The first Energy Transformation Dialogue of the Mitigation Action Implementation Network (MAIN) took place from August 5-7 in Sacramento and San Francisco, California. Organized by the Center for Clean Air Policy (CCAP) and co-hosted by the California Energy Commission (CEC), the event brought together key energy and utility regulators from developing countries in Latin America and Asia to learn about the power sector transformation currently underway in California and in other countries.
Tremendous advancements towards low-carbon energy are occurring in the power sector. The price of solar has fallen 80% in five years, and the cost of wind power has been reduced by nearly half. Energy storage technology is on its way to becoming economically viable, offering the potential to mitigate the intermittency issues of renewable energy (RE). Distributed generation (DG) is reducing the need for large investments in utility-scale generation, and advanced sensors and smart-grids have the ability to effectively manage demand and increase energy efficiency. These new technologies and advancements are transforming the electricity sector and hold significant mitigation opportunities for the power sector, a large contributor of greenhouse gas (GHG) emissions and climate change, while also increasing resiliency, reducing line losses, and lowering energy costs. The goal of the dialogue was to accelerate this transformation toward renewable and distributed energy in developing countries by creating a forum for in-depth discussion between countries and to learn from California, Germany, Mexico and others.
The dialogue built on previous MAIN dialogues and efforts to support countries’ work on designing Nationally Appropriate Mitigation Actions (NAMAs). It is also meant to coincide with countries’ current efforts underway to develop national climate pledges under the UNFCCC, as well as the launch of the Green Climate Fund (GCF), which can help finance and garner national attention to reforming energy markets.
Key points from the dialogue include the following:
High levels of intermittent RE can be achieved and California and other countries are doing it now. California, Germany and other countries have succeeded in achieving high rates of intermittent RE and are continuing to pursue even greater levels of RE penetration. California has reached 25% renewables capacity (not including large hydro) and is on track for meeting their 33% Renewable Portfolio Standard (RPS) in 2020. Other countries have similarly reached high levels of renewables, including Denmark (39%), Portugal (25%) and Spain (21%).
Central to the success of renewables is the falling cost of RE, primarily solar photovoltaic (PV) energy. In California and other markets, new solar PV has become cost competitive against traditional generation sources. Developers are even starting to build solar PV plants without Power Purchase Agreements in place, confident that they will be able to recoup their investment selling into the market.
Distributed generation of renewable resources presents a great opportunity to meet growing energy demand, reduce transmission and distribution losses, improve grid stability, provide greater energy access to rural and isolated areas, and achieve greater climate resilience at a competitive cost to the consumer. There has been a profound shift in recent years, particularly noticeable in developed countries such as the U.S. and EU Member States, toward utility involvement in distributed generation.
Providing the right policy mechanisms and building blocks for distributed energy resource development is key. Net metering policies have been critical to the large uptake in distributed solar. Crucial to net metering is setting the sellback rate of excess generation to both promote DG uptake and also ensure that distribution companies are adequately compensated for maintaining the grid.
High levels of intermittent RE can present challenges to the grid, though these can be overcome through distributed energy resources (DER), including energy efficiency, demand response and storage. California’s “duck”-shaped net-load curve for daily net energy load reveals a dramatic mid-day drop due to high solar PV generation, as well as a very steep ramp-up in the late afternoon as solar generation drops off and household energy demand increases. Demand response can help flatten the level of ramp-up needed when RE falls off the grid. Improved market price signals can incentivize increased electricity usage during peak RE generation, such as for refrigerated warehouses, or for workplace electric vehicle charging.
NAMA financing has been ramping up and provides an opportunity to fund this transformation away from traditional fossil fuels toward distributed energy resources. The GCF has received funding pledges of over $10 billion. It must obligate 60% of total contributions (approximately $6 billion) by mid-2017 and is looking for projects and programs that are both bankable and transformational, achieving the desired “paradigm shift” through changes to national policies that address key barriers to low-carbon development. Policies contributing to a transition to DER are an excellent example of this and align with the selection criteria that the GCF will use to evaluate and approve proposals.
This dialogue was convened with the generous support of the International Climate Initiative (IKI). The German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) supports this initiative on the basis of a decision adopted by the German Bundestag.
California Energy Commission Keynote Presentation: The Growth of Renewable Energy in California Commissioner David Hochschild Energiewende: Germany’s Energy System and the Status of the Energy Transition Markus Kurdziel The Green Climate Fund and National Climate Pledges Leading to Paris Ned Helme Power Sector Reform in Mexico: an Overview by SENER Luis MuÑozcano Energy Transformation in Uruguay Beatriz Olivet Challenges MAIN Countries Face in Managing Grid and Transmission Issues Gerardo Canales CAISO: Integrating Renewables and Distributed Energy Resources into California’s Electricity Markets Lorenzo Kristov Greening the Grid: Integrating Renewable Energy into the Grid David Palchak Indonesia’s Renewable Energy Policy Ida Nuryatin Finahari Advancements in Smart and Clean Energy Technologies: How R&D Addresses Advancements Alan Solomon The Development of Smart Grid Pilot Projects in Argentina Oscar Medina
California’s Policies and Other Structural Programs Promoting Distributed Energy Resources Stephen St. Marie Focusing on Distributed Energy Resources: Duke Energy’s Commercial Strategic Initiatives William F. Tyndall Distributed Energy Policy in Costa Rica Oky Segura Elizondo DER by Southern California Edison Dhaval Dagli MERALCO’s Renewables Program in the Philippines Anna A. Reodica Chile’s National Energy Commission on Renewable Energy Programs and INDC Options Jose Carrasco