate of .15 to .2 degrees per decade. Natural processes are generally not linear — this warming is speeding up. We may be getting close to a tipping point at which global warming dramatically accelerates, flooding coastal areas and creating conditions so hot in many countries that humans can no longer survive.
Please Listen up to this week’s Energy Show as we share various scientific and media perspectives on global warming. It’s time to panic and act.
Great solar policy is just as important as great solar technology. Obviously we need the technologies for these products — but we also need the policies so that solar products can be cost-effectively installed. And I’m not just talking about incentives…policies related to net metering, interconnection and permitting are just as important.
Getting good solar policy requires effective political lobbying. I hate to let you down, but these great energy policies did not magically spring from the brains of inspired politicians When I look back at the successes our industry has had over the years — net metering, the California Solar Initiative, Solar Tax Credits, state incentives — all of these policies were based on sound analytical research coupled with effective lobbying.
There are a few companies that specialize in the types of analysis that’s required to put together good policies. One of the best is Cross Border Energy, based in Berkeley California. They provide clients with strategic advice, economic analysis and expert testimony on market and regulatory issues in the natural gas and electric industry. It is my pleasure to have Tom Beach, Principal Consultant of Cross Border Energy as our guest on this week’s Energy Show.
Tom has been influential on many of California’s ground breaking energy policies. He has worked on the restructuring of the states gas and electric industries, the addition of new natural gas pipelines and storage capacity, renewable energy development, and a wide range of issues concerning California’s large independent power community. I also had the pleasure of working with Tom on the California Solar Initiative many years ago. To learn more about the energy industry, real world solar economics, and Tom’s perspective on energy regulatory issues, listen up to this week’s Energy Show.
PS – the Kyocera and SMA rooftop solar system I installed for Tom back in 2003 is still working perfectly, with only 0.4% degradation over the last 15 years.
PPS – his monitoring system is intermittent since his 15 year old computer that runs the software is on its last legs.
The electric utility industry is undergoing rapid change. There used to be two types of utilities: investor owned utilities (IOUs, such as Pacific Gas and Electric and ConEd) and municipally owned utilities (MOUs, such as LADWP and Silicon Valley Power). Now there is a third hybrid type, called a Community Choice Aggregation (CCA) utility.
IOUs work for their stockholders — striving to maximize their profits by charging the most they can for electricity, maximizing their net assets and minimizing their expenses (often maintenance). MOUs work for their local cities — and try to provide affordable and reliable power in their territory. Not surprisingly, electric rates at IOUs are almost always higher than rates at nearby MOUs. Because IOUs profit by installing their own solar and storage systems and maximizing their own sales of electricity, they do not look favorably on homeowners and businesses installing their own systems. My biggest competitors for almost 20 years have been local IOUs.
CCAs offer the potential for lower electric rates for customers in their territory, without changing completely to a municipally-owned business structure. CCAs buy power from large solar and wind farms, as well as hydroelectric facilities. They then distribute this power over the existing utility lines. The existing utility bills customers and maintains the power lines, while the CCA essentially just charges customers for the energy they use. CCAs offer customers cheaper electricity, and they offer better economics to solar customers.
Silicon Valley Clean Energy (SVCE) is the new CCA serving most of the Silicon Valley area. My guest this week is John Supp, Manager of Accounts Services at SVCE. Please listen up to this week’s Energy Show as we talk about the operations, economics and effects that CCAs will have on both customers and the utility industry in general.
Electric utilities got their start in the U.S. in the 1880s. Thomas Edison began transmitting DC power as he literally illuminated the world. Then George Westinghouse (with help from Nikolai Tesla) deployed a better way of delivering electricity with AC power. Both Edison and Westinghouse went on to build tremendously successful companies, aptly named General Electric and Westinghouse Electric respectively. Although dominant in the 20th century, both companies have struggled in the 21st century.
Without a doubt utilities strive to deliver reliable and affordable power all over the world. But new technologies — particularly wind, solar and battery storage — are making the conventional utility business model obsolete. Customers are able to purchase and maintain their own power plants for less money than it costs a utility to centrally generate power and transmit it to every building. There is no doubt in my mind that over the next 20 years we will transition to a network of microgrids supported by some type of intelligent power distribution system.
What we knew and (some of us) loved about conventional utilities is changing. And utilities are fighting back — hard — to maintain their power supply monopoly. So here are Ten Electric Utility Company Myths — some of which were based on fact, and some were simply PR spin.
1. Myth: Utility profits are decoupled from selling electricity
2. Myth: Solar shifts costs to disadvantage ratepayers
3. Myth: Utilities support energy efficiency, we offer rebates
4. Myth: Utilities like EVs. They get to sell a lot more electricity
5. Myth: Utilities like Solar and Battery Storage
6. Myth: Utilities are a public monopoly working for ratepayers
7. Myth: Solar reduces electricity costs
8. Myth: Safety is a utility’s #1 concern
9. Myth: public utilities are the only way to provide reliable and affordable electricity
10. Myth: Solar will disrupt the grid at high penetration levels
Listen up to this week’s Energy Show as we go into detail on each of these myths — and explain their implications on ratepayers and competing power industries.