Category Archives: Department of Energy

Corporate Green Goals
 Playing A Key Role
 In Pushing Utilities
 Toward Renewables

The Trump administration’s budget proposal for the coming year threatens to do exactly what the president promised as a candidate: eviscerate federal funding for climate change programs. The Energy Department’s highly successful renewable energy office would be particularly hard hit, with the administration’s proposal calling for a roughly 70 percent cut in funding—from just over $2 billion currently to $639 million next year. While wrong-headed, the proposals won’t slow the nation’s renewable transition, which is now being powered, to a large extent, by the corporate sector.

This change, which I discussed here, was highlighted in an interview last month by Chris Beam, the new president of American Electric Power’s Appalachian Power subsidiary, which currently gets 60 percent of its electricity from not-so-clean coal. Speaking to editors and reporters at the Charleston Gazette-Mail, Beam said: “At the end of the day, West Virginia may not require us to be clean, but our customers are.”

And that is exactly what is happening across the country, corporate customers are forcing utilities to expand their renewable energy offerings, whether that is to keep existing customers or to attract new companies into their service territories. As Beam added, according to the Gazette-Mail’s Ken Ward Jr.: “So if we want to bring in those jobs, and those are good jobs,…they [corporate customers] have requirements now, and we have to be mindful of what our customers want.”

Continue reading Corporate Green Goals
 Playing A Key Role
 In Pushing Utilities
 Toward Renewables

Energy Secretary Perry
 Badly Misses Mark
 In Grid Study Memo

Energy Secretary Rick Perry clearly has bought into the fact-challenged approach to governing perfected by President Trump and now practiced almost daily by White House spokesman Sean Spicer: In a speech last week to the National Coal Council, Perry told the group that one of key problems from the Obama administration’s energy policies is “that we’re seeing this decreased diversity in our nation’s electric generation mix.”

Unfortunately for Perry, the fact is that the nation’s electric generation mix actually is much more diverse today than it was eight years ago. According to data from EIA, the independent statistics arm of his new agency (the same one, of course, that he forgot he wanted to eliminate back in the 2012 presidential campaign), the U.S. grid is demonstrably, provably and irrefutably more diverse now, as the chart below demonstrates.

Coal’s share of the market, as everyone knows, has fallen, dropping from roughly 50 percent of the total in 2008 to just under a third today. In its place, the amount of gas generation has shot up, and now accounts for about a third of the nation’s generation total as well. The rest of coal’s lost market share has been gobbled up by the wind and solar industries, with nuclear largely unchanged. Objectively, a system where two sources account for roughly 33 percent of the total, a third 20 percent and a fourth 15 percent is significantly more diverse than one with a single resource accounting for almost 50 percent of the total, and the next two at roughly 20 percent each.

Secretary Perry may not like the changes, but to say that something is not what it is, indeed, to say that it is the opposite of what it is, borders on the irresponsible. Worse, the secretary is using this and a number of other questionable assumptions as the basis for a department study looking into issues surrounding the “long-term reliability of the electric grid.”

Continue reading Energy Secretary Perry
 Badly Misses Mark
 In Grid Study Memo

‘Just The Tip
 Of The Iceberg’–
 DOE LED Update

The LED revolution is in full swing: DOE’s latest market data show that the number of installed light emitting diodes almost doubled in just a year, climbing from 215 million at the end of 2014 to 424 million by the end of 2015, while cutting energy consumption by 280 trillion British thermal units (compared to 143 trillion Btu a year ago). This is still a relatively small amount—overall the U.S. consumed 97.8 quadrillion Btus in 2015, of which about 5.8 quads were for lighting—but DOE says it “is just the tip of the iceberg.”

That has got to strike terror in the hearts of electric utility executives everywhere. Already starved for growth—overall retail sales of electricity in the U.S. in 2015 totaled just over 3.7 trillion kilowatt-hours (kwh), essentially unchanged from 2007—utilities are now seeing real erosion in lighting-related demand, erosion that could turn into a landslide in the next 5-10 years and beyond.

Continue reading ‘Just The Tip
 Of The Iceberg’–
 DOE LED Update

EIA Annual Outlook
 Misses The Mark
 On Threat To Utilities,
 Generation Revolution

So many studies, so little time. Just in the past couple of weeks analyses from DOE’s Energy Information Administration, Bloomberg New Energy Finance, British Petroleum and the International Renewable Energy Agency have hit my inbox (thank goodness we have moved beyond the old hardcopy stage, just those reports alone would have contributed to the world’s ongoing deforestation problem), and having the time to study them all has been difficult. But muddling through them does provide some fascinating glimpses of where the energy industry is today, and where it might be headed in the years to come.

EIA’s 2016 Annual Energy Outlook, released in abbreviated form last month with its full rollout slated for early July, includes more sobering news for electric utility executives: Sales growth really is gone, and it isn’t coming back. In its analysis, EIA estimates that overall electricity sales will grow at an average rate of 0.7 percent from 2015-2040, essentially unchanged from the 0.6 percent growth rate posted from 2000-2015. But a closer look at the numbers shows even that relatively anemic growth estimate may be optimistic.

For example, EIA estimates that electric sales in the residential sector will rise by an average of just 0.3 percent a year from 2015-2040—well under even the paltry 1.1 percent annual growth recorded from 2000-2015. According to EIA, the slow growth can be attributed to rising energy efficiency, especially in the lighting sector, and the broad adoption of distributed photovoltaics (PV). But what is most intriguing about EIA’s estimate is that virtually all of the growth occurs in the out-years (see chart below): From 2015 through 2030 there is essentially zero growth in residential sales. Specifically, EIA puts 2015 sales in the sector at 1,402 billion kilowatt-hours (kwh)  and projects that sales in 2030 will rise to just 1,416 billion kwh—an increase, if you can call it that, of 0.1 percent annually. Rather than calling this growth it would be more appropriate to write it off as a rounding error. It also represents the continuation of a longer-term trend: Residential electric sales in 2007, just before the onset of the Great Recession, totaled 1,392 billion kwh. Measured from that starting point, sales are expected to climb just 24 billion kwh in 23 years, a miserly 0.07 percent annual increase.

Continue reading EIA Annual Outlook
 Misses The Mark
 On Threat To Utilities,
 Generation Revolution

Rare Good News
 On Electric Demand
 Comes With A Catch

Good news can be hard to come by in the electric utility industry these days—overall growth is stagnant, new technologies and competitors are aching to get into the market, and customers are beginning to act like, get this, customers, seeking something more than just a monthly bill from their provider. So a report showing soaring growth anywhere in the sector should be a cause for celebration—except, of course, when it includes its own version of a self-destruct mechanism.

The report in question is EIA’s recently released commercial buildings energy consumption survey (CBECS), a treasure trove of data, somewhat dated to be sure, but compelling all the same.  The occasional report—it has been released nine times since 1979—estimates that electricity use in commercial buildings totaled 4,241 trillion Btu in 2012 and accounts for more than 60 percent of the sector’s total energy consumption. While EIA touts the fact that electricity consumption in commercial buildings has almost doubled since it began tracking usage in 1979, the real newsworthy growth has occurred since 1995. Since then, consumption of electricity in commercial buildings has risen by roughly 50 percent, from around 2,750 trillion Btu to 2012’s 4,200-plus level. That 50 percent-plus rise in 17 years amounts to more than 3 percent annually—a level of demand growth that would thrill today’s growth-starved utility executives.

But there is a catch, which I’ll get to in a minute.

Continue reading Rare Good News
 On Electric Demand
 Comes With A Catch