US Crude Oil Exports Headed to South Korea

The Ban on Crude Exports

One of the 2014 predictions that I made back in January was “The crude oil export ban will not be lifted in 2014.” The present ban on US crude oil exports dates to the The Energy Policy and Conservation Act (EPCA) of 1975. The act effectively bans crude oil exports to all countries except Canada. The export of refined products, such as gasoline, diesel, and jet fuel is allowed.

But given that the US is still a net importer of crude oil to the tune of ~5 million barrels per day (bpd), on the surface it seems silly to entertain the notion of exporting crude oil. The problem essentially comes down to the location of the crude being produced, and the configuration and location of US refineries. Prior to the shale oil boom, crudes processed by refiners had been getting heavier and more sour (i.e., contained more sulfur). As a result, refiners had invested heavily in equipment that could process these types of crudes.

Enter the shale oil boom, which has been producing ever-greater volumes of light, sweet crude since 2008. There is a limit to how much of this crude can be processed by refineries that have been configured to process heavy, sour crudes, and as a result some areas of the country are oversupplied with lighter oil. This in turn has led to discounts â€" sometimes very large â€" of light, sweet crudes relative to heavier crudes that are internationally traded.

The oil industry would like to address these local oversupply situations of light domestic crudes by overturning the crude oil export ban. I predicted that this would not happen this year, because I can’t see an administration that has stalled for six years on the Keystone XL pipeline expansion being in any hurry to overturn the export ban. Further, serious discussions of repealing the ban would likely generate the sort of resistance from environmentalists that the Keystone XL pipeline did, which would further encourage the Obama Administration to kick that can down the road. Given the Keystone XL delays, it is hard for me to imagine that the export ban will be overturned during the current administration.

However, there have been a couple of developments this year that many see as chipping away at the ban.

Chipping Away at the Ban

The shale oil boom has been accompanied by a shale gas boom. There are liquid hydrocarbons that are produced along with natural gas. Lease condensate, or simply “condensate”, refers to hydrocarbons that exist as gases at the high temperature and pressures of natural gas inside the earth, but that condense into liquids at normal temperatures and pressures once lifted. This condensate consists primarily of longer chain molecules such as pentane and higher, and is sometimes called natural gasoline. Further processing of condensate to remove remaining methane and ethane to make it more easily stored and shipped is called stabilization, and the product is called stabilized condensate.

It was unclear whether stabilized condensate fell under the crude oil export ban, so the US Department of Commerce was asked by Pioneer Natural Resources (NYSE: PXD) and Enterprise Product Partners (NYSE: EPD) to rule on the issue. The Department of Commerce ruled that stabilized condensate is a refined product rather than crude oil, and thus could be exported. Some analysts argued that this further opened the door to the full blown repeal of the export ban.

But now an actual shipment of crude oil is in the process of being exported.

US Crude Oil Bound for Asia

In addition to the exemption for Canada, and now the clarification over the export of stabilized condensate, there is one other exception to the export ban. In 1996 President Bill Clinton signed legislation that allowed the export of Alaska’s North Slope (ANS) crude. Following the passage of the legislation, ANS crude exports to Asian countries climbed to ~44,000 bpd. But these exports ceased in 2004, as ANS production declined, and the ANS produced in excess of Alaska’s needs has been primarily shipped to the US West Coast.

But crudes from the Bakken area of North Dakota have been finding their way to the West Coast, in turn reducing the demand for ANS. This has resulted in deepening discounts for ANS crude, which were worsened by the shutdown of a Flint Hills Resources refinery near Fairbanks that had consumed nearly one-sixth of ANS output. These discounts have now become significant enough relative to the price of crude in Asia that last week the Polar Discovery, a tanker owned by ConocoPhillips (NYSE: COP), left Valdez, Alaska with a crude oil shipment bound for South Korea. This marks the first export of crude oil from Alaska since exports dried up in 2004.

Conclusions

ConocoPhillips is the largest crude oil producer in Alaska, and has stated that additional shipments will be dictated by the market conditions and tanker availability. ExxonMobil (NYSE: XOM) and BP (NYSE: BP), two other major crude oil producers in Alaska, are both also reportedly considered exporting crude to Asia.

Whether crude exports from Alaska begin to happen regularly will depend on the differentials between ANS and the price of oil in Asia. Affecting this will be a number of factors, including the future direction of Alaskan and Lower 48 oil production. In recent years, Alaskan production has been declining, but Alaska recently passed a law that should result in greater investments into Alaskan oil production. Should this result in a reversal in Alaska’s production decline, odds are high that exports to Asia will increase.

Link to Original Article: US Crude Oil Exports Headed to South Korea

By Robert Rapier. You can find me on Twitter, LinkedIn, or Facebook.

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Google Quits Political Group That Opposed Climate Change Action

Clean Power googleplex

Published on September 30th, 2014 | by Jake Richardson

September 30th, 2014 by  

Even Google makes mistakes. The world leader in search recently announced it had made one in financially supporting a political group that is opposed to the US taking action on climate change. Google had been supporting one of the group’s  campaigns focused on an issue unrelated to climate change.

googleplex

Google Chairman Eric Schmidt summarized the situation, “The people who oppose it are really hurting our children and grandchildren and making the world a much worse place. We should not be aligned with such people. They are just literally lying.”

The American Legislative Exchange Council is the group that Google has decided not to renew membership with at the end of the year. ALEC has toyed with the idea of an interstate research council to study potential benefits of climate change. Such a view would be very contrary to what most scientific research has found, such as devastation of natural habitats for many forms of life and the relocation of human settlements located in coastal areas. ALEC has also been involved in attempts to repeal renewable energy mandates for states.

ALEC’s chief executive officer said, “It is unfortunate to learn Google has ended its membership in the American Legislative Exchange Council as a result of public pressure from left-leaning individuals and organizations who intentionally confuse free market policy perspectives for climate change denial.”

It’s sort of humorous that in its response, ALEC managed to blame ‘left-leaning individuals’ as if there are a number of fragmented leftist citizens that caused a huge corporation like Google with over 10,000 employees to sever its relationship with a conservative lobbying group that tries to deny climate change. Also, the statement says the end of the Google funding was due to organizations that confuse free market policy perspective with climate change denial, but climate change is primarily about science, not economic policy.

Of course, it has been well-documented that Google actively invests in renewable energy development. In fact, Google has publicly stated that it wants to eventually operate on 100% renewable energy, so it makes no sense for there to be any tie to a lobbying group that is very unaligned with its values.

Google has invested in over 15 renewable energy projects, operates data centers that utilize clean energy, and has some solar power at its Mountain View headquarters. About $1.5 billion dollars has been invested by Google so far in renewable energy projects.

In 2011, a group of Google science communication fellows also noticed their employer had been supportive of  a politician who was (like ALEC) a climate change denier, “Given Google’s commitment to educating the public about climate change, why would the company align its political efforts with [Senator James] Inhofe? In responding to criticism, a Google spokesperson acknowledged “while we disagree on climate change policy, we share an interest with Senator Inhofe in the employees and data center we have in Oklahoma.”

They signed and sent a letter to Google CEO Larry Page and executive chairman Eric Schmidt.

Apparently, ALEC and Inhofe have some kind of relationship, because he is listed on the group’s website under Federal Relations Initiatives. According to Slate, ALEC has also received funding from the Koch brothers, which is hardly the company Google would probably like to be keeping, at least in a political sense.

Though this is a separate situation, it might be worth mentioning that Eric Schmidt has used his Google money to fund research in ocean conservation at the Schmidt Ocean Institute. Some of that research is focused on ocean acidification, which is linked with human-made atmospheric CO2 levels, “On the heels of the successful Wendy Schmidt Oil Cleanup XCHALLENGE, the Wendy Schmidt Ocean Health XPRIZE aims to spur global innovators to develop accurate and affordable ocean pH sensors that will ultimately transform our understanding of ocean acidification, one of the gravest problems associated with the rise in atmospheric carbon dioxide (CO2).”

So, it somehow seems fitting that Schmidt is the one who made the statement about protecting our world for future generations from the effects of climate change.

Image Credit: Jijithecat, Wiki Commons

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Hello, I have been writing online for some time, and enjoy the outdoors. If you like, you can follow me on Google Plus.



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Solar Policy Battle: IRS Now Part of Fierce Debate Over How to Value Solar Energy

solar energy valuation and Internal Revenue Service

The rift over how to equitably compensate distributed solar power producers for the electricity they generate has just gotten a bit more stark.

The Alliance for Solar Choice (TASC), a downstream solar advocacy group whose members include SolarCity, Solar Universe, Sungevity, Sunrun, and Verengo, just sent out a release revealing that the conflict has escalated to the point of requiring a decision from the U.S. Internal Revenue Service.  

An electric utility can pay a producer of distributed generation like rooftop solar using a value-of-solar tariff (VOST) or through net energy metering. NEM spins the power meter backward and pays the consumer the retail rate for power exported to the grid, whereas a VOST calculates the "value" of solar and pays the consumer that rate for all solar produced by the rooftop system. However, the true "value" of solar is highly open to interpretation.

Net metering has been adopted by 43 states, but the city of Austin, Texas implemented a VOST in October 2012, and Minnesota has gone the VOST route as well.

But TASC -- and by extension, SolarCity and Sunrun -- is intent on keeping the VOST model from spreading. TASC notes that as a result of the filing of an Information Letter Request (ILR) with the IRS by an "Austin homeowner," the IRS will now "formally review VOSTs and their impact on taxpayers."

According to a redacted version of the ILR, the taxpayer is requesting a ruling that addresses this hypothetical situation: 

"If, under a program established by Austin’s retail public electric utility company, he sells all energy generated by the solar energy property to the utility and, in exchange for the sale, the utility makes payments to him in the form of utility bill credits; and (b) if such payments from the utility are includable in his taxable income."

TASC suggests, "Under a VOST, solar customers cannot use the power generated by their solar systems. Instead, they must sell all the power their solar systems produce to the utility at a price set by the utility (and often reevaluated on an annual basis). Meanwhile, they must continue to purchase all the electricity they need from the utility just like a homeowner without solar. Utilities support VOSTs over the widely effective net metering policy."

TASC and other NEM proponents cite a 2013 brief from law firm Skadden, Arps, Slate, Meagher & Flom which claims that VOSTs jeopardize homeowners' ability to claim the 30 percent federal Investment Tax Credit (ITC). The brief also claims that VOSTs could increase homeowners' income taxes because VOST payments would be considered to be income. For example, an average-size PV system at the residence of an Austin homeowner in a a median-income tax bracket would incur approximately $250 per year in income taxes because of the VOST, according to Bryan Miller, co-founder of TASC.

“VOST schemes expose unassuming homeowners to thousands of dollars in additional taxes,” he contends.

Miller, a Sunrun employee as well as a leader of TASC, told GTM that a VOST is a "front-of-the-meter" scheme and repeated his claim that utilities are using the VOST as a "Trojan horse" to "eliminate rooftop solar" and "take away choice and competition." Miller says the VOST "expands monopolies by forcing homeowners to sell all their power to the utility."    

Miller said that the utilities' "frontal assaults" on NEM "don't work" and that they've lost that argument -- so the VOST is a way for the utility to "eliminate competition." Miller claims that the utilities are "well aware of the tax issues."

According to Miller, "The IRS will clarify this and stop the VOST movement in its tracks." He added that the Austin City Council can solve this problem tomorrow by reinstating NEM as an option for the customer.

As Herman Trabish has reported, the opinion from Skadden, Arps, Slate, Meagher & Flom partners Sean Shimamoto and Emily Lam suggests that a VOST could result in tax problems for solar owners.

“The payments received by a taxpayer for the sale of electricity under feed-in tariffs appear to fall squarely within the definition of taxable gross income,” wrote Shimamoto and Lam.

“The terms of FITs provide for the sale by the taxpayer to the utility of all electricity generated by the taxpayer's residential solar system,” they added in the memorandum filed by TASC.  “In exchange, the utility compensates the taxpayer with either cash or a credit on the taxpayer's utility bill. Although the taxpayer may also purchase electricity from the utility, under FITs, the two transactions are separate and distinct. The proceeds from the taxpayer's sale of electricity to the utility therefore likely constitute gross income.”

This conclusion, they added, “is supported by Senate Bill 1225.” The federal bill specifically excludes the possibility of "any gain from the sale or exchange to the electrical grid" being counted as taxable income.

As we reported previously, Shimamoto and Lam also concluded the Arizona Public Service “bill credit” proposal would put solar owners at risk of losing the 30 percent federal ITC. The system owner has to use “at least 80 percent of the electricity generated” for non-business purposes to qualify for the personal ITC, the attorneys wrote. “Under FITs, 100 percent of the electricity generated is sold to the utility, and thus 100 percent of the use of the residential solar system is for business use.”

Shimamoto and Lam are correct about the income tax issue, agreed a New York tax attorney familiar with renewables tax issues who asked not to be named in the article by Trabish. The APS “bill credit” is, at best, “not helpful” to rooftop solar owners and could result in taxation if a system's output is high enough. The source disagreed about the 30 percent ITC being at risk, however. If sale of the electricity to the utility makes system owners ineligible for the residential ITC, he said, they would then be eligible for the 30 percent business tax credit. And that would make them eligible for the benefits of accelerated depreciation as well, he added.

Karl Rábago is a co-creator of the first value-of-solar tariff. He told GTM yesterday that "utility rate-making is a full contact sport."

Much of this comes down to language. Is the VOST transaction "a sale?" Rábago was careful to craft the language in the Austin VOST to refer to "credits," never using "sales" or "cash." He points out that "Miller is wrong on his facts -- VOST is a behind-the-meter system and there is no forced sale." 

He told GTM that a VOST is "just a different way of calculating the credit. It's still a credit on the bill. Your net bill is the same as it would be for NEM. It's still a netting process that happens on the customer side of the transaction. It's not a sale." He suggested that "With NEM systems that close out the year with a cash payment, under the TASC reasoning, the utility has to issue every NEM customer a 1099 for the sale. A 1099 is not required with VOST because there is no sale and no income."

Rábago told Midwest Energy News, "The big piece of the value-of-solar concept that is embodied in this law is that if you fairly compensate customers for the value of the solar energy, you can have a fair conversation about charging customers for the distribution [and] for the utility services they still use." He added, "It just happens to be that solar is the most charismatic and most rapidly declining in technology cost. It’s the one that sees the headlines, but behind the value of solar are the value of storage, the value of savings (energy efficiency and demand response), the value of security, and the value of smartness."

The VOST veteran concludes: "This is inviting the IRS to rule with some precision that sales incidental to use are all sales, which we've kind of gotten away with with NEM. Asking for a specific ruling is a little shortsighted."

Thad Kurowski, SolarCity's director of policy and electricity markets, noted in an email obtained by GTM, "It will be interesting to see what the IRS determines."

A lawyer close to this decision said yesterday, "The Skadden memo is the best thinking we have on this -- and it appears the VOST income will be taxable." Another tax attorney said, "They're likely to rule that it's income."

Rábago suggested that if the IRS determines that it is not taxable income, "then the TPO companies could get comfortable with a VOST."

In any case, the decision is now in the hands of the IRS.

Photo Credit: IRS and Solar Valuation/shutterstock

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

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UN Climate Summit: Could Rising Seas and Coastal Flooding Give Rise to New Legal Category?

Greenland:  A Laboratory For The Symptoms Of Global Warming

Recently the international community descended on New York City for the United Nations General Assembly’s 69th annual high-level meetings and general debate. For the first time in UN history climate change tops the agenda. In remarks at the Climate Week opening event, at the Morgan Library in New York City, US Secretary of State John Kerry established that climate change as a challenge for the international community transcends in a myriad of ways the traditional narrow ‘environment-only’ understanding and increasingly morphs into an international security challenge:

“Last month was the hottest August the planet has experienced in recorded history, and scientists now predict that by the end of the century the sea could rise a full meter. Now, a meter may not sound like all that much to a lot of people, but just one meter is enough to put up to 20 percent of the greater New York City underwater. Just one meter would displace hundreds of millions of people worldwide [see Internal Displacement Monitoring Center for latest data] and threaten billions in economic activity. It would put countless homes and schools and parks, entire cities, and even countries at risk. We all know that climate change also means heat waves, water shortages. I can show you parts of the world where people are killing each other today over drought and water. There’s a potential of massive numbers of climate â€" what we call climate refugees.”

Further, it culminated in US President Barack Obama’s call for a new ‘global compact’ to tackle climate change when President Obama addressed the UN Climate summit on Tuesday trying to build momentum towards an eventual successful outcome at the 2015 United Nations Climate Change Conference (COP21) in Paris:

“But we can only succeed in combating climate change if we are joined in this effort by every nation â€" developed and developing alike. Nobody gets a pass. (…) We have to raise our collective ambition. (…) It must be inclusive â€" because every country must play its part. And, yes, it must be flexible â€" because different nations have different circumstances.(…) And for the sake of future generations, our generation must move toward aglobal compact to confront a changing climate while we still can. (…) No nation is immune. In America, the past decade has been our hottest on record. Along our eastern coast, the city of Miami now floods at high tide. (…) A hurricane left parts of this great city [New York] dark and underwater. And some nations already live with far worse. (…) So the climate is changing faster than our efforts to address it.”

So, both statements do not fail to mention â€" among a plethora of other discussed climate risks â€" rising sea levels and coastal flooding as direct results of the changing climate.

In this context, the Association of Climate Change Officers (ACCO) hosts a Climate Week NYC event titled “Rising Seas Summit” on September 24-26, 2014 in support of the UN Climate Summit. It will highlight the nexus between climate change, sea level rise, and related extreme weather events.

Rising sea levels could potentially have the most devastating impact and this not only for small island states such as the Maldives. Note, even though these small island states are already negatively impacted and can be expected to be the worst hit by continued rising sea levels â€" potentially even losing their entire state’s territory to the ocean â€" they are far from being the only current and certain future victims of a changing climate if no timely countermeasures are initiated globally.

The following graphic illustrates that rising water does not discriminate and simply gets everywhere with both developed and developing countries to incur substantial financial losses over the next decades.

roman climate march

Source: Tim McDonnell/Climate Desk via Mother Jones

These figures are staggering and may even â€" by now â€" be obsolete given that projections based on constantly ‘new’ climate data tend to change frequently but rarely in humanity’s favor. Therefore, always expect to be behind the curve or in the words of President Obama: “[T]he climate is changing faster than our efforts to address it.”

Already back in 2007, the Intergovernmental Panel on Climate Change (IPCC AR4) described in its assessment impacts and vulnerabilities as follows:

“Some studies suggest that sea-level rise could lead to a reduction in island size, particularly in the Pacific, whilst others show that a few islands are morphologically resilient and are expected to persist. Island infrastructure tends to predominate in coastal locations. In the Caribbean and Pacific islands, more than 50% of the population live within 1.5 km of the shore. Almost without exception, international airports, roads and capital cities in the small islands of the Indian and Pacific Oceans and the Caribbean are sited along the coast, or on tiny coral islands. Sea-level rise will exacerbate inundation, erosion and other coastal hazards, threaten vital infrastructure, settlements and facilities, and thus compromise the socio-economic well-being of island communities and states.”

IslandsFirst nicely adds to the litany of problems including “saltwater inundation of agricultural land, which threatens food security (…); saltwater intrusion into vital ground water supplies, which threatens water security and decreases the availability of fresh water for drinking, sanitation, and irrigation; amplification of damage from intense storms due to the weakening of natural barriers.” Most importantly, in addressing the potential displacement of large percentages of coastal populations, IslandsFirst notes that this can cause “stress for not only the displaced, but also for the receiving communities.”

This opens the door to an interesting legal question in the realm of international refugee law. Currently, the contentious determination of “climate refugee” entails no recognized protective legal status and it is hard to see a change in the legal status quo given the ramifications in terms of international migration patterns and predominantly national government policies of discouraging immigration around the globe. Internally displaced persons (IDPs), in turn, have fled their homes without crossing an international border. Prima facie, it therefore seems that referring to ‘victims of climate change’ â€" determining this is obviously already problematic â€" in general as “climate-induced displaced persons” (CIDPs) is more in the interest of the international community because it keeps the responsibility of protecting those citizens where it currently is; namely, with the government of the country of citizenship with the climate risk materializing on its sovereign territory.

So, what should be done?

Due to overall global urbanization trends â€" i.e. towards coastal mega-cities â€" and the fact that globalized economic activity â€" with the operation of ‘global supply chains’ â€" will continue to hinge on seaborne global trade with coastal port cities as gateways to markets, a larger proportion of the world population will live near the coast. And this is why in an interview with Andrew Revkin of the New York Times, former NYC Mayor Michael Bloomberg â€" now a UN climate envoy â€" calls for increased efforts to protect the waterfront. He reasons:

“[We] cannot and will not abandon our waterfront. It’s one of our greatest assets. We must protect it, not retreat from it. (…) The future of waterfront cities, whether it’s New York or Miami ,or anywhere else â€" and most of the world’s major cities are coastal cities â€" depends on our ability to adapt to rising sea levels and climate change. You can’t pick up Manhattan and move it inland, but you can adopt policies that better protect it from storms.”

The operative word here is ‘adaptation’ â€" with adapting now being economically less costly than procrastinating. Check out, for example, this Deutsche Welle (DW) piece on how the low-lying Netherlands is preempting a rising sea level by building floating homes and redirecting rivers.

Authored by:

Roman Kilisek

Roman Kilisek is a Global Energy & Natural Resources Analyst and a contributor at Breaking Energy. His writing and research focuses on global energy policy, energy infrastructure and trade, commodities, mining, global political risk and macroeconomics. He likes to draw on scenario development and analysis. He has a Master of Arts degree in international relations and diplomacy from Seton Hall ...

See complete profile

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Rationalizing California's Residential Electricity Rates

California is finally talking seriously about changing the way utilities price electricity for residential customers.  In particular, as a result of recent legislative actions, the CPUC now has some flexibility to modify the extreme increasing-block pricing (IBP) schedules that were adopted after California’s 2000-01 electricity crisis.  IBP means charging more for additional kilowatt-hours as a household consumes more over the billing period.  Pacific Gas & Electric’s current residential rate schedule, shown in the figure below, illustrates how IBP can charge drastically different prices for an additional kilowatt-hour (kWh) depending on how much the customer is consuming. (The rates of Southern California Edison and San Diego Gas & Electric look pretty similar.)

PGErates2014August

 PG&E’s current increasing-block residential electricity rate structure

This extreme form of IBP violates one of the basic tenets of utility price setting: cost causation. Prices should reflect the cost of serving a customer.  The cost of providing electricity does vary over time, an issue that I will return to below, but it does not vary with how much a household uses over the billing period.  That kilowatt-hour (kWh) for which PG&E charges one customer $0.32 costs the utility the same to provide as a kWh for which PG&E charges another (or the same) customer $0.15.

The implementation of IBP in California is both unfair and inefficient, a holdover from policy made during the darkest days of the electricity crisis without careful analysis of the impact.  While California’s IBP schedules are more extreme than in other states, the lessons from the Left Coast have much to teach in other locations as well.

To remind the young or forgetful (or the less-obsessed with electricity tariff history), prior to the electricity crisis, the regulated electric utilities in California had two-tier IBP rates with the second tier 15%-20% higher than the first tier.  The majority of customers consumed more than their first-tier baseline quantity for their region, paying the first-tier price up to the baseline and the second-tier price for any additional electricity beyond that.  But more than a third of customers only experienced first-tier rates.

After the crisis, utilities needed to raise revenues, but politicians said they wanted to protect the poor, so regulators instituted a 5-tier system, with rates on the first two tiers â€" designed to go up to 130% of baseline quantity, which is about the median household’s consumption â€" frozen at pre-crisis levels.  As a result, any revenue increase had to come on tiers 3, 4, and 5, which constituted only about one-third of the residential electricity sold. (Tiers 4 and 5 were merged into one tier a couple of years ago.)  To get the needed revenue, the price on those high-tier kWhs had to go up a lot.

SCEtiers1999-2009

            Southern California Edison’s tiered rates from 1999 to 2009 (Source Ito (2014))

That is how we got to the IBP schedules we have today where the highest-tier rates are more than twice as high as the low-tier rates (though the high tiers change frequently, so the exact ratio is a moving target).  This ratio is far out of line with other retail rate structures.  The majority of utilities in the U.S. don’t have IBP; they sell all electricity to residential customers at the same cost per kWh.  In the one-third or so that do have IBP, the rate structure typically looks more like pre-crisis California, with two tiers and only a small difference between them.

Lots of claims get lobbed into the political heat of the discussion about IBP, generally with little empirical basis, so it is worth reviewing the best evidence we have.  Increasing-block pricing proponents make three cases for IBP:

First, some proponents argue that high-usage customers are more expensive to serve on a per-kWh basis because they on average consume a higher share of their electricity at peak times.  It is ironic that some of the same organizations that make this argument also are the adamant foes of time-varying pricing that would reflect time-varying costs directly.  In any case, my own research (published in Review of Industrial Organization in 2013) shows that there is a tiny bit of truth to this claim, but the operative word is tiny.  That study shows that for PG&E and Southern California Edison, the different time-patterns of consumption between large and small residential consumers could justify at most about a few percent price difference. That would be less than a one cent per kWh average price differential, far smaller than would result even if we returned to the pre-crisis IBP structure, and vanishingly small compared to what we have today.

My study shows that the true incremental cost per kWh of serving large and small residential customers is virtually the same.  And that cost is much lower than the upper-tier prices under the IBP used by the California regulated utilities.  Even if you added the carbon cost of the emissions and priced those emissions at $37/ton (the latest estimate of the social cost of greenhouse gas emissions from the Obama administration), that would raise the appropriate price by less than two cents per kWh.

The second argument for IBP is the one that drove the political debate in 2001, that IBP is a way to raise rates while protecting the poor.  Implicit in this claim is that poor people consume less electricity than rich people do, which makes intuitive sense, but at the time the legislation was rushed through during the crisis there was just a sense, not a measure of the real difference.  A paper that I published in 2012 (in American Economic Journal: Economic Policy) shows that using the steep post-crisis IBP does help low-income customers relative to a flat rate, but by much less than you might think.  The reason is that the CARE program that is explicitly designed to give lower rates to low-income consumers â€" those up to 200% of poverty or $47,700/year for a family of 4 â€" has already taken most of the low-income customers out of the standard IBP tariff and put them on a separate low-income tariff.

Overall, I estimate that moving to a flat-rate tariff would raise the average bill of a customer making about $50,000/year or less (in today’s dollars) by about $5/month.  That’s not nothing, but it’s also not a huge effect to get in exchange for an increasing-block rate structure that greatly distorts prices away from real costs â€" which are essentially the same for the low-tier and high-tier kWh.  Furthermore, moving from IBP to a flat rate would likely incent more truly needy households to sign up for CARE.  If the goal is to help the poor, a program targeted directly at the poor makes more sense than one targeted at consumption level, which has a weak correlation with how wealthy a household is.

Using IBP to help low-income households has another problem.  It arbitrarily harms many low-income households that are heavy users for completely understandable reasons.  Household baselines are based on climate regions (PG&E has 10 regions, SCE has 6) and…well…nothing else.  They don’t adjust for how many people live in the house, how old those people are, how much time they spend at home (rather than using electricity somewhere else), or any other reason that we would expect even an energy-conscious household to consume more.  Instead, IBP rewards people who live alone and don’t spend much time at home.  Does that make sense?

The third case made for IBP is that it leads to conservation, because it raises the price of marginal consumption.  In theory, this could be right, but in practice it doesn’t work out that way.  The idea is that it raises price for the heavier uses and lowers price for the lighter users, compared to a single flat rate, but the response of heavy users is proportionately larger.

But path-breaking research that our former grad student Koichiro Ito published this year in the economics profession’s top journal (American Economic Review) shows that most customers don’t pay attention to the marginal price they face, but instead respond to the average price or total bill.  This isn’t surprising given that the vast majority of customers don’t even know we have tiered pricing and even for the electricity-obsessed it’s very hard to know what marginal price you will face at the end of the month.  Ito demonstrates that when customers respond to average price, IBP results in virtually no change in total consumption.[1]

Solar_panels_on_house_roof_winter_view

Residential Solar PV has been a big beneficiary of increasing-block pricing  (Source:http://256.com/solar/images/)

But what has become apparent in the last few years is that one small set of customers is very aware of IBP and the high marginal prices for heavy consumers: solar PV households, or actually the solar PV vendors who explain IBP to them.  While evidence that IBP incents energy efficiency is absent, the evidence is clear that IBP is a key driver behind the distributed solar PV movement in California.

In fact, solar PV installers “work with” customers to optimally design systems so they just shave off the high-tier usage without touching the low-tier usage where the price is way too low for PV to save customers money.  With federal subsidies that pay nearly half the cost of PV â€" and net metering that pays the residential customer for electricity supplied to the grid at the retail rate rather than the wholesale rate that other renewable generation sources receive â€" solar PV can beat the high-tier prices of IBP.  That’s why solar PV installers are the most vocal opponents of rational rate reform that would call a kilowatt-hour a kilowatt-hour regardless of how many other kilowatt-hours you consume during the month.

So, increasing-block pricing isn’t cost based.  It is a very indirect way to lower the average bills of low-income customers, while arbitrarily harming many of them and benefitting many wealthy people who live alone or don’t spend much time at home (or own a second home). And it’s only effect on conservation is to create incentives to install solar that just skims off the highest tiers of the IBP structure, an activity that is pursued overwhelmingly by the richest households (and which raises the bills of all other ratepayers).  The first step to rationalizing California’s electricity rates is to greatly reduce or eliminate increasing-block pricing.

Then we need to talk about time-varying pricing.  We should be transitioning to opt-in time-varying pricing immediately and to opt-out in the near future.  I’ve explained an efficient and equitable way to do this in a recent paper, but that will have to wait for another blog.

[1] Paul Chernick recently filed testimony on behalf of NRDC that mischaracterizes Ito’s finding, saying Ito claims consumers don’t respond to IBP.  That’s not at all what Ito finds, as I explain here.   A study by Energy & Environmental Economics argues that in British Columbia IBP does lower total consumption.  But the study looks only at whether high-consuming households consume less under IBP â€" which they do, not surprisinglyâ€"and ignores that low-consuming households consume more, because their price is lower than under a single flat rate.  What matters, of course, in the change in total consumption, on which the E3 study is silent.

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Latest EIA Report Shows Marked Increase in U.S. CO2 Emissions

Carbon Emissions Growth in the USAs the World Meteorological Organization (WMO) recently reported, atmospheric CO2 concentrations have risen to record levels. In line with this report is the latest Monthly Energy Review from the U.S. Energy Information Administration (EIA) finding that U.S. CO2 emissions have reversed their downward trend, showing a significant increase over the past 18 months.

According to the report, CO2 emissions for the first half of 2014 are 2.74 percent higher than for the same period in 2013 and 5.96 percent higher than for the first half of 2012. This reverses the downward trend of energy-related CO2 emissions, which account for 98 percent of the U.S. total, from 2010 through 2012.

Residential sector shows largest increase of CO2 emissions

The largest increase in emissions is from the residential sector, with a 16.73 percent rise in the first half of 2014 as compared to the same period in 2012. This is followed by the commercial sector with a 10.27 percent increase, electric power with 6.89 percent higher emissions and the industrial sector with 3.18 percent more emissions. The transportation sector remained flat, with no increase in emissions in 2014 from 2012 levels.

Carbon dioxide emissions from coal rose by 12.32 percent in the first six months of 2014 compared to that period in 2012. Natural gas and petroleum rose 7.31 percent and 0.81 percent respectively.

Renewable energy sources continue to expand

The latest EIA report continues on past reports, showing an increase in renewable energy capacity in the United States. Energy production from renewable sources â€" including wind, solar, biofuels, biomass, hydro and geothermal â€" increased by 3.83 percent in the first half of 2014 compared to the same period in 2013, and 7.35 percent from 2012. In total, 11.68 percent of the country’s energy production  and 9.89 percent of domestic energy consumption comes from renewable sources. Despite the solid and accelerating growth of renewable energy in the U.S., it is not keeping pace with the current trend in CO2 emissions.

“The growth in U.S. CO2 emissions is clear wake-up call that much more needs to be done to accelerate the growth of renewable energy sources, as well as improved energy efficiency, if the nation is to successfully address climate change,” concluded Ken Bossong, executive director of the SUN DAY Campaign.

â€"â€"â€"â€"â€"â€"

The SUN DAY Campaign is a non-profit research and educational organization founded in 1992 to aggressively promote sustainable energy technologies as cost-effective alternatives to nuclear power and fossil fuels.

The relevant charts for CO2 emissions in the EIA report are Tables 12.1 â€" 12.7 while those for renewable energy are Tables 1.1 â€" 1.3.

Image credit: Ian Britton, courtesy flickr

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Egypt Announces Feed-in Tariffs For Renewable Energy Projects Ahead Of Auctions

Clean Power Egyptian flag

Published on September 29th, 2014 | by Mridul Chadha

September 29th, 2014 by  

The Egyptian government has rolled out financial initiatives to support expansion of renewable energy infrastructure as the country gets to ready to host landmark auctions of 4 GW renewable energy capacity.

Egyptian flag

Egypt’s government has approved new feed-in tariffs for renewable energy projects just weeks ahead of a planned auction of 2 GW capacity each of wind and solar power projects. The electricity minister hopes that these new tariffs will attract bidders to the auctions, and provide certainty to investors.

The tariff regulations are quite comprehensive, and cover small as well as large-scale power projects. Renewable energy projects owned by households would receive 0.848 Egyptian Pounds (LE0.848) for every kWh generated. Commercial power generators would receive LE0.901 per kWh and LE0.973 per kWh for projects under 200 kW and 200 to 500 kW respectively.

Large-scale projects with capacity between 500 kW and 20 MW will be eligible for tariff of US$0.136 per kWh, while projects with capacity between 20 MW and 50 MW will receive US$0.1434 per kWh. The government has set 50 MW as the maximum limit for project size, but requests for higher capacity may be considered.

The government will also provide financial and other incentives to project developers, households, and commercial producers. For small-scale projects, the government will offer low-cost debt financing, while large-scale project developers will be allowed to pay custom duties at concessional rates for imported equipment.

The Egyptian government is expected to launch the auction for wind and solar power projects next month. These auction is part of long-term program which would see the Egyptian government auction a total of 30 GW of power generation capacity based on renewable energy and coal. The wind energy projects auctioned are expected to be commissioned by the end of next year while the solar power projects would be commissioned by June 2015.

Egypt has set a target to generate 20% of the power demand from renewable energy sources by 2020. The emphasis would be on wind energy as the government plans to add 7,200 MW new. capacity by the end of this decade.

Image Credit: Egyptian Flag via Flickr CC

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About the Author

currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.



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China Sets Coal Consumption Standards For Power Plants

Cap And Trade Shuozhou coal power plant China

Published on September 30th, 2014 | by Mridul Chadha

September 30th, 2014 by  

China is taking serious initiatives to reduce dependence on coal as it looks ready to unleash unprecedented measures to reduce its greenhouse gas emissions.

Shuozhou coal power plant China

2,000 MW Shentou Second Power Plant in Shuozhou, China

The National Development and Reform Commission (NDRC) is spearheading efforts to reduce pollution from coal-fired power plants and has, in collaboration with the National Energy Administration and the Ministry of Environment Protection, issued coal consumption standards.

The standards are part of China’s climate change plan for 2020. As part of the plan, 10 GW of inefficient coal-fired power plants will be closed while about 350 GW capacity will be required to improve operational efficiency.

Additionally, new coal power plants will be have to restrict their average coal consumption to 310 grams per kWh of electricity generated. The limit for existing power plants will be 315 grams per kWh generated.

These standards and measures are aimed at reducing the share of coal-based electricity to less than 62%. Coal-based power plants currently constitute 69% of China’s installed capacity. These new measures to reduce coal consumption at power plants are the latest in a long series of other initiatives.

The NDRC has, in the past, directed all provinces to significantly reduce their coal consumption. It has divided China’s 2020 carbon intensity reduction targets among provinces to push them to take appropriate actions to reduce greenhouse gas emissions.

Earlier this year, Beijing announced that consumption of coal will be fully banned in the city’s inner six districts, while it will be reduced by 80% in the outer ten districts by 2020. The ban also covers other fossil fuels such as fuel oil and coke.

Beijing’s coal consumption in 2012 was around 27 million tonnes, providing for 25% of the city’s total energy consumption. The local government aims to reduce the consumption to less than 10 million tonnes by 2017. To help power producers make the source switch, the local government has offered subsidies for using natural gas to generate power.

Beijing, in addition to six other jurisdictions, has an operational emissions trading scheme that covers more than 400 entities operating in the city. The scheme is reported to have been highly successful with almost 100% compliance rate reported during the first year. China aims to have a national-level emissions trading scheme operational before the end of the decade.

The policy initiatives implemented by the Chinese authorities have yielded positive results. Between 2008 and 2013, the country managed to reduce its carbon intensity by 28.5% equivalent to 2.5 billion tonnes of CO2 emissions, the Chinese government had revealed earlier this month.

Image credit: Kleineolive | CC BY-SA 3.0

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About the Author

currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.



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New Housing In California To Be “EV Capable”

Buildings ChargePoint_Infographic_EV_Growth

Published on September 29th, 2014 | by Cynthia Shahan

September 29th, 2014 by  

California is swiftly advancing, with one EV-charging-friendly bill after another. The latest is via the California Building Code (CBC2016), which looks set to require that all recently constructed parking lots or housing must be ready for electric charging infrastructure. The information is from draft building code documents and written in legal terms.

ChargePoint_Infographic_EV_Growth

“The new building code requirements don’t specify charging station installation, just the conduit and electrical system calculations required to prepare for charging stations,” The Long Tail Pipe reports.

The new building code essentially makes it easy to install a charging station by removing all common obstacles. Presently, The Long Tail Pipe reports, “any EVSE installation might require trenching to run new conduit to carry electrical wiring, plus upgrades to the service panel so it can supply enough power to run the charging stations. If needed, they are very expensive additions to a charging station installation. The new building code requirements will make sure the conduit and service panel capacity is already there. With that in place, it will more-or-less just be a matter of running wires and bolting charging stations into place.”

California’s work towards fewer emissions and clearer air is rapid. This is similar to a move last year to put similar requirements in place in Palo Alto, where all homes were required to come pre-wired for 240-volt, level-two, in-home chargers. This is a simple and easy thing that only adds about $200 to the overall cost of a new home and is a fraction of what retrofitting a home for such a purpose would cost.


 

The Long Tail Pipe continues: “A slide deck from the California Building Standards Commission goes over upcoming updates to the Building Code. These updates cover a whole gamut of things, including electric vehicle service equipment (EVSE) support.” Further in the story, The Long Tail Pipe points out: “A September 2014 report to the California Legislature, by the Department of Housing and Community Development, has an excellent summary of the new requirements.”

A few weeks ago, a California bill that allows renters to install electric car charging stations, Assembly Bill (AB) 2565, was signed into law. The goal of 1.5 million zero-emission vehicles by 2025 is closing in. This breaks up rental apartment restrictions that were barriers to continued electric car growth.

This also follows the launch of California’s “Charge Ahead” program. This program addresses lower-income family needs and increases the moderate-income family’s ability to make the switch to an electric vehicle. The bill has credit enhancement programs to help families with credit deficiency. Electric cars can save families a lot of money, but they typically come with a higher upfront price tag. The bill also includes vouchers for transit passes and car-sharing programs.

Related Stories:

California Bill That Allows Renters To Install Electric-Car Charging Stations

Charge Ahead California Opens A Portal To America’s Future

Guest Infographic: The Impact of Solar Charging Stations on Our Health

Image Credit: ChargePoint

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About the Author

is an Organic Farmer, Classical Homeopath, Art Teacher, Creative Writer, Anthropologist, Natural Medicine Activist, Journalist, and mother of four unconditionally loving spirits, teachers, and environmentally conscious beings who have lit the way for me for decades.



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How a Top Liberal State Is Creating an Electricity Market That Conservatives Should Love

New York Electricity Markets

Imagine an electricity market that gives small businesses and consumers the same ability to compete and make money that utilities have always had.

The market has no explicit technology mandates that require utilities or individuals to "pick winners and losers." It simply sets some basic rules that prioritize consumer-side distributed energy technologies, efficient and economic use of energy, business model innovation and environmental performance.

The market is guided by a simple philosophy: regulators pledge to set parameters and then get out of the way to let entrepreneurs selling energy services flourish alongside traditional utility companies.

Sounds like the dream of conservatives and libertarians everywhere, right?

No, this is not the electricity system planned for Glenn Beck's utopian libertarian community. Rather, it's the one being constructed in New York, one of the top-five most liberal states in America.

"We think the markets and the innovators will do better at developing solutions than either regulators or utilities will do on their own," said Audrey Zibelman, chair of the New York Public Service Commission, in a recent panel discussion on the state's efforts to redefine the electricity system.

Over the last six months, Zibelman and other New York officials have begun the complex process of remaking the way utilities on the distribution grid operate. The goal itself is straightforward: turn utilities into "platform providers" that broker more customer-sited clean energy systems on a two-way system. By next year, New York hopes to be on the way to having a completely different distribution grid. 

"Utilities are now the platform. This is about the innovation on top of the platform that’s going to make consumer needs more important," said Zibelman.

Under the proposal, called Reforming the Energy Vision (REV), regulated utilities would still maintain operational control of the grid, but would get compensated for investments based on certain performance metrics, rather than just building new large power plants. They would have an explicit directive to procure more resources from individual customers and third-party companies providing solar, storage, combined heat and power, microgrids and energy efficiency services.

Solar? Storage? Efficiency? Are regulators are just cloaking their expensive green agenda in free-market language?

No. The state is creating a freer market with more options that is designed to keep electricity rates stable.

Rather than simply valuing the build-out of more centralized power plants, as regulators have traditionally done (ones that may not be needed as demand flattens), New York has decided to value environmental performance and network efficiency, and then let competition flourish under that broad framework.

"I don’t want to create mediocre wires companies. I want to create excellent, innovative companies that have third parties wanting to come to New York and build businesses around DER [distributed energy resources] because they see it’s a marketplace where they can be successful,” said Zibelman. 

The REV process is fundamentally different than the clean energy standards that have been passed in 37 states, including New York. REV does not set a specific technology mandate -- only a set of market rules and guiding rate structures. Utilities and third-party providers would have a lot of freedom in how they procure and sell resources, as long as projects are cost-competitive and meet a certain threshold for emissions.

In fact, officials in the state have proposed phasing out explicit state-level mandates and want to use the REV model to guide $5 billion in "fuel-neutral" clean energy investment. 

More competition, more consumer choice, and no mandates: could there be any way to promote clean energy that would be more appealing to conservatives? 

There's one catch, however. The REV process is predicated on the fact that climate change is being driven by the burning of fossil fuels, and that new infrastructure investments need to take that into account.

Although surveys have shown that a majority of Republicans understand that humans are changing the climate, it has become virtually impossible for GOP politicians to talk about the issue out of fear that a small group on the extreme right wing will vote them out of office in primaries.

"What Republicans are afraid of is that if we give more credence to climate change, that it's going to be [interpreted as] the call...for more rules, more regulations," admitted New York Republican Congressman Michael Grimm in an interview earlier this year. 

But that's what is so attractive about REV. It's designed to prevent over-regulation. It creates a simple market structure with the goal of decarbonization (along with reliability and customer choice), and allows for businesses to compete to provide the best services in an effort to achieve that goal. 

Even the New York utility Con Edison, one of the biggest investor-owned utilities in the country, is enthusiastic about the process. 

"It gives us a pathway to understand where we are going to go as a business in the future," said Sergej Mahnovski, director of Con Ed's "utility of the future" team. "It’s inevitable that some of these distributed technologies are going to get more cost-effective and that they’re going to get integrated into the system somehow. What Audrey [Zibelman] has allowed for is a process and a regulatory structure to understand that path to get from where we are today to that future."

Even for conservatives who may have an ideological aversion to the science of climate change, New York's proposed structure offers plenty they could rally around: competition, business innovation, and a focus on consumer choice. 

"What I want is New Yorkers feeling that they are getting a lot of value for their energy dollar. And that value is being driven by a lot more choice of product and services than they ever had before," said Zibelman.

Conservatives in America are in desperate need of some intellectual leadership on environmental issues. As New York is proving, there are big, bold ways to deal with issues like climate change without sacrificing conservative values or relying on traditional mandate-based policies. 

In a thought-provoking essay from earlier this year, Michael Liebreich, founder of Bloomberg New Energy Finance, summed up conservatives' current problem on the issue.

"The big mistake of the right has been to leave unchallenged the assumption that leftist tools are the only ones available to manage the transition to clean energy, instead of coming up with good conservative solutions -- ones which have improved services, lower costs, competition, wealth creation, pricing in of externalities, personal responsibility and freedom at their heart," he wrote.

That is the perfect description of what's currently underway in New York.

Ironically, one of the most left-leaning states in the nation is developing a system that people on the right -- even the most hardcore libertarians -- should be salivating over.

New York has a unique set of factors in its favor: a deregulated market, slowing demand, aging and vulnerable infrastructure, as well as united leadership from the governor and regulators. The REV model won't necessarily work everywhere as proposed. But it does provide a model for what's possible beyond traditional mandates, which so many on the right loathe.

So what's it going to be?

Will leaders on the political right continue their zombie-like approach to clean energy and climate change, dismissing solutions as an encroachment on freedom?

Or will they see it as many thought leaders already do: a platform for creating revolutionary changes in energy choice and competition, while also happening to benefit the environment?

Photo Credit: New York and Electricity Markets/shutterstock

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

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High-throughput cell-sorting method can separate 10 billion bacterial cells in 30 minutes

UH Mānoa College of Engineering mechanical engineer Yi Zuo has developed a new, high-throughput method for sorting cells capable of separating 10 billion bacterial cells in 30 minutes.

The finding has already proven useful for studying bacterial cells and microalgae, and could one day have direct applications for biomedical research and environmental science -- basically any field in which a large quantity of microbial samples need to be processed.

The new method was described in a September 2014 publication in the scientific journal Analytical Chemistry, "Surface free energy activated high-throughput cell sorting."

Almost all of today's previously existing cell-sorting methods rely on what is called a single-cell analysis platform. These methods sort cells by running each individual cell through a kind of gateway that nabs out the ones that embody a single, defined physical property. Such methods can be designed to sort cells by size or to identify cells that display a targeted feature, such as a fluorescent dye that has been added.

Zuo's method is different. It is a bulk method that sorts different cell populations by tuning their solubility.

"It has no apparent limitations in sorting throughput," said Zuo, who came up with the original idea while teaching a UH Mānoa graduate level mechanical engineering class, ME650 Surface Phenomena. "We can separate 10 billion bacterial cells within 30 minutes."

The new method relies on a measurement principle that sorts cells by differentiating their characteristic surface free energies.

For liquid surfaces, surface free energy is equal to surface tension. But for solid surfaces, such as the surface of cells, surface free energy cannot be measured directly. Instead, surface free energy for solids was previously estimated using a contact angle measurement with complicated theoretical interpretations.

"Although plausible, this principle was very hard to implement," Zuo said. "Compared to other cell properties, such as size and deformability, it is technically challenging to determine their surface free energy. Only recently we developed a novel spectrophotometric method for directly determining the surface free energy of live cells. Based on this technological advance, we are able to implement the principle of surface free energy-activated cell sorting."

Zuo did this research in collaboration with UH Mānoa civil engineer Tao Yan. Their research was supported in part by Zuo's National Science Foundation CAREER Award in 2013. Under this grant, Zuo is studying the molecular mechanisms of lung surfactant, which is crucial to maintaining normal respiratory function in air sacs of the lung. Zuo hopes to help expand the use of clinical surfactants to treat various neonatal and adult respiratory diseases, including respiratory distress syndrome.

The University of Hawai'i Office of Technology Transfer and Economic Development (OTTED) has filed a provisional U.S. patent application for the new cell-sorting method, "Surface Free Energy Based Particle Sorting."

Story Source:

The above story is based on materials provided by University of Hawaii at Manoa. Note: Materials may be edited for content and length.

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Predicting electric power outages before they happen

The largest power outage in United States history, the 2003 Northeast blackout, began with one power line in Ohio going offline and ended with more than 50 million people without power throughout the Northeast and the Canadian province of Ontario.

Despite the apparent failure of the electric grid during such cascading events, blackouts aren't necessarily grid failures. Blackouts are often the result of automated protection measures that ensure power surges or downed power lines don't damage trees, people, appliances or other parts of the grid.

In the past, utility engineers have used static models of local electric grids to aim for single-contingency, worst-case scenario protection strategies rather than dynamic, real-time solutions to a unique grid disturbance.

Through advanced modeling and computer simulation, Travis Smith and fellow R&D staff members in the Department of Energy's Oak Ridge National Laboratory Power and Energy Systems Group are developing tools to improve grid protection operation analysis and prediction under different scenarios. These new grid protection tools are not only for familiar events like equipment failures, energy shortages or extreme weather, but they can also protect against influxes of renewable energy sources and "smart" grid components, such as communication devices and sensors, which both pose new protection challenges.

"We're integrating existing tools to do an even better job at what they already do," Smith said. "We eventually want to feed real measurements from the grid into the model, which for utilities means a faster response time because they can plan for individual scenarios."

For decades, utility planning engineers have used the Power System Simulator for Engineering (PSSE) or comparable software to plan utility infrastructure and power distribution. PSSE executes dynamic simulations of power transmission so engineers can analyze and optimize the grid's performance.

Once planning engineers plan the grid, protection engineers must design protection strategies based on that plan.

"Protection engineers ask, 'If something goes wrong, if there's a fault, can we isolate one part of the system?' " said Smith, who worked as a protection engineer and consultant for more than 15 years before coming to ORNL.

To simulate faults, or changes in electric current that typically indicate something has gone wrong on the grid, protection engineers use Computer Aided Protection Engineering (CAPE) software. However, predicting the protection strategy needed for any number of events -- from a tree felling a power line during a storm to an abrupt rise or fall in consumer demand -- is a much heavier computational burden than planning for the system to work under normal conditions.

"When protection engineers look at the grid, they are studying it under static conditions," Smith said. "So they simulate a fault to see what happens, but that simulation is not taking into account real-time dynamics on the grid."

In the end, grid protection relies on a string of automated protective relays, devices placed on transmission lines and substations. If a relay registers a disturbance, such as a drop in voltage, it will trip a switch and shut off local power. More often than not, protective relays are older electromagnetic devices that cannot transmit data to the utility company.

"Technicians often have to physically go to the substation and pull out a data file to understand what happened," Smith said.

When the first hours of a blackout are spent investigating what caused the outage, it can be difficult to prevent adjacent relays from tripping and creating further problems.

For real-time solutions, Smith is developing a detailed protection program for ORNL's consolidated PSSE/CAPE software that analyzes changes in parameters such as current, voltage, frequency and impedance to coordinate protective relays into a low-impact protection strategy as an event is occurring.

He is refining the program and investigating the impact of renewable energy on grid protection using models of the Eastern Interconnection (EI), one of the nation's major grids, for the years 2008-21. The models are provided by the Eastern Interconnection Reliability Assessment Group, which analyzes and forecasts EI transmission conditions.

"The program script is automated so it can quickly analyze all the contingencies and provide a guidebook for a range of circumstances," Smith said.

One of the biggest R&D challenges is related to the size of the computational problem, which slows simulation times. For models that simulate the grid five to 10 years from now, an infusion of wind energy, small-system energy storage devices and communicating sensors makes the amount of computation even more daunting, and simulation time steps shrink from milliseconds to microseconds to detect viruses or cyber-attacks.

"Once you have a faster, smarter grid, you need protection for a faster, smarter grid," Smith said. "I'm working with computer scientists at ORNL to see if we can push the model to run faster than real-time speeds so we can predict what will happen before it happens."

While Smith says he currently may be "the only person in the world using this kind of program right now," he predicts utility companies worldwide will adopt real-time protection analysis in the next few years.

It will happen "soon, if we see a large blackout," Smith said. "We'll zoom into the model using EMT (Electro Magnetic Transients), see what is happening among protective relays, and run higher resolution time step simulations to solve the problem before it gets out of hand."

This research is funded by the DOE's Office of Electricity Delivery and Energy Reliability Advanced Modeling Grid Research Program. -- Katie Elyce Jones

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Will U.S.-India Summit Bring Historic Climate Action?

Anjali Jaiswal, Senior Attorney, San Francisco, Co-authored by Meredith Connolly, NRDC Energy Law & Policy Fellow

Today, President Barack Obama meets with Indian Prime Minister Narendra Modi in what could be one of the most significant events following the U.N. climate week. As leaders of the world's largest democracies and prominent entrepreneurial societies, the Obama-Modi summit is a considerable opportunity to accelerate climate action in economically advantageous ways for both countries. The United States, India, and the world will benefit enormously if the leaders agree to immediate action to curb climate change. 

Both leaders have set the stage for a productive meeting with big announcements on climate mitigation and adaptation. Prime Minister Modi is poised to announce a goal of installing a whopping 100 gigawatts (GW) of solar and wind energy in India within the next decade, seeking engagement with U.S. companies as well as direct investment to achieve that target. This would represent a huge increase from India's current installed capacity of 20 GW of wind and 2.6 GW of solar power as of March 2014. The U.S. currently has about 61 GW of wind and 16 GW of solar power installed. In a recent Wall Street Journal op-ed, Prime Minister Modi also highlighted his government's commitment to innovative clean energy technology to electrify Indian villages and pointed to the United States as the "natural global partner" for this cooperation.

kiran.jpg

Solar panels at a power plant commissioned under India's National Solar Mission in Jaisalmer, Rajasthan. Photo credit © Bhaskar Deol.

Now is the time to see promises translate into action: Indian Prime Minister Modi ran on a platform of increasing energy access and energy security in light of India's skyrocketing energy demands, after establishing a climate-change department as chief minister of India's Gujarat state. President Obama's administration has unfinished business scaling-up clean energy and stemming the causes and impacts of climate change in the United States. This gives the pair of leaders a huge opportunity to partner strategically to address climate change and boost both countries' burgeoning clean-energy markets while building resilience in local communities. Decisions made in the next few years about climate policy and development will shape the planet's future for decades to come.

At the U.N. Climate Summit, President Obama explained that the United States is taking action through stronger fuel-economy standards for new cars and the first-ever national carbon pollution limits for power plants â€" the nation's biggest single source of greenhouse-gas emissions. President Obama also announced an expansion of international development programs, leveraging U.S. scientific and technological capabilities to strengthen climate resilience in vulnerable countries. This announcement signaled an important opportunity for the Obama-Modi summit on joint resilience planning to protect vulnerable communities from climate disasters, such as fatal floods and heat waves.

Together, the United States and India can accelerate bold climate action to the benefit of both countries and the world. To improve energy prosperity while stemming climate change, the following key items should be on the agenda during the Obama-Modi summit: clean energy finance, energy efficiency innovation and leadership on phasing down potent greenhouse gases.

Scaling clean energy and jobs

Energy access, clean energy development and economic livelihoods are national priorities for India's new administration under Prime Minister Modi. As President Obama said at last week's U.N. Climate Summit, "there does not have to be a conflict between a sound environment and strong economic growth." Recent reports confirm that limiting carbon emissions need not limit, and may in fact accelerate, economic growth. 

Simply stated, clean energy creates local jobs. Preliminary estimates show that India's emerging grid-connected renewable energy market has created nearly 70,000 jobs so far, and the United States boasted nearly 80,000 green jobs created by clean energy last year alone. In addition, many U.S. companies, such as First Solar, play an active role in India's growing clean energy market â€" which is eager to scale up and reach its potential.

A chief barrier to widespread deployment of renewable energy projects in both countries, but particularly in India, is the availability of low-cost financing. Interest rates in India currently hover around 12 percent. Innovative financing mechanisms, including green banks and green bonds, could support the growth of clean energy, including grid-connected renewable energy, off-grid and rooftop solar energy, as well as energy efficiency measures. The two countries should work to exchange knowledge on these financing instruments that leverage existing institutions, such as the National Clean Energy Fund and the Indian Renewable Energy Development Agency (IREDA) in India, and can expand emerging green bonds and green banks in the United States.

Constructing energy efficient cities

Advancing building efficiency efforts is critical to meeting escalating energy demand in the United States' and India's rapidly growing cities, improving energy security, and propelling both countries forward in the clean energy race. India's energy demand continues to soar, even as over 400 million people lack access to reliable electricity and power failures continue to be commonplace in both urbanizing cities and rural villages. The United States should work with India to turn these challenges into a clean-energy business advantage and national opportunity for both countries while combating climate change.

As the fastest, cheapest and cleanest way to meet these voracious energy needs, energy efficiency is a central part of the solution. Building on recent U.S.-India discussions, the United States should partner with India to develop a joint building efficiency and electricity grid center in India modeled on the U.S. Flexlab (a Department of Energy building efficiency simulator at Berkeley Lab that tests individual measures and integrated systems before construction or retrofitting occurs). The center could serve as test bed for energy efficient infrastructure and know-how and as a center for training and the development of a robust building-science and smart-grid program. The two countries could also share experiences and develop models for compliance frameworks for energy efficiency building codes, leading to cleaner air and more resilient communities. 

Progress on heat-trapping HFCs

Advancing an international phase-down of hydrofluorocarbons (HFC) has been a tenuous topic lingering between the two nations. HFCs are super-potent climate-changing chemicals used in air conditioning and refrigeration, insulating foams and aerosol products.  Air conditioner use is rising in India and is likely to grow with India's expanding middle class. This use is contributing to both rising energy demands and increasing greenhouse gas emissions.

The United States and over 100 other nations are willing to move forward with discussing a global phasedown of HFCs under the Montreal Protocol. The United States and China are also making progress on a bilateral HFC working group, which is exchanging technological knowledge that coincides with the Montreal Protocol process. The United States and Europe are also taking domestic actions to phase down these dangerous gases. The new Modi government has yet to take a formal position on HFCs.  

A real sign on a strategic partnership during the Obama-Modi summit would be if the two leaders could make a breakthrough on phasing down HFCs. The United States and India should couple progress towards an international phase down of HFCs with bilateral cooperation to help meet India's concerns about the readiness of HFC alternatives. For example, the United States and India could exchange technical knowledge and develop concrete projects on climate-friendly coolants while discussing a phase down timetable and an amendment to the Montreal Protocol to start negotiations this fall. 

At this critical time, ahead of the global climate agreement expected in Paris in December 2015, the world needs leadership, cooperation and action â€" especially from two of the world's top energy consumers. A U.S.-India strategic partnership is essential for advancing low-carbon economies, increasing energy security and preparing for the worst effects of climate change in both countries. Strong joint action can help put us on a path to a more sustainable future that expands economic growth and improves the lives of millions. 

This version of the article was originally published on Live Science.

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