The concept of Smart Cities offers the promise of urban hubs leveraging connected technologies to become increasingly prosperous, safe, healthy, resilient, and clean. What may not be obvious in achieving these objectives is that many already-existing utility assets can serve as the foundation for a Smart City transition. The following is a broad discussion on the areas of overlap between utilities and smart cities, highlighting working knowledge from experience at PG&E.
Best States to add Solar Power and Wind Energy
A massive 16 GW of renewable energy (RE) was installed in the United States in 2016, adding more new electricity generation than from coal, nuclear, and natural gas combined. This growth in renewables was driven by commercial and industrial (C&I) users like Amazon, Lockheed Martin, and Alphabet, which moved faster and installed more RE than utilities, and more than homeowners.
Hundreds of corporations are committed to renewables powering 100 percent of their global business. Usually, there is not enough space on corporate roofs and parking structures for on-site solar to meet all energy needs; so corporations are also buying power from large off-site wind and solar farms. In ideal locations, these developments generate more kilowatts per dollar than any alternative including coal and gas.
Corporations are leading the way, but it hasn’t been easy. In most states, utilities are regulated monopolies that view independent wind and solar generation as unwelcome competition. Yet, some states and their utilities have more enlightened regulations and smart grids that are ready for the growth in renewables. A new report from CleanEdge, a leading research and advisory firm, is the Corporate Clean Energy Procurement Index. It ranks these 10 states as best for corporate RE procurement:
- New Jersey
- New York
- Rhode Island
The index ranks all 50 U.S. states based upon the ease with which companies can procure RE. The index consists of 15 indicators, broken into three categories: utility purchasing options, third-party purchasing options, and onsite/direct deployment options.
State energy policy is often more important than available wind and solar. For example, although enough sunlight reaches Nevada to power the entire nation, the state makes it tough to get electricity outside the utility monopoly. MGM Resorts had to pay $86.9 million to exit using the utility NV Nevada and directly secure its own power.
Let’s look at three states doing it right.
Iowa tops the list because it has the right policies. Iowa is also blessed with strong winds, ideal to produce wind power for less than building a gas or coal power plant. In Iowa, MidAmerican Energy, a Berkshire Hathaway company and ironically a sister company to NV Nevada, makes it easy for a corporation to contract for wind power. MidAmerican, under different regulators, also supplies electricity to South Dakota, Nebraska, and Illinois. Berkshire Hathaway Energy has invested $16 billion in renewables and owns 7 percent of the country’s wind generation and 6 percent of its solar generation.
In 2015, an equivalent of 47 percent of MidAmerican’s Iowa retail electricity demand was from wind; they are forecasting 58 percent in 2017. MidAmerican is now developing a 2 GW wind project that will take wind power to 90 percent of retail demand two years from now. Green bonds, 10-year and 30-year, totaling $850 million are used to finance the project.
When Google and Facebook wanted to run data centers only with renewable energy, MidAmerica contracted to deliver 548 MW of wind power, likely at less than 6 cents per kilowatt-hour. Iowa is a leading state for corporations to procure renewable energy through a utility.
Texas has a winning combination of more wind generation than all other states combined and a competitive energy market. Corporations can procure Texas wind power for less than coal, methane, or other sources. Unlike Iowa and many states, in Texas a customer can choose from a variety of providers rather than one regulated utility monopoly.
Texas will have over 20 GW of wind power by the end of this year, more than all but five nations. Since Texas deregulated its energy market in 2002, hundreds of private investors have poured billions into developing wind and solar projects in Texas. To be a world leader in low-cost renewables, Texas has spent billions upgrading to a high voltage transmission system that can move electricity from remote high-wind areas to Dallas, Austin, Houston and other cities. That grid investment is paying off multiple times. The deregulation and massive private investment occurred during the tenure of Governor Rick Perry, nominated to be U.S. Secretary of Energy.
Wind power from 257 MW Wake Wind Energy will supply Owens Corning and Equinox, for a fixed-priced with power purchase agreements (PPA) of 20 years. Facebook is partnering in the development of a 200MW wind farm near its new billion-dollar data center in Fort Worth. Google, an Alphabet company, is contracting with Invenergy to purchase the generation from the Bethel Wind Energy 225 MW project. Dow Chemical, Mars and Walmart have all used PPA to secure years of wind power at low prices.
In addition to leading in wind, Texas recently ranked third in the nation for installing new solar power. For example, Toyota is contracting with SunPower to install 8 MW of solar power on the roofs and carports of its new North American headquarters in Plano. Within five years, most of Texas 12 GW of coal power will likely be replaced with wind and solar power.
By 2030, 50 percent of California’s massive energy demands will be meet with renewables like solar and wind, up from today’s 30 percent. California is solving the variability of solar and wind with storage, software, and time-of-use pricing that keeps supply and demand in balance at all times.
With this much renewable energy, all coal power plants in California are shuttered. The last two nuclear plants are being phased out by 2025. Over 50 methane (natural gas) plants are being closed. The obsolete plants are being replaced PV solar, CSP solar, wind, geothermal, and biowaste energy. Large corporate users are procuring a mix of off-site wind and solar projects, along with solar and storage on their own facilities.
California is home to the world’s largest corporate users of wind and solar power. Alphabet, Google’s parent company, is the world’s biggest corporate user of clean energy. Alphabet has gone beyond its own needs and invested $2.5 billion in large-scale solar and wind with combined renewable energy capacity of 3.7 GW. In California, much of this RE is secured with PPAs.
Corporations such as Safeway, Whole Foods, and Extended Stay have installed solar+storage. They use sophisticated software from providers like Stem and Green Charge to charge batteries when grid power is cheap and plentiful, run operations when the sun shines, and sell stored power to utilities during peak hours when electricity is most valuable.
Business Renewables Center
In 2015, the Rocky Mountain Institute (RMI) launched the Business Renewables Center (BRC) to help corporations make large off-site wind and solar procurements. The community started with 28 founding members including General Motors, Kaiser Permanente, Nestlé Waters, Owens Corning, and Salesforce. Today, the organization’s membership has increased to 178 members who made 93 percent of total corporate renewable energy deals last year. My wife and I are monthly contributors to RMI, a leading global non-profit think tank.
Business Renewables Center helps with the complexities that are different in every state. BRC offers primers for economic analysis, deal making, and finance. BRC offers members a marketplace where corporate buyers can connect with project developers and other service providers. Members find it easier to navigate alternatives, state by state, including contracting with utilities, PPAs, leases, community solar, aggregated energy contracts, and energy certificates.
While coal power in the United States is now half of what it was a few years ago, wind, solar and other renewable energy are at record levels. The drivers of this growth have not been utilities in states that protect their monopoly power; they have been major corporations who are running their business with renewables. In some states, the best path for corporate RE procurement is PPAs with third-party developers, in others contracts with utilities, or direct purchasing, or through aggregators making sophisticated use of storage and software.
On the downside, the transition has been disruptive, and thousands have lost jobs in the coal industry. On the upside, millions of jobs have been created in energy efficiency, solar energy, wind power, energy software and financing. A growing number of U.S. states generate over 30 percent of their electricity with renewables, some over 50 percent, and other states are committed to be 100 percent renewably powered within 30 years, eliminating emissions, achieving energy independence, resilience, and growing economies.
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Spotlighting innovations in urban sustainability and connected technology
When the idea of smart cities was born, some ten to fifteen years ago, engineers, including me, saw it primarily as a control system problem with the goal of improving efficiency, specifically the sustainability of the city. Indeed, the source of much of the early technology was the process industry, which was a pioneer in applying intelligent control to chemical plants, oil refineries, and power stations. Such plants superficially resemble cities: spatial scales from meters to kilometers, temporal scales from seconds to days, similar scales of energy and material inputs, and thousands of sensing and control points.
So it seemed quite natural to extend such sophisticated control systems to the management of cities. The ability to collect vast amounts of data – even in those pre-smart phone days – about what goes on in cities and to apply analytics to past, present, and future states of the city seemed to offer significant opportunities for improving efficiency and resilience. Moreover, unlike tightly-integrated process plants, cities seemed to decompose naturally into relatively independent sub-systems: transportation, building management, water supply, electricity supply, waste management, and so forth. Smart meters for electricity, gas, and water were being installed. GPS devices were being imbedded in vehicles and mobile telephones. Building controls were gaining intelligence. Cities were a major source for Big Data. With all this information available, what could go wrong?
If you want a healthier community, you don’t just treat illness. You prevent it. And you don’t prevent it by telling people to quit smoking, eat right and exercise. You help them find jobs and places to live and engaging schools so they can pass all that good on, so they can build solid futures and healthy neighborhoods and communities filled with hope.