by Dr. Richard Silkman, CEO
The recently released report from the Intergovernmental Panel on Climate Change (IPCC) confirmed our worst fears. After a year of being suppressed as a result of COVID-induced reductions in energy consumption in 2020, CO2 emissions came roaring back in 2021, using up far too much of the dwindling carrying capacity of the planet to absorb greenhouse gas emissions. This report, and others like it, have acknowledged that limiting rising temperatures to earlier targets of a 1.5oC is now essentially impossible, and worse, the fallback target of 2oC looks increasingly hopeless. Countries around the world are simply not moving fast enough along the twin paths of beneficial electrification and the deep decarbonization of the electric grid necessary to prevent major climate change.
This may seem puzzling, given that the news each day includes more and more articles of new wind, solar, and other renewable generation projects delivering energy and more and more companies and institutions committing to zero or so-called “net zero” CO2 emission targets. In point of fact, there is no inconsistency; rather, it illustrates the enormity of the scale required to eliminate carbon from our energy sector and the economy at large.
One of the most complete and well-done studies in this area is DNV’s “Energy Transition Outlook.” Their work shows that even under very aggressive assumptions about renewable energy development (e.g., 50% of all energy is renewable by 2050) and beneficial electrification (e.g., over 50% of cars on the road are electric vehicles by 2050), worldwide CO2 emissions will fall from 2019 levels by only 9% by 2030 and just 45% by 2050 – well short of what is required to meet reduction targets. The aggressive scenarios modeled by DNV will result in exhausting the earth’s CO2 budget to stay under 1.5oC by 2029 and the budget to stay under 2.0oC by 2053, leaving the world on track to see temperature increases of 2.3oC by 2100 and to deal with the consequent impacts of climate changes these temperature increases will bring.
Closer to home, work done by The Brattle Group for the New England region shows that to achieve an 80% reduction in CO2 emissions by 2050 will require a 200% increase in the amount of electricity consumed, all of which must be generated from renewable sources. This will require adding more than 4,000 MW of renewable generation capacity a year each year through 2050. To put this in perspective, New England added an average of less than 300 MW a year from 2010 – 2019.
My own work, “A New Energy Policy Direction for Maine,” confirms these results. In order to convert all surface transportation, space heating, and industrial processes to electricity, it will require a three-fold increase in the amount of electricity consumed in Maine. Further, all of that electricity will need to be supplied by roughly 7,500 MW of solar, 2,500 MW of on-shore wind, and 5,000 MW of floating off-shore wind in the Gulf of Maine.
This, of course, is only one piece of what needs to be accomplished. All of this new renewable generation needs to be interconnected to the transmission grid and delivered to homes, businesses, factories, campuses, and vehicle charging stations in order to support beneficial electrification. Doing this will require unprecedented expansions of the electric grid. In New England alone, we will need thousands of miles of new high-voltage transmission lines to bring the energy generated off-shore in the Nantucket Sound and the Gulf of Maine and on-shore from wind resources in Northern Maine to load centers around the region. Further, we will need to expand by at least two-fold the distribution grid – many more miles of poles, wires, and new substations – and in the process create an electric grid that is transformed from a one-way deliverer of electric power (e.g., our water supply systems) into a network of interconnecting power flows (e.g., the Internet).
Regrettably, there is no certainty that Maine, New England, or the world will progress very far along the twin paths of beneficial electrification and deep decarbonization. In addition to having to overcome powerful economic interests with a stake in maintaining the status quo, we will need to spend trillions of dollars to underwrite the transition. It is not lost on those who have studied this transition that a key element is the substitution of capital investments in the form of renewable generation facilities and electric grid expansion for the billions of dollars we spend annually on fossil fuels, primarily oil and natural gas. My study of this transition in Maine suggests a need to invest roughly $2 billion a year each year through 2050 to achieve a deep decarbonization of our energy sectors. This represents roughly 3% of our total state income and will be offset by reductions in the roughly $5 billion we spend each year to import natural gas, gasoline, and heating oil as fossil fuels are replaced by zero carbon electricity.
The other thing that will need to change is the electric sector itself – regulated utilities, generators, and electricity markets. The current electricity market rules and structures are not designed to support the buildout of the transmission grid necessary, nor are they designed for an electric grid where virtually all of the electricity is generated from renewable energy sources that have effectively zero short-term marginal cost. Instead of looking like most markets, including our current electricity market, with traditional upward sloping supply curves reflecting the different levels of marginal costs of various suppliers, this new market will look like the market for cellular phone service – where the incremental cost of using the phone is effectively zero, so long as there is unused capacity available. It only takes a cursory look at these two markets to know that the pricing structures are very, very different.
There is, of course, one key difference between this future electricity market and the market for cellular phone service. This difference is the ability of the phone carrier to slow down the speed at which information flows over the network or to deny access to the network (a busy signal) when the capacity of the network is exceeded by those who want to use it. There is no analog for electricity. The grid operator simply cannot “slow down” the delivery of electricity, nor can it present a “busy signal” and deny service to someone connected to the grid – at least not without causing considerable pain as we have seen in California and Texas, when rolling blackouts were initiated to preserve the integrity of the grid during emergency situations.
The above analogy illustrates a most interesting aspect about electricity and electricity markets. The grid actually provides two services to its users: (1) it provides electricity when called upon by a user, and (2) it provides the user the ability to call upon it whenever the user wishes. We can think of the first of these products as energy; we can think of the second of these products as capacity or reliability. (I will use the term reliability, as I believe it is more intuitive.) The relative costs of providing energy have been and will likely continue to be over the near future significantly higher than the cost of providing reliability, as the costs of generating electricity will remain driven by fuel costs. However, once we approach a near carbon free generation mix – as all the New England states have pledged to do to meet their carbon and climate change imperatives – the balance of costs shifts to reliability, and when we achieve a carbon-free grid, costs will be essentially 100% reliable. Put simply, in a world where all of the electricity is renewable, there will be no shortage of energy. As we know, the sunshine that falls on New England alone generates enough energy each hour to meet New England’s total energy needs for a year. Instead, what we will be short of in that world is the ability to use that energy whenever we want.
The problem is that our current electricity market rules, utility regulatory structures, electricity using equipment and devices, and end-user customs are not designed for and are thus inadequate for that world. They will not – indeed, they cannot – support the transitions necessary as I have laid them out earlier. Those responsible for managing the New England grid at ISO-NE have known for quite some time that both the “superstructure” and the “plumbing” are fundamentally incapable of providing reliability as we move step-by-step closer to a world dominated by renewable generation. In response they have initiated a series of long-term planning efforts designed to highlight these inadequacies and develop new market products, new pricing structures, new relationships between electricity users and the grid, new means of developing transmission. For those of you interested in these efforts, I direct you to the Future Grid Reliability Studies being undertaken through the Planning Advisory Committee at ISO-NE.
The process is slow moving as various existing stakeholder interests need to be overcome and swept aside, but it is probably the best effort being undertaken in the region today in terms of identifying obstacles and effecting structural changes to address them. I will report on the results of this process in a blog later this year.
In the meantime, many CES clients are taking matters into their own hands.
In reading this you may ask yourself, “what can I do and what can my company do to help slow the course of climate change for that will negatively impact future generations?” The answer is that all of us can do our part to help and we should be inspired by those that are leading by example. CES would like to acknowledge our customers and colleagues who are working tirelessly to do their part to make a meaningful impact. Examples of CES customers that have followed a specific path of measuring emissions, organizing stakeholders, setting impactful goals, creating plans to reach those goals, and beginning to implement those plans will make a difference in this effort are all around us.
For Earth Day 2022, the University of Massachusetts Amherst launched their ambitious goal to entirely power the campus with renewable energy by 2032. In the announcement Chancellor Kumble Subbaswamy said “UMass Amherst will be a leader of carbon mitigation efforts in the Commonwealth of Massachusetts while educating the next generation of leaders in sustainability. UMass Carbon Zero will serve as a model for other large research universities as they embark upon their own energy transitions.”
In May of 2021, Massachusetts Institute of Technology (MIT) unveiled its new action plan to tackle the climate crisis by committing to net-zero emissions by 2026. The plan, titled “Fast Forward: MIT’s Climate Action Plan for the Decade,” includes new and expanded initiatives that include new technologies, policies, and outreach.
In 2022, Hypertherm announced its updated 2030 environmental sustainability goals that include: 1. Carbon Neutral Operations, 2. Reducing the usage impact of Hypertherm products by 50 percent, 3. Reducing waste from all waste streams by 50 percent, and 4. Achieving a circular economy (reuse, repair, refurbish and recycle instead of consuming more finite resources) score of B (improvement from a current score of C).
CES clients Amherst, Bowdoin, Hampshire, Smith, and Williams colleges formed a pioneering collaborative several years ago that will allow them to offset 40,000 megawatt hours per year of their collective electrical needs with electricity created at a new solar power facility in Farmington, Maine. After years of steady work, the solar project officially went online on October 27 and is now sending renewable electricity to the New England grid. The college consortium represents one of the first utility scale collaborative purchases of New England-generated solar electricity by higher-education institutions.
In addition to their participation in the Farmington VPPA project, Smith College has committed to carbon neutrality by 2030. To accomplish this goal, Smith completed a decarbonization study in 2016 that has guided their work toward converting the existing heating, cooling, and electricity system from fossil fuel gas to renewable electric sources.
CES is proud of the work we do to assist these clients and many others with their energy goals. Please visit our website or contact one of our Energy Services Advisors to learn more about how we can provide custom assistance at any stage of your decarbonization journey.
Photo by FietzFotos