Two conflicting studies about energy use in America have been circulating in the press in the last couple of weeks.  A recent GE study found that Americans are willing to embrace new energy behaviors to effect change.  A different study found that Americans do not know how to conserve energy and do little to effect significant change.  So which one is it?

The problem with the GE study is that it asks a hypothetical question about whether or not you would do the right thing.  “Would you adjust your energy consumption habits and behaviors in the short-term to effect change long-term?”  If the question is asked that way, few respondents will say no.  We all like to think that we are good people and are willing to sacrifice some short-term needs to achieve greater good in the long-term.  However, when it comes down to investing money in energy efficient appliances, the latter study finds that Americans are unlikely to ultimately do the right thing, especially in this economy.

Demand side energy research has grown substantially with the proliferation of smart grid technologies and its corresponding stakeholders.  Studies show up in the headlines on a daily basis, many of which have conflicting findings.  In this case, many Americans SAY that they are willing to embrace new energy behaviors to effect change, but ultimately do not.  Unfortunately at this point, we are talking the talk, but not walking the walk.

Decoupling is the logical answer for many in the industry.  In decoupled states, utility revenue does not depend on the amount of electricity sales.  For example, investor-owned utilities in California are rewarded for energy efficiency and various other metrics (i.e. reliability, customer satisfaction).  None of these metrics are tied to the amount of electricity sales.  If California utilities sell more electricity than expected, that extra revenue goes back to the customer in the form of lower rates.

This regulatory framework has been quite successful in California.  It is the only state in the country to keep per capita energy use constant over the past few decades.  Even as new technologies like computers and plasma televisions have become available, energy use for the average Californian has not changed.  Decoupling has played a key role in accomplishing this feat.

One drawback with this framework is that it takes a lot of time and effort to determine the impact of utility efforts on the energy efficiency of its customers.  To reach an agreement, the utilities and the California Public Utilities Commission (CPUC) carry out lengthily studies.  Not surprisingly, the utilities often claim more credit for energy efficiency improvements than the CPUC is willing to give.  Consider this excerpt from a May 4, 2010 Reuters article:

“[California investor-owned utilities] achieved only 70 percent of the targeted energy savings in the 2006-2008 period, according to an independent consumer advocacy division of the CPUC, the state’s energy regulator.

In stark contrast, the utilities had reported they achieved 160 percent of their goals, the commission’s Division of Ratepayer Advocates (DRA) said, adding that the investor-owned utilities should not be entitled to any shareholder bonus payments from the CPUC.”

The process is a bit contentious because the numbers are so far apart and much deliberation will ensue in order to arrive at an agreement.  It is also a bit cumbersome because of all the studies and deliberation that must be done.  Why do you think the utilities and CPUC are still discussing energy efficiency in the 2006-2008 time period?

This article is meant to raise questions and start discussion about regulatory frameworks in general.  There are pros and cons of every system in existence today, and perhaps no holy grail out there.

What do you think?  How should regulators encourage energy efficiency?  Is there an ideal system?  How do regulators encourage energy efficiency in your state or country?  What are the pros and cons of those systems?

I am particularly interested in the latter two questions because I am most familiar with the California system and would like to learn more about other parts of the world.

I would like to thank the Prenova Energy Blog for the link to the Reuters article.

According to a UC Berkeley study that analyzes the effects of plug-in hybrid electric vehicle adoption on system load in California, “1 million compact car plug-in hybrid electric vehicles would not significantly affect the system peak.”  We may not see 1 million electric vehicles on the road in all of the United States for 5 or 10 years, so it will be at least 10 or 20 years before we see 1 million in California alone.  According to this study, even then, electric vehicles will not significantly affect the system peak.  System capacity constraints will become a real issue in 20 or 30 years, but we should not worry about it too much at this point.

A concern that is not overblown is how electric vehicles impact the distribution system.  There are two main issues with respect to the distribution system that electric utilities are concerned about.  The first issue is obvious.  The number one job of electric utilities is to keep the lights on.  Electric vehicles may not have much of an impact at a system wide level, but for a given circuit or transformer, a few electric vehicles charging at the same time may lead to an increase in localized outages.  Considering that adoption of electric vehicles will be concentrated in certain neighborhoods, electric utilities are concerned about maintaining the same level of reliability.

The second issue is less obvious.  According to an EPRI study, concentrated charging of electric vehicles will lead to an increase in transformer degradation.  The figure below plots the degradation of a given transformer as a function of the number of plug-in hybrids served.  According to the study, “These transformers typically serve 5-7 households.”  If a cluster of 5-7 households adopts 3 to 5 plug-in hybrids and charges them at 240 volts, transformer degradation increases precipitously.  This scenario will be quite common because adoption of electric vehicles will be concentrated in certain neighborhoods and 240 volt charging will be common (in fact, 240 volt charging will be required for LEAF owners).

Stephen Lacey of RenewableEnergyWorld.com recently interviewed Matt Nielsen, a senior researcher with GE.  He emphasizes many of the same points:

“Most people agree that we have enough generation capacity to meet the first wave [of electric vehicles]… One of the key stress points that folks are concerned about are the local points of connection for these vehicles, especially the local area transformers… They are designed such that they may be overloaded during the day, but then they have a cooling period at night so they can decrease their temperature and that doesn’t impact their overall lifetime.  So what does that mean?  Does that mean we then continue to add load to these transformers when we thought they were going to be cooling down, but now they are not cooling down?  Or do we charge them during the day and we add to the peak load that they see, stressing them even more?  A lot of the utilities are very proactive.  They are already trying to look at where they believe adoption will occur for the electric vehicles and then try to identify those stress points in their distribution system and proactively identify a plan to correct that.  So I think, on the utility side, one of the main challenges in on the distribution side.”

Like us humans, transformers need time to cool down.  If they are forced to work 24/7, their overall lifetime decreases.  This issue, as well as localized outages, are the key challenges that utilities will face as a result of electric vehicles.  Concerns about peak demand are overblown.  Concerns about the distribution system are real and need to be dealt with proactively.

To read more on how utilities can deal with these challenges, check out this white paper.  It highlights some of the electric vehicle work we did at Freeman, Sullivan & Co.

In reality, electric vehicles shift emissions from the tailpipe to the smokestack, nuclear reactor, hydroelectric dam, wind farm and many other sources of electric power.  Ultimately, the impact of electric vehicles on greenhouse gas emissions is a function of the electric generation mix in a given region.  In the United States, the generation mix is nearly 50% coal and an additional 22% comes from natural gas and other fossil fuels (see image below, courtesy of MIT Electric Vehicle Team Blog).

With this generation mix, Samaras and Meisterling (2008) report that the average life cycle greenhouse gas intensity of electricity generation in the United States is 670 g CO2-eq/kWh.  At this level of greenhouse gas intensity, Samaras and Meisterling estimate that plug-in hybrids produce nearly 40% less lifecycle greenhouse gas emissions than conventional gasoline vehicles (see image below).  Even at the greenhouse gas intensity of coal, plug-in hybrids produce less lifecycle greenhouse gas emissions than conventional gasoline vehicles.

In comparison to conventional hybrids, plug-in hybrids produce slightly less lifecycle greenhouse gas emissions.  At the greenhouse gas intensity of coal, plug-in hybrids produce more lifecycle greenhouse gas emissions than conventional hybrids.  Therefore, in coal dependent states like West Virginia, buying a conventional hybrid as opposed to a plug-in hybrid will lead to a larger reduction in greenhouse gas emissions.  See the image below for a state-by-state summary of generation mixes (courtesy of MIT Electric Vehicle Team Blog).

Over the next few years, availability and purchases of electric vehicles will be concentrated in the northeast and west coast, where coal is a small fraction of the generation mix.  Most of these states have an average life cycle greenhouse gas intensity of electricity generation lower than natural gas.  Therefore, electric vehicles in the United States will lead to significant reductions in greenhouse gas emissions.  Electric vehicles are not zero emissions vehicles, but their potential impact on greenhouse gas emissions is significant enough to justify generous government rebates and all the attention they are receiving.

According to the PlugInAmerica.org newsletter that informed me about this video:

“Doug and Lisa’s trusty 2003 RAV reached the notable milestone in March. Back in 2003, their RAV was the last EV sold from Toyota of Hollywood’s lot and possibly the very last retail RAV4 EV delivered. The car has been driven at least 14,000 miles annually since that sunny September day, often hitting the road bright and early for the 80-mile round-trip commute from the couple’s home in Seal Beach to Energy Efficiency Solar / Acro in Pomona. This electric workhorse of an SUV, charged with electricity generated by their own solar array, also earns its keep hauling ladders, miscellaneous equipment and solar panels.

Doug proudly proclaims that the RAV’s record-mileage on a single charge was an impressive 138 miles. ‘I really like driving on energy I make myself,’ he says.

Adds Lisa, who also fancies driving on sunshine: ‘I was initially surprised by how completely the car fit into our lives. It is environmental, it’s economical, and it’s family friendly. Our RAV4 EV is like the energizer bunny. It just keeps going and going and going . . . ‘”

To receive similar electric vehicle news, visit PlugInAmerica.org to sign up for their newsletter.

The LEAF vs. Mitsubishi’s i-MiEV

Along with the LEAF, Mitsubishi’s i-MiEV will be one of the first widely available electric vehicles.  According to multiple sources, Nissan’s recent press release on the LEAF’s $25,000 price tag has sparked a price war with Mitsubishi.  Mitsubishi responded with an announcement that it is aiming for a 2011 i-MiEV price tag of $22,500 after federal tax savings.

The Mitsubishi i-MiEV - Hot or not?

This price advantage over the LEAF is enticing, but the i-MiEV comes with more caveats, even though both electric vehicles offer a 100 mile range.  First of all, the i-MiEV is only available with a right-hand side steering wheel, even in the United States.  Secondly, the i-MiEV is rather ugly, in my opinion.  It looks like a Smart car and seems like a minor improvement on an electric golf cart.  Surprisingly, the Nissan LEAF is only slightly larger than the i-MiEV, but it much more closely resembles a highway-ready vehicle for some reason.  Maybe it’s the small wheels on the i-MiEV that make it look less highway-ready.

The LEAF looks great and is available with a left-hand side steering wheel.  Even though it will cost $2,500 more than the i-MiEV, the LEAF is a more attractive electric vehicle option to me.

The LEAF vs. the Chevy Volt

The Chevy Volt is also on schedule to be released at the end of the year, but the official price is yet to be determined.  Will General Motors get pulled into the price war?  They were initially aiming at a $32,500 price tag after federal tax savings, but now I think they will have to bring the price under $30,000.  With the recent announcements by Nissan and Mitsubishi, I’m sure we’ll hear news on Volt pricing soon.

The main advantage that the Volt has over the LEAF and i-MiEV is that it has a backup gasoline engine.  Therefore, this plug-in hybrid does not have range limitation (as long as there’s a gas station nearby).  Initial testing has confirmed that the Volt will have a 40-mile all-electric driving range and then get 50 MPG afterwards.

The Chevy Volt Back Seat - Is it a Deal Breaker?

Even at $30,000, the Volt sounds equally promising as the LEAF, that is until I discovered that it only has two seats in the back (see image above).  With the gasoline engine in the front, engineers were left with no room for the battery pack.  Therefore, what looks like a nice center console in the back seat is actually the battery pack that runs through the middle of the car.  To many families in the United States, the split back seat will be a deal breaker.

The LEAF is $25,000 and doesn’t seem to come with any of the caveats of the i-MiEV and Volt.  How did Nissan do it?

When I wrote “Is Demand Response Clean?”, many readers thought that I was not a supporter of  demand response because I pointed out that it is not necessarily clean if customers shift load to off-peak hours or use a backup generator.  In fact, I am a huge advocate of demand response, but I think the focus needs to shift to how demand response facilitates the integration of renewable energy.  As I mention in my interview with Lisa Cohn, without more demand response, growth in renewable energy will be much riskier:

“The biggest impact of demand response is that it is going to facilitate more integration of renewables onto the grid…  California wants to get to 33% renewables by 2020.  That is going to introduce a lot more risk onto the system because these are intermittent sources of power.  With more demand response on the system, it is going to enable the system operator to respond to changes in weather…  There are substantial automated demand response resources that are coming online…  We’re in the process of trying to prove that these resources can come online in less than 10-15 seconds…  If the wind stops blowing, the utility can immediately shut off a bunch of air conditioning load to respond to that reduction in generation.”

When most people in the industry think about the risk posed by renewable energy, they overlook demand response and look towards batteries and other forms of energy storage as the logical solution.  A recent podcast entitled “Energy Storage: Will We Find the Holy Grail?” by Stephen Lacey of Renewable Energy World provides an example of this tendency:

“We’d all like to see a world mostly powered by renewables; the sun, wind and water providing us the energy we need to keep society moving.  It’s an appealing thought, but it is possible?  To some extent, with the proper integration, these resources can make up a substantial part of our energy mix.  But at some point, given the variability of these resources, we have to have storage.  Without it, our efforts can only go so far.”

I could say (and have said) exactly the same thing about demand response.  Given the variability of renewable resources, we have to have demand response.  Without it, our efforts can only go so far.

In fact, demand response and energy storage are not that different.  Consider this example of two air conditioners whose owners only want them to consume renewable energy (which will be popular in the near future).  One air conditioner uses a battery as backup when renewable resources are temporarily unavailable.  The second air conditioner is demand response enabled and runs relatively harder when renewable resources are available and shuts off when they are not.

When renewable resources are available, the first air conditioner runs normally while extra energy is being consumed by the battery, whereas the second air conditioner consumes extra energy because it is running harder.  When renewable resources are temporarily unavailable, neither air conditioner consumes grid supplied power because the first is running on the battery and the second is off.  To utilities and grid operators, there is no difference between the two approaches to responding to the availability of renewable resources.

Consumers with the demand response enabled air conditioner may experience a difference in comfort on a few unusual days, but considering that many of us prefer to consume renewable energy, it may be worth the small sacrifice.  After all, it is a cheaper solution than having a battery as backup.

Is energy storage the holy grail or are we overlooking other options?

Don’t get me wrong.  I am a huge demand response advocate.  Without more demand response, growth in renewable energy will be severely constrained.  Unless electricity demand responds with changing sun and wind patterns throughout the day, we will never be able to rely on those sources for energy.  I will be writing about this benefit of demand response in future articles.  For this article, I try to debunk the myth that demand response is clean so that we can move on to the true benefits of demand response in later articles.

Do demand response participants shift load?

As a demand response program evaluator, my first priority is to determine the impact of demand response programs during curtailment hours.  My second priority is to determine how much load is shifted outside of curtailment hours.  I have evaluated many types of demand response programs from residential air conditioning load control to large commercial and industrial programs.  Although certain individual customers may not shift load, the aggregate impact for all customers that participate on a given day always shows load shifting.  Net energy usage for the day is often slightly lower, but this slight decrease a few times a year is not significant when compared to the reductions achieved by energy efficiency and energy conservation programs.

If participants do not shift load, what do they do?

Sometimes it may seem like certain individual customers do not shift load, but because of backup generation, it is difficult to tell.  Many participants simply turn on their backup generator when they are required to curtail load.  In these situations, participants do not shift load outside of curtailment hours because there is no load to be shifted.  If a participant turns on a backup generator and continues with business-as-usual, their utility metered load suggests that they curtailed and did not shift load, but in fact, they did not even curtail.

What about peaking generators?

Many proponents of demand response are willing to concede that load shifting occurs, but still focus on the less important benefits of demand response.  Another argument that I often hear is that, yes, load is shifted, but at least it is shifted away from dirty peaking generation.  Peaking generation is dirty when compared to many resources, but base load generation in the United States during off-peak hours is usually coal, which is not clean.

Final Thoughts

If demand response is not clean, why do we often hear demand response advocates say, “The cleanest megawatt is the one never used?”  When it comes to public relations, it’s just easier to bundle demand response with energy efficiency and energy conservation.  Instead of explaining all of the ins and outs of demand response, it’s easier to just tell customers, “It reduces energy use.  Be green.”  I don’t necessarily disagree with this approach for general public relations as long as it leads to further participation in demand response programs.

The issue is that those of us in the industry need to understand how we are all interrelated instead of working in silos.  If demand response facilitates the integration of renewables, proponents of sun and wind power should also understand and promote demand response.  Similarly, those on the demand side need to understand supply side issues and concerns.  After all, if you remember from economics 101, supply and demand have to intersect at some point.

Much like when President Barack Obama mentioned smart grid in his inauguration speech, I was surprised at how the mainstream is willing to devote such valuable time to energy stuff. With the inauguration speech, I thought, “Did I hear that correctly? Did President Obama really just mention energy stuff in his momentous inauguration speech?” With this Apple commercial I thought, “Did Apple really just devote valuable ad time during the Oscars to talk about energy stuff?”

Yes folks, this energy stuff is becoming the stuff we are made of. People around the world are beginning to embrace it. It’s even becoming cool. With the help of technology, energy conservation is becoming less of a sacrifice and more of a cool thing. It will take time for technology like this iPhone application to diffuse, but once it does, there will be substantially less energy waste in this world.

It is not going to be easy to get there though. The iPhone application in this ad, called Schlage Link, is relatively expensive and has not received very good ratings. In the iPhone application store, more than half of its 1,282 customer reviews are 1 or 2 out of 5 stars. Although Schlage Link can save energy, is it worth $10 to $15 per month? Many reviewers apparently think not.

Eventually, the cost of these technologies will have to come down. With the help of many innovative companies and entrepreneurs out there, energy conservation will become easier and less of a sacrifice. Combined with strong support from the mainstream, there is substantial momentum that will be unstoppable once it gets going.

What is Energy Efficiency?

Energy efficiency involves technology that produces the same end product while using less energy.  For example, an energy efficient air conditioner produces the same level of cooling capability while using less energy than the average air conditioner on the market. This technology is always changing because a device that was energy efficient 30 years ago is probably not energy efficient today.

Energy efficiency programs have become increasingly popular as global warming has become more of a threat.  As many people in the industry say, “the cleanest energy is the energy never used.”  For example, consider a business that installs solar panels on its office buildings, but does not replace its inefficient light bulbs and air conditioners.  If the inefficient devices were replaced by efficient ones, there may not have even been a need for the solar panels in the first place.  Clean energy powering dirty devices does the world no good.  For this reason, Barack Obama calls energy efficiency “the cheapest, cleanest, fastest energy source.”

What is Energy Conservation?

Although energy conservation is often confused with energy efficiency, it is quite different.  Both involve a reduction in overall energy use, but achieve that goal in different ways.  Conservation involves cutting waste of energy whereas energy efficiency does not.  For example, I can replace my old air conditioner with an energy efficient one, but can still waste energy by running it while I’m not home.  I may have been able to save more energy by changing my behavior or programming my thermostat as opposed to replacing my air conditioner.

Energy conservation has not been as popular as energy efficiency because it is often associated with sacrifice.  If I do not have my air conditioner on while I’m not home, I might be uncomfortable for a few minutes while the house cools down when I get home and turn it on.  If I buy an energy efficient air conditioner instead, I save energy without changing my behavior.  For utilities, it is also much easier to measure the impact of installing an energy efficient device because the energy savings do not depend on human behavior.

Is Energy Conservation Gaining Popularity?

Fortunately, there are many companies out there that are trying to create interesting solutions so that we can conserve energy without having to change our behavior as much.  Sensors can be used that know when someone is in the room and leaving the room.  In the near future, we should be able to use our phones to control home energy use.  If my home is unbearably hot when I arrive, I will be able to turn on the air conditioner when I’m 15 minutes away.  Once these technologies become more widely available, energy conservation will likely gain popularity.  Just remember… it’s not energy efficiency.  It’s energy conservation.