Carbon Reporting Software Market Set for Explosive Growth

By Aaron Paulding | Published: February 10, 2010

According to a recently published report by Groom Energy Research, the market for carbon reporting software, known as Enterprise Carbon Accounting (ECA) software, is expected to increase seven-fold by 2011 as more firms begin measuring and reporting on their carbon emissions.  While these programs allow a company to input its direct emissions data, they also calculate the customer’s indirect emissions output by electric generators supplying power to them.  The ECA programs will even recommend strategies to reduce greenhouse gas emissions based on the company’s operations and production processes.

There are several factors driving the growth in carbon monitoring programs.  One is the newly active Environmental Protection Agency regulation, which requires facilities that produce more than 25,000 tons of greenhouse gases per year to disclose their annual emissions figures to the EPA.  However, for companies below this threshold, increased pressure from customers and investors to project a greener public image is the leading impetus in purchasing ECA software.  More than 2,000 companies now voluntarily report their emissions to the Carbon Disclosure Project, a program designed to establish customer baselines for greenhouse gas emissions levels and help participants take efforts to reduce emissions from year-to-year.  Additionally, the desire to drive long-term cost and energy savings through sustainability investments such as energy efficiency programs and infrastructure upgrades has propelled the ECA market.  A third leading factor driving ECA software purchases is mandates from large buyers, such as Wal-Mart, to measure the environmental footprint of operations throughout their supply chains.  Suddenly, Wal-Mart’s 60,000 suppliers demanded carbon software to measure their emissions levels.

The report also notes that the ECA software and services market exceeded $380 million in 2009, while venture capital investment totaled $46 million in ECA start-up companies.  As regional voluntary carbon markets become more mature in the next several years, carbon reporting software will be an indispensable tool for thousands of companies.  NuEnergen currently offers a Carbon Footprint Tracker on our EnerTrac energy dashboard to assist our clients in inventorying their various sources of greenhouse gas emissions.

NuEnergen's Carbon Footprint Tracker

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U.S. Energy Department Affirms Wind Power Potential

By Aaron Paulding | Published: January 22, 2010

turbines1According to a study released by the Energy Department’s National Renewable Energy Laboratory, wind could produce 20% of the electricity required by households and businesses in the eastern U.S. by 2024, although this would require a $90 billion investment in the power grid.  “We can bring more wind power online, but if we don’t have the proper infrastructure to move that power around, it’s like buying a hybrid car and leaving it in the garage,” said David Corbus, the project manager for the study.  In order for the goal to be realized, the grid must be equipped with better power lines that can support the load during windy hours and carry the electricity to cities where demand is highest.  The current grid cannot utilize all the wind power produced during windy periods, which wastes a vast amount of potential clean power.

For wind generation to comprise one-fifth of eastern electricity production, wind farms must be built on both land and in favorable offshore locations, and about 22,000 miles of new power lines must be installed.  Wind power capacity must increase by ten times current levels to about 225,000 megawatts.  Unfortunately, large offshore farms such as the Cape Wind project in Massachusetts have been delayed for years due to local opposition, even though the project could provide renewable energy to 400,000 households.  The Interior Department will finally decide this spring whether to approve the wind project.  Despite the project delays and the recession, U.S. wind electricity production increased 29 percent from January to October 2009 compared to the same period in 2008.

One way the federal government could help boost the wind power industry is by mandating a national renewable portfolio standard (RPS), requiring utilities to purchase a minimum amount of their energy from clean generation sources.  Currently, several eastern states such as New York, New Jersey, Connecticut, Maine, and New Hampshire have an RPS exceeding 20% by no later than 2025, but a national goal with a single target year would much better incentivize building additional wind farms and other renewable sources in the coming years, by sending proper price signals to contractors.

By increasing wind power generation and other renewable sources to these levels, carbon emissions are projected to decrease by an additional 4.5 percent by 2024.  However, if no more wind farms are constructed, emissions will rise.  Additionally, growth in wind power will diversify the national energy portfolio and create green jobs.

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Getting Smarter - Smart Grid on the Rise

By Aaron Paulding | Published: January 21, 2010

solar-arrayWhile the original electrical grid facilitated the industrial innovations of the 20th century, the smart grid will inspire the green advances of the 21st. “Without it, most of the other green technology won’t work,” says Ben Kortlang of KPCB, a Silicon Valley venture-capital firm.  While technologies in fields such as communications and medicine have steadily advanced in the past century, electrical grids still utilize nineteenth century technology to power twenty-first century appliances.  Half of the grid is more than forty years old.  This antiquated network creates several problems.   Currently, peak power plants are built in order to supply power to the grid during peak demand hours on just a couple of the hottest days of the year.  Constructing new plants requires an investment of $1 billion or more and overcoming numerous regulatory obstacles, making the process take years or even decades to complete.

Moreover, utilities are still dependent on customers to tell them when there is a power outage.  Recent figures suggest that outages cost the U.S. economy $150 billion every year.  Nearly 10% of electricity is lost from the U.S. grid due to technical problems and theft.  Connecting the grid via a communication network will allow utilities to reroute broken paths and repower the grid almost instantaneously.

Interest in smart grid technology that will make our electricity grid much more efficient is picking up steam.  Since the grid is aging and needs to be updated soon, it is sensible to upgrade to the best available technology.  Venture capital firms have invested over $1 billion in smart grid start-ups since 2004.  Also, the federal government is overseeing a $3.4 billion program to modernize the grid through a series of infrastructure and efficiency projects across the country. According to the Brattle Group, a consultancy, the benefits of a smart grid may reach $227 billion over the next 40 years, depending on which other policies are implemented in tandem.  If utilities provide customers with real-time usage information and introduce dynamic pricing models, charging rates based on the concurrent electricity demand, consumers will realize $45 billion in cost savings.

If consumers were just able to access real-time usage information, they would reduce consumption by 6.5% on average.  If variable pricing schemes were also implemented, users would reduce their demand by 10 to 15% during peak hours.  Essentially, variable pricing and real-time monitoring would allow consumers to implement their own micro demand response programs voluntary, scaling back their electricity usage when price signals compel them to do so.  Customers would save money and the overall electricity demand curves would be less volatile.  Thus, utilities would no longer have to purchase as much backup capacity.  The customers’ and the grid operators’ interests would therefore be better aligned, especially if revenue decoupling programs were implemented nationwide to maintain utility’s profit margins as electricity usage decreased.

A more intelligent grid design would allow the transfer of electrons from locations with an oversupply of power to points where demand is high and the grid is stressed.  Smart appliances such as clothes dryers and dishwashers could be programmed to run only during times of low demand.  If a plug-in electric car were not being used during peak daytime hours, the utility could pay the car owner for withdrawing some of the storage power out of the car battery to redistribute electricity across the grid where it is needed.  Smart grid technology would also allow renewable energy sources to be better incorporated into the grid.  Smart appliances could be programmed to run only when wind turbines or solar panels are feeding power into the grid, making these intermittent sources of energy more useful and the grid cleaner.

Morgan Stanley predicts that growth in smart grid technology will exceed 8% per year, reaching $100 billion by 2030.  Cisco expects the smart grid communications network to eclipse the size of the internet.  Although the specifics of these predictions may vary, they all include one overarching theme; smart grid is a sensible way to improve the nation’s energy infrastructure, and if planned properly, the returns on smart grid investments will generate cost savings that will greatly exceed the up-front capital expenses of modernizing the grid.

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EPA Implements Mandatory Greenhouse Gas Emissions Reporting Rule

By Aaron Paulding | Published: January 14, 2010

co2_emissionssmokestackAs per the new Environmental Protection Agency regulations, facilities that produce in excess of 25,000 metric tons of greenhouse gas (GHG) emissions per year must begin to report their annual emissions to the EPA, effective January 1, 2010.  Under this rule, only direct emissions occurring on the facility’s grounds are included in determining its total emissions; it will not include the facility’s indirect emissions resulting from electric generation at power plants supplying the facility.  The regulation will not require the facility to reduce its emissions at this time, but the first annual emissions report covering the 2010 calendar year will be due by March 31, 2011.  As the EPA collects these data over the next several years, the agency will decide on effective policies to mitigate greenhouse gas emissions.

This legislation includes emissions of the most common greenhouse gases, including carbon dioxide, methane, nitrogen dioxide, hydrofluorocarbons, petrofluorocarbons, sulfur hexafluoride (SF6), and other fluorinated gases, which have extremely high global warming potentials.  Since the most powerful greenhouse gases, such as SF6, have global warming potentials that are ten or twenty thousand times as strong as carbon dioxide, only 1-2 tons of annual emissions of these gases can cause an industrial facility to exceed the mandatory reporting level.

The new rule will cover approximately 10,000 locations, including industrial gas suppliers, as well as electricity generation facilities, stationary fuel combustion sources, petroleum refineries, landfills, customers with high heating oil consumption, and heavy trucks and equipment.  The EPA estimates that this program will cover 85% of U.S. greenhouse gas emissions.  Most commercial buildings will not meet the minimum threshold that mandates emissions reporting, which is equivalent to the annual emissions of about 2,300 homes or that of 4,600 passenger vehicles.   If a facility exceeds the emissions threshold of 25,000 tons of carbon dioxide equivalence during any given year, the facility owner or manager will be required to report annual emissions electronically to the EPA each year until the building can reduce its emissions below 25,000 tons for 5 consecutive years, or below 15,000 tons for 3 years.

In addition, building heaters such as water heaters that burn fuel qualify as a stationary fuel combustion source under the EPA’s definition.  Therefore, they must be included in determining if the facility exceeds the emissions threshold of 25,000 tons, and must be included in any mandatory reporting.  The EPA has posted a calculation tool on their website to help facilities determine their requirements under the regulation.  If a commercial building has a maximum rate heat input capacity greater than 30 mmBtu per hour, the facility manager must complete further calculations to determine if it meets the threshold of mandatory reporting.   Please visit the EPA’s GHG Mandatory Reporting Applicability Tool website to learn more information.

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Google Aims to Become Electricity Marketer

By Aaron Paulding | Published: January 9, 2010

google-energyOn Thursday, Google leapt forward into the energy industry in an effort to find reliable supplies of renewable energy for its power-hungry data centers. Google applied for approval from the Federal Energy Regulatory Commission (FERC) to become an electricity marketer, which would give Google the authority to buy and sell bulk power at market prices, just like utilities do.

Google applied through its Google Energy LLC subsidiary, which the company founded last month, recognizing the need to manage the risk of its considerable energy expenses and to have greater access to renewable energy sources to meet its environmental sustainability goals. If FERC approves its application, Google would join 1,500 companies in the United States that are defined as energy marketers. Most of those entities, however, are utilities or electricity generation facilities. Although it is unusual for a technology firm to opt for this energy procurement method, it is a sensible tactic for the company. According to Niki Fenwick, a Google spokeswoman, “We want to have the ability to procure renewable energy to offset power usage of our operations.” Google maintains that having more direct access to renewable energy sources will further its goal to become carbon neutral.

In 2007, Google announced that it intended to make its data centers and buildings carbon neutral, installing a 1.6 mW solar panel system on its headquarters building. As part of its RE<C program, which aims to find renewable energy sources that are cheaper than coal production, Google has invested $45 million in renewable energy start-up firms specializing in solar, wind and geothermal electricity generation.

Interestingly, Google does not publish its total energy consumption levels, nor how many data centers it operates and where they are located. The company asserts that such information could be used by its competitors to discover its energy procurement and management strategies. However, Rich Miller of Data Center Knowledge has been following the data center industry and has tracked Google’s facility locations. So far, he has identified about 24 Google data centers. Large data centers can use upwards of 30 to 50 megawatts of capacity each. Therefore, Google’s energy needs are probably comparable to the output of two power plants, hence the company’s determination to improve access to cleaner energy at more stable prices.

Stay tuned to find out if FERC will approve Google’s proposal to become an energy marketer. If such an important corporation can successfully purchase renewable energy to meet all of its energy needs and also jump-start the market for carbon-offsets, the renewable industry could quickly take off.

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New York’s New Energy Conservation Incentive

By Aaron Paulding | Published: December 9, 2009

niagara-fallsIn 2007, the New York State Public Service Commission decided to further its push to promote energy conservation by adopting a revenue decoupling scheme for utility billing. This program aims to incentivize customers to use less energy, while maintaining a consistent revenue stream for utilities by eliminating the correlation between revenues and sales volumes.

The Public Service Commission approves the amount of revenue each utility can collect over a certain block of time, based on the utility’s predicted sales volumes. At the end of the period, each utility compares its revenue forecast to its actual sales and calculates the true-up adjustment. If sales exceed the forecasted revenue, the utility will issue customers a credit under the decoupling mechanism. If sales do not meet expectations, the utility will add a surcharge to the customer’s bill in order to recoup the revenue shortfall.  Utilities such as Consolidated Edison of New York, Central Hudson Gas & Electric, and Orange & Rockland all added a revenue decoupling line item to their invoices within the last several months.  The decoupling mechanism only affects the delivery costs of electricity and natural gas; the commodity portions will be unchanged under this initiative.

Although some groups accuse the scheme of being too generous to utilities, the program is crucial to conserving energy. Under the prior billing structure, the utility boosted its revenue stream as it sold more energy. Furthermore, the utility’s revenue would decrease as energy efficiency increased and the aggregate usage of customers dropped. With revenue decoupling in place, the utility will no longer be penalized by a decline in net usage due to efficiency improvements. This method encourages the utility to invest in energy conserving measures, presumably reducing the demand of customers. The decoupling legislation is part of New York’s plan to reduce electricity usage 15 percent by 2015.

New York is one of twenty states that uses decoupling for either electricity or gas. Some critics of decoupling claim that consumers will pay more for less energy. So far though, the adjustments have typically ranged between plus or minus 1 percent on a utility bill. According to Brandi Colander, an attorney for the NRDC, “rates may be going up slightly, but bills are going down”.

California has implemented a successful revenue decoupling program in the last several decades. The state began natural gas decoupling in 1978 and electricity decoupling in 1982. Since 1970, California has reduced its residential energy use per capita 19 percent, while that figure has risen 9 percent for the United States.

revenue_decoupling4

California's energy use per capita has remained flat for 30 years

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World’s Carbon Emissions Continue Rise…Despite Recession

By Sandy Hamilton | Published: November 18, 2009

smoke-stackPollution typically declines during a recession. Not this time.

Despite a global economic slump, worldwide carbon dioxide pollution jumped 2% last year, most of the increase coming from China, according to a study published online Tuesday.

“The growth in emissions since 2000 is almost entirely driven by the growth in China,” said study lead author Corinne Le Quere of the University of East Anglia. “It’s China and India and all the developing countries together.”

Carbon dioxide emissions, the chief man-made greenhouse gas, come from the burning of coal, oil, natural gas, and also from the production of cement, which is a significant pollution factor in China. Worldwide emissions rose 671 million more tons from 2007 to 2008. Nearly three-quarters of that increase came from China.

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New Natural Gas Supplies Delay Energy Crunch

By Aaron Paulding | Published: October 16, 2009

nat-gas-reserves-chart3Global supplies of natural gas may be much larger than once thought. Breakthrough technology in gas exploration and production has advanced much more rapidly than predicted, which will unlock vast fields of previously irretrievable fuel. A new process known as hydraulic fracturing, or “fracking”, which involves injecting liquids, sands, and chemicals underground to flush out gas pockets trapped in shale and sandstone rock formations has propelled a great leap forward in the industry. Combining this method along with horizontal drilling and 3-D seismic imaging to determine the location of potential underground gas wells prior to drilling has rapidly increased the efficiency of natural gas production. In the past decade, these techniques have doubled the success rate of discovering wildcat wells, or wells that are separate from any known gas fields.

The implications of this discovery are significant. The proportion of fuel that the United States needs to import will decrease as a larger domestic energy supply becomes available. Natural gas currently accounts for one quarter of U.S energy consumption, and 22 percent of electricity production. A report released on June 19th by the Potential Gas Committee found that estimated U.S. natural gas reserves have grown from 1,532 trillion cubic feet in 2006 to 2,074 trillion cubic feet in 2008, an increase of 35 percent. Shale gas now comprises 616 trillion cubic feet of reserves, almost one-third of the nation’s total. This promising outlook for the natural gas market, coupled with the development of solar, wind, and biofuel technology, will advance America’s goal for energy independence. According to Ambrose Evans-Pritchard, International Business Editor for Telegraph publication, “As for the U.S., we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.” Most importantly, the United States will no longer be transferring billions of dollars in wealth overseas by importing two-thirds of its oil, much of it from politically unstable countries.

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New York City Increases Sales Tax Rate on Gas and Electricity

By Aaron Paulding | Published: October 8, 2009

nyc-battery-park2On July 13, 2009 the New York State Senate passed A.B. 8615, A.B 8866, and A.B. 8867, which modify the New York City sales tax code. Effective August 1, 2009, the New York City sales tax rate increased from 4.0% to 4.5%. The combined state and local sales tax rate effective in New York City has increased from 8.375% to 8.875%. This rate includes the 4.0% state tax rate, the 0.375% Metropolitan Commuter Transportation District tax, and the 4.5% city sales tax. Furthermore, all revenues related to transportation and delivery charges of electricity and gas commodities are subject to the 4.5% city tax rate, even if purchased from an Energy Services Company (ESCO). The new tax rate applies if the meter is read on or after August 1, 2009, and more than half the days covered by the bill occur after August 1, 2009.

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Cold Winter for East Coast Predicted

By Sandy Hamilton | Published: October 5, 2009

old-man-winterThe USA’s East Coast could shiver under a blanket of unusual cold this winter, according to forecasters. The impact of this forecast is already being seen in the pricing of Natural Gas and Electricity futures as they’ve doubled from the August lows.

“It could be one of the coldest (U.S. winters) in this decade, depending on what happens in the West,” says Matt Rogers, a forecaster with the Commodity Weather Group, a consultancy with clients in the energy and agriculture industries. “We feel like we need to watch this particular winter closely.”

Temperatures could be 5% to 10% below normal, Rogers says. However, he and others also predicted a milder-than-usual winter across other northern states.

Forecasters are basing their predictions on El Niño, a periodic warming of the tropical Pacific Ocean that can bring warm air to the north. Forecasters say El Niño will be weaker than normal this year.

INTERACTIVE GRAPHIC: How El Nino affects U.S. weather

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