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On How to Regulate the Electricity Distribution Utility of the Future

Thanks Bas. I have to admit, I've been somewhat stymied in my efforts to study Germany's regulatory environment by the language barrier (which doesn't plague me when examining Ofgem documents!). But I'll try to take a closer look at dena's policies. 

Jesse

February 4, 2015    View Comment    

On How to Regulate the Electricity Distribution Utility of the Future

Yes, a reference network model would help you benchmark the cost of expanding your network to incorporate distributed resources, such as solar, biogas, etc. You would most likely to need to contract with a consultant to perform the analysis. I assume as a small rural electric cooperative, it would not make sense for you to license a model and train your own staff to perform such analysis. If you're interested in more information, contact me: jesse[at]socialmediatoday[dot]com.  

February 4, 2015    View Comment    

On How to Regulate the Electricity Distribution Utility of the Future

Hi Bas,

How do you quantify or support the qualitative claims you make there about Germany? (Just curious)

In either case, this paper addresses the regulation of distribution utilities, not wholesale energy markets, which I think you are referring to. In that domain (distribution regulations), the UK's Ofgem is probably the most sophisticated regulator in the world. My proposals build on and advance the Ofgem methods to better address the growth of distributed resources and smart grid technologies. 

Jesse

February 3, 2015    View Comment    

On Net Metering for Rooftop Solar: How to Fix the Problems

Bas, Nathan:

Thanks for an adult, well-cited, respectful conversation about this contentious topic. You cite sources, state where you are expressing your opinion (vs other evidence) and keep a respectful tone throughout. This is exactly the kind of dialog we love to see here at TEC (and am example for other commenters!). 

The only thing I'd note: not every thread here has to turn into a chat about nuclear power's relative safety or cost!! I understand the impulse but it would be great to hear more of your thoughts on the direct topics on hand as well. 

Cheers,

Jesse

January 19, 2015    View Comment    

On Net Metering for Rooftop Solar: How to Fix the Problems

Thanks everyone for the excellent discussion! I've enjoyed reading all the comments. Cheers,

Jesse

January 17, 2015    View Comment    

On Net Metering for Rooftop Solar: How to Fix the Problems

Paul, let's tone down the rhetoric a bit. 

Why would you assume that any injected power from PV generators is "unwanted." Unless PV penetration is very high in the local feeder, injected power is consumed nearby by other electricity users. There are significant economies of scale/scope in electricity networks, as you well know. The idea that everyone should go it alone and "eat their dogfood" as another commenter pointed out, is pretty simplistic thinking.

As long as all network users are paying/being paid for the costs/benefits they incur on the system, we are all better off if we participate in a power system, rather than disconnect or go it alone.

Jesse

January 14, 2015    View Comment    

On Is the US-China Climate Change Deal a Game-Changer? An Interview with MIT's Valerie Karplus

Joris, Prof. Karplus sent the following reply to your comment via email:

I'm happy to respond -- basically there is a great and cost-effective opportunity to reduce coal for both air quality and climate goals. Correctly noted is the fact that scrubbers do not remove CO2 from coal and may even contribute to the climate problem. This will become important once cost effective coal reduction opportunities run short and necessitates a carbon price (as I will argue in an upcoming piece for the Paulson Institute in January).

December 13, 2014    View Comment    

On Are Rebound Effects a Problem for Energy Efficiency?

David,

Your example only holds if you assume the only form of rebound is a specific indirect rebound mechanism, which is knonwn as the "re-spending effect," wherein energy savings are spent on a general bundle of consumer goods, which then have the average energy intensity of the economy as a whole. (For a taxonomy of rebound effects, see here). Indeed, no one predicts indirect rebound effects to add much more than another 5-15% on average to the overall rebound effect, as I wrote in my extensive 2011 review of the rebound literature.

What you are of course ignoring is the direct rebound effect (as well as several other indirect mechanisms), wherein an improvement in the efficiency of an energy service reduces the apaprent cost of that service, triggering an increase in demand for that service. Now where energy services are concerned, of course they are much more energy intensive than the economy as a whole. So if we make lighting (about 70-80% energy cost to total cost of lighting ratio BTW) or a blast furnace at a Chinese steel mill, or freight trucking, or an industrial motor at a factory more efficient, direct rebounds in energy demand can be far more significant than the overall energy intensity of the economy indicates. That's why the literature on each of these cases shows much larger rebounds than you want to acknowledge.

 

And again, the fact that energy is a relatively small share of total US GDP does not at all imply that rebound effects are small. If energy expenditures are 8 percent of US GDP, and we make all energy services twice as efficient over the next 20 years, as in your example, then that implies we just made 8 percent of the US economy twice as productive over 20 years. That would grow the U.S. economy by 4% over that 20 years, or 0.19 percent per year increase in U.S. economic growth rate over those 20 years, if we assume these gains scale smoothly. Now that would be a nice welcome boost to U.S. GDP, but two orders of magnitude less than your "simple" (and flawed) example above.

Now what does that mean for the scale of rebound? Well let's assume for sake of argument that we are in a rich nation like the U.S., so direct rebounds are in the 20-70 percent range we see across empirical studies for the U.S. (see links in my original article). Let's use 50 percent as an easy middle of the range figure for the average rebound. In that case, instead of shrinking to 4 percent of U.S. GDP, energy expenditures would only shrink to 6 percent, as half of our energy savings are eroded by direct rebound. Then if the economy as a whole grows by 4 percent and we spend 6 percent of GDP on energy-related expenditures now on average, we would spend an additional 0.24 percent of our original, pre-efficiency GDP level on energy. That would erode another 6 percent of the expected total energy savings (0.24 percent of GDP / 4 percent of GDP original energy savings = 6 percent of original energy savings). Our total rebound in this case would be 56 percent. 

That's a lot of multiplying percents, so go ahead and check my math, but the logic there is sound, and corrects the clear errors in your simple attempt to disprove the possibility of very large rebounds.

Now transplant this case to the developing world, which is less efficient, and where energy use is more like 12 percent of GDP. Say we get 50 percent more efficient there as well over 20 years, leading to a 6 percent increase in GDP over 20 years, or 0.29 percent boost in the growth rate.

Now let's assume direct rebound effects in the developing world are closer to 75 percent on average (again see evidence discussed in the original post). Then instead of cutting energy expenditures in half to 6 percent of GDP, we lose 4.5 percentage points of that savings to direct rebound (6 percent * 0.75), and we wind up still spending 10.5 percent of GDP on energy. With GDP now also 6 percent higher, the indirect rebound from this macroeconomic growth and respending is 0.63% of our original GDP or an indirect rebound of 10.5 percent of our original energy savings (0.63 percent / 6 percent = 10.5 percent). Total rebound in this case is north of 85 percent. 

These are all hypothetical, rebounds for very large, economy-wide efficiency improvements. Of course the sector and country-specific cases will differ. But I hope you see why the small share of the economy spent on energy in no way implies that rebound effects are small. 

Your continued insistance that they must be small, despite mounting evidence to the contrary, as well as the admonishions of the IPCC, is unfortunate. As I noted above, the evidence does not support the idea that backfires are the norm. Nor are they impossible or even particularly rare. My 2011 review of the literature made that quite clear.

However, the evidence also pointedly does not support the idea that rebounds "where they are found, are quite small," as you claim. As my original article notes, rebounds in the 35-80 percent range are still a very big deal for energy planning and climate mitigation. Please stop trying to imply otherwise.

Finally, your claim that the evidence for rebound effects is not empirically grounded or is based on non-testabable hypotheses is belied by the massive amount of literature on the topic. Just search Google Scholar for "rebound effect, energy, empirical" and have fun reading the reams of papers on this, which you seem to have completely missed...

I suggest you start with these three recent examples:

 

October 21, 2014    View Comment    

On Are Rebound Effects a Problem for Energy Efficiency?

Hi David,

First off, you should probably recheck your "quick calculation" that "were 100% rebounds [sic], then efficiency policy alone could double economic growth in the U.S. over the next 20 years." Last I checked, energy expenditures were a small fraction of U.S. GDP, on the order of 7-8 percent. So if we doubled the efficiency (i.e. productivity) of all energy consumption in the U.S., and 100% of the resulting gain in welfare was taken as an increase in GDP while energy consumption was held constant, then U.S. GDP would grow by about 3-4 percent as a result. But 3 percent, 100 percent, what's the difference?

You claim you aren't actively trying to dismiss the consensus that rebound effects are typically significant. Yet you claim in your October 9th article at NRDC's blog that "rebound effects are very small where they exist at all."

That would be news to the IPCC Working Group III, which surveyed the peer-reviewed literature and concluded that "rebound effects cannot be ignored." Here's how they summarize the reams of literature on this, which you are so quick to shrug off:

"A comprehensive review of 500 studies suggests that direct rebounds are likely to be over 10% and could be considerably higher (i.e., 10% less savings than the projected saving from engineering principles). Other reviews have shown larger ranges with (Thomas and Azevedo, 2013) suggesting between 0 and 60%. For household‐efficiency measures, the majority of studies  show rebounds in developed countries in the region of 20-45% (the sum of direct and indirect rebound effects). ... . For private transport, there are some studies that support higher rebounds, with Frondel et al.(Frondel et al., 2012) findings rebounds of between 57 and 62%. 

There is evidence to support the claim that rebound effects can be higher in developing countries (Wang et al., 2012b; Fouquet, 2012; Chakravarty et al., 2013). Roy (2000) argues that rebound effects in the residential sector in India and other developing countries can be expected to be larger than in developed economies because high‐quality energy use is still small in households in India and demand is very elastic (van den Bergh, 2010; Stern, 2010; Thomas and Azevedo, 2013)." 

As I noted, the studies they are summarizing here exclude any macroeconomic rebound effects. Those are of course difficult to observe empirically, so you'd be happy we just pretend they don't exist. But when it comes to studying complex real-world phenomona for which we can't run controlled experiments (say, the global climate, or the economy), we tend to rely on models to form intuitions, develop hypotheses, and come up with our best guesses for what the world looks like. When those findings are inconvenient for you, you'd better come up with a better argument than "BUT: MODELS," or we might start thinking you really are trying to ignore rebound effects. You sound an awful lot like a skeptic of anthropogenic climate change when you make remarks like that...

Jesse

October 15, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

We would need batteries to go to an ultra-low carbon nuclear-heavy system as well (i.e. 80-100% reductions in CO2 leave little-to-no room fo gas-fired peakers). See my previous post on this here. In the near-term, batteries could simply be a viable alternative to gas (and sometimes oil or coal-fired) peaking power plants that operate today with very low capacity factors and very high marginal costs. Once online, batteries could do more than peak-shave though, and could also provide additional ancillary services, including frequency regulation, reserves, renewables integration and load shifting in some combination.

October 13, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

Thanks for clarifying. Cheers

October 13, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

At 7 cents/kWh cycle, how do you get "doubling the current cost of electricity"? We wouldn't be using the batteries for 100% of our electricity. The most lucrative use would be to flatten load peaks and fill in valleys (which would benefit baseload nuclear plants just as much if not more than solar or wind, btw). There, you'd be trying to ensure the spread between peak and off-peak prices is <7 cents/kWh or $70/MWh. Currently, that wouldn't happen every day, but many days in the year you would see that kind of peak/off-peak spread. And that's at current expected costs. Drop the cost 30-50 percent further, which doesn't seem impossible, and you're at a ~$35-50/MWh spread. That would be quite competitive with current peaking power plants, and probably drive most of them out of business, while increasing the load-factors for baseload plants and allowing mid-day solar production to be shifted to the afternoon peak, for example. I could see that being economical. How about you?

October 13, 2014    View Comment