Oct 10, 2019

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Welcome back. Today's Smart Brevity count: 1,043 words, ~ 4 minutes.

Situational awareness: "The world’s largest energy traders are betting oil will slip further next year, heaping pressure on Opec and its allies to do more to prop up the price," the Financial Times reports from a big energy conference in London.

And this month marks 30 years since Neil Young released "Freedom," which opened a terrific run of albums and provides today's intro tune...

1 big thing: PG&E's blackouts make the case for home generation

Person sitting in a California restaurant lit by candlelight during one of PG&E's shut-offs. Photo: Brittany Hosea-Small/AFP via Getty Images

One side effect of California utility PG&E shutting off power to roughly 2 million people to deter wildfires: It's effectively a free ad for distributed generation options.

Driving the news: Check out the Twitter feed of Sunrun, the country's top residential solar provider, and you'll see this message about their battery product...

  • "#Blackouts are happening now all across #California. Take back control of your home's #energy with Sunrun's Brightbox #solar #battery service and stay powered through the next #outage."
  • It links to a page where customers can explore purchase of their solar and battery systems. Sunrun even has a separate page about the PG&E shut-offs that notes wildfires are now year-round events in California.

The big picture: They're not the only distributed energy provider that stands to gain.

  • "Suppliers of backup, diesel-fired generators, solar panels, batteries and fuel cells alike see a sales opportunity in the massive power shutoffs rolling out across the San Francisco Bay Area," Bloomberg reports.
  • Via Greentech Media, Wood Mackenzie Power & Renewables' analyst Ravi Manghani says this week's blackouts mean "the market should see an uptick in battery storage sales."

Why it matters: Distributed energy is indeed an important part of creating more resilient power systems at a time when climate change is putting more stress on grids.

  • Greentech points out that this isn't lost on California regulators, who "have been looking to distributed energy resources as part of the solution to the state's wildfire-power grid challenge."

What they're saying: A Fast Company story last night on the PG&E outages quotes Christopher Burgess of the nonprofit Rocky Mountain Institute making the case for "community microgrids" that combine solar and batteries.

  • “I could definitely see a future where the transmission lines are just so long and so problematic, and it gets more and more dry due to climate change, and those things just become so much of a vulnerability that it’s actually better just to ‘island off’ certain communities,” he said.
Bonus: More on the PG&E saga

The Los Angeles Times points out how the decision to cut power underscores the state's reliance on infrastructure that belies its high-tech image.

The big picture: "With Pacific Gas & Electric Co. expected to cut electricity to 800,000 customers this week, the state is confronting its reliance on a transmission network that predates climate change, solar panels and lithium-ion batteries, depending instead on electric lines strung over thousands of miles on vulnerable wooden poles," per L.A. Times.

Meanwhile, the New York Times unpacks the latest twist in the utility giant's ongoing bankruptcy, noting a judge's ruling yesterday is a setback for the company. From their piece...

  • "Dennis Montali, a federal bankruptcy judge, ruled that PG&E no longer had the sole right to shape the terms of its reorganization, opening a path in court for backers of a rival proposal."
  • "The competing plan was devised by a group of PG&E creditors that includes prominent hedge funds, and it is supported by individuals with claims against PG&E for wildfire damages."

Where it stands: PG&E's stock plummeted after the ruling and is down by nearly a third ahead of the market's open.

2. Why the Northeast carbon pricing system matters
Expand chart
Data: Regional Greenhouse Gas Initiative; Chart: Axios Visuals

The consortium of Northeast and mid-Atlantic states that have a carbon pricing system for power plants is out with a new report that shows there the money raised is going.

Where it stands: The chart above shows the 2017 distribution of roughly $316 million in money raised via Regional Greenhouse Gas Initiative (RGGI), which auctions pollution "allowances" under its cap-and-trade system.

  • RGGI states have steered a total of $2.4 billion into those areas since the program launched in 2009, the report shows.

Quick take: The report underscores how carbon pricing can raise substantial revenue for initiatives that help reduce emissions, even if the CO2 prices themselves are too low to directly cause changes in the power mix.

  • And that has arguably been the case with RGGI, which has seen fairly low prices at its pollution allowance auctions over the years.
  • Other forces, namely the rise of cheap natural gas and renewables' growth, have been key drivers of changes to the electricity mix and emissions cuts in RGGI states.
  • Go deeper: This Twitter thread among some energy wonks dives into this further.
3. Coal industry hits natural gas on climate

America's beleaguered coal industry is attacking natural gas for its role in fueling climate change, Axios' Amy Harder reports.

Between the lines: You read that right! It’s ironic because coal is considered far more damaging to the climate than gas.

  • Coal's new attack — via a blog post by a prominent trade group — shows the desperate measures the industry is taking as it loses market share to gas and faces increasing criticism over its climate effects.

The big picture: Gas emits far less CO2 when burned than coal, but its primary component — methane — is also a potent greenhouse gas that can escape during production and transport.

Driving the news: The National Mining Association's blog post argues that as gas has become the country's largest power source, higher CO2 emissions from gas-fired generation make it "a leading contributor to the challenge.”

What they’re saying: “That’s apparently news to the oil and natural gas industry,” the post argues.

  • It adds: “One ad after another positions natural gas as the key emissions solution. Why debate the environmental merits of fracking when you can step on the head of the coal industry to prove your value in a carbon-constrained world?”

Reality check: On a per-unit basis, coal creates more carbon dioxide, which is by far the most prevalent greenhouse gas, compared to oil and gas.

4. Checking in on Big Oil's slow diversification

BP's venture arm announced Thursday that it led a Series A funding round for Grid Edge, a British software company that helps buildings control and cut their energy use.

Why it matters: It's the latest sign of how oil majors are boosting their investments in power technologies, EV charging and other areas outside their dominant fossil fuel lines.

The big picture: BP and Grid Edge said in their joint announcement that the startup's tech draws on data like weather forecasts and expected building occupancy to help customers tailor their energy needs.

  • It enables them to "leverage periods of high renewable power generation, and effectively use their building’s flexibility in energy demand and generation like a giant battery, to reduce costs and carbon emissions," per the statement.
  • The companies did not disclose the size of the investment.

Speaking of Big Oil and climate change, Reuters reports: "Royal Dutch Shell said on Thursday it would offset the carbon dioxide emissions of around 1.5 million road users in Britain starting later this month under a loyalty scheme."

Ben GemanAmy Harder