Policy – Position – Agenda – where does it sit?

The President of the Solar Council made the point: The political position of denying does not matter in the end. From that we can conclude that ultimately the posturing will change as the influences around them change and the policy models too will change.

If you have rang a Call Centre recently it is very likely you might have been confronted with ‘its policy of ‘. No longer do they say is ‘the position of ‘. Why is this?

Policy – the business dictionary like to say it is the declared objectives to achieve and preserve – the free dictionary likes to say a plan or course of action intended to influence and determine. Most others say something very similarly, so we can conclude the meaning is a rule or contract when used as a noun. We can say the synonyms can also include a Rule, Strategy, Plan, Procedure, and Dogma, Program. All of which is a Guiding Principle.

Our point. You have every right to question if it is an appropriate course of action. Why because it indicates the decision is primarily based on material interest.

Position – Think the right or appropriate space. Where your point of view could also be described a thesis or the laying down of a proposition.

It also can be characterised by the unsolicited offer to an existing customer with wording such as ‘you do not need to do a thing’. Then some time later you are penalised because you did not object. Do you want an energy use example?

Well think this: Step by step the instructions are tweaking you into being positioned. However, is this an acceptable principle? Maybe, so long as the policy is accountable.

Then there is the issue of what is the purpose of the policy. In the name of justice is often cited. It then must be broken down into for whom? If it is for the workplace, than it is vague. If it is for welfare, it is wide reaching. Here lies a problem, it can be vague and wide reaching and have no other purpose other than to be resisted and discarded. In effect the agenda you did not know about.

Back to the Call Centre: Do they have an agenda? We can assume they want you to accept what they do is the correct position. You will than accept that their view is correct, and they can say we have wide reaching evidence of the acceptance of our policy – you can conclude the agenda was for acceptance of the positioning.

Do you have a position on the renewable energy policy? Talking at – yes there was some disagreement, the Chairperson of the Australian Institute of Energy, on 5 June 2014, it was clear the definition of what was effective as the tools for success was not obvious. What we are saying is that ‘any action’ taken must be clearly a benefit over the established position. For instance: Solar is technologically superior as a generator. Energy Efficiency reduces the need to generate. They both affect the transport needs of the energy. They both can be local fixes in constrained areas of the network, and conversely they can affect negatively in areas of a distribution system that has not any capacity issue. It gets even more perverse when you consider the transmission network – moving from one distribution area to the next. The battle then becomes who can best serve in the supply demand balancing equation! Answer, it can be both. However, we are then talking about energy security. In this aspect the reference is to the balance between sustainability and reliability and cost efficient power. When we do we are speaking in terms of the national security.

For another discussion we might talk about energy conservation verses energy efficiency. Hint – the definitions must be addressed before you can proceed.

 

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Bidding process – The White – ERF Paper

Lets talk more about the bidding process, assuming you managed to read the Energy Reduction Fund White Paper released 24 April 2014. We talked about profiling you risk in our post ‘The White – ERF Paper’ on 2 May 2014. It has been attracting worldwide interest. What we don’t know is why it is so. We can only speculate many are expecting a ‘big bang’ or ‘flip flop’ for the policy. Regardless, it is better than doing nothing, so lets assume we can get past the regulatory uncertainty and look at things assuming you business can access the funds, has eligible projects, and has in place safeguard mechanisms.

First question you need to ask is are you strategic or tactical in your approach – or a hybrid. We might suggest hybrid is a good hedge. Why because you can be reactive to changes without being too hung up on risk factors. Also, providing funding could be as easy as the 2014/2015 Federal Budget being approved, without the specialist legislation. Yep, the good ole executive bypass is possible. But that is the government’s risk.

To bid in you need to create a program with a project size that has a prospect of being awarded funding. We note that some say, and repeated by Energetics (a consulting firm that is known to influence policy on Climate), claim 2,000 t CO2 equivalent abatement will get you a jersey. However, remember this is a reverse auction – the lowest price wins! There is no guarantee the best project will win. You could be forgiven for getting a little suspicious over who and what will be rewarded.

That said, the usual suspects for the preparation to be included in the bidding, may actually preclude you too! Namely, the requirement of ‘additionality’ for the projects. Back in 2012, August 14 – CO2Land org looked a little harder at additionality and its association with the word ‘real’ (concluding real was used as a synonym) and found:

  • Specifically ISO 14064-2 (project accounting) does not include ‘Real’ because during development of ISO 14064-2 ‘Real’ was regarded as a programmatic rule/criteria, which is outside the scope of ISO 14064-2.
  • ISO 14064-2 is a standard rather than a program
  • ISO 14064-2 (Clause 5.4) specifies the following requirement in regards to additionality: “The project proponent shall select or establish, justify and apply criteria and procedures for demonstrating that the project results in GHG emissions reductions or removal enhancements that are additional to what would occur in the baseline scenario.”
  • Additionality is incorporated into ISO 14064-2 is based on the core principles of ISO standards in general, i.e. that ISO standards not be a barrier to trade (WTO-TBT – anyone following development of ISO 14067 (product) will know this is a major issue). As such, ISO standards must be policy-neutral (extended to include program-neutrality). This is of course very important for market confidence.
  • ISO 14064 deals with the concept of additionality by requiring that the GHG project has resulted in GHG emission reductions or removal enhancements in addition to what would have happened in the absence of that project. It does not use the term “additionality”…Thus the project proponent may apply additionality criteria and procedures, or define and use boundaries consistent with relevant legislation, policy, GHG programmes and good practice.”
  • Although the concept/requirement of additionality is within the requirements of ISO 14064-2, the simple reason why the ‘term’ additionality is not present within the requirements of ISO 14064-2 is because of certain sensitivities/perceptions/politics of certain parties involved in the development of the standard –

And, the following references helpful in gaining a more complete understanding:

Oh dear, I wonder if they understand the standard says the concept should be policy- neutral. Why to give confidence to the market, elementary is it not?

But, here comes the good news. If you are aware, adopt a pragmatic approach, and are proactive in that you go low first up and go early you might just get there for your funding. All you got to do is keeping improving on your targets into the future.

What projects might have the better chance of winning a place. Energy Efficiency projects are probably the best suited for the auction process and the pre-qualification needs.

The conclusion: If you have done nothing meaningful before about your energy use. You can now be rewarded? Good policy, hey!

To ponder, Mark Jackson – a professional, asked in the Australasian Renewable Energy and Carbon Professionals Group on LinkedIn: “Is anyone else getting a sense that renewables are not getting a fair airing…budget etc”.

Friends by degrees – the ACT story

Reported is the NSW government is at war with itself, as is some Federal politicians, as is some local government people. The canny troublemaker is the ACT Government. For accepting that showing example is better than doing nothing to support climate science.   For doing what the NSW Government made allowance to do in addressing the future.

It is all a bit odd if you take into account that in war you might say 2 degrees of separation is sufficient to warrant attention. In finance it would take up to 5 degrees to lose sight of the target. A canny businessperson might think there are opportunities at 3 degrees of separation. In terms of climate we have evidence that 4 degree of temperature difference is on track under climate change scenarios and may in all likelihood accelerate into tipping points of no return in a very short time frame. So if we talk of degrees of separation and degrees temperature as similar measures it all becomes most worrisome.

Looking at what is being said (to keep you informed currently NSW and Federal Government is coalition parties):

The Federal Member for Hume – said ‘green policy gone mad. Wholesale prices will triple’. Then states the NSW Government will contribute to that increase by applying to take baseload power out of the system when the wind does not blow. Interesting when you consider the NSW Government is the approving power for its own considerable wind farm precinct building exercise.

The Chief Minister of the ACT and the ACT Minister of Environment and a thousand other things (in a colloquial sense) have said small increases will occur in energy prices, but business confidence will pick up, as the programs will excite business development. Co2Land org has to admit any attempt to encourage a larger private sector in ACT has to be constructive.

The State Member for Monaro’s best was reserved for his own, the NSW Parliamentary Secretary for Renewable Energy were he challenged that NSW had become the ACT’s junkyard! Claiming little or no support from NSW landholders during consultation processes. Co2Land org finds this interesting as the evidence is only or mostly the Landholders that object are the ones that missed out on a financial benefit. We are happy to be proven wrong on that statement.

The State Member for Burrinjuck (also Minister of Department of Primary Industry, and in a stoush over redistribution of her boundary with the State Member for Goulburn) is to have said to ‘be opposed to inappropriately sited windfarms’. This sounds like a parochial comment of who can and who cannot by the tone.

The State Member for Goulburn is quoted as saying ‘opposes wind farms, but is leaving the door open for other renewables’. Does this mean negotiations are possible?

The Yass Valley Mayor claims communities are really angry about these projects.  The Goulburn Mayor was merely concerned at the methods used and took the opportunity to encourage more settlement in the region. The Palerang Mayor said adequate precautions have been taken to ensure appropriate site and location positioning for developments. CO2Land org too agrees that where impacts on local residents are correctly accessed it is more likely that when incentives are offered the local will accept the arrangements. So is that the real issue, who pork barrels who for what?

But the absolute ‘corker’ (Aussie slang for taking the mickey out of things) is recently the question was asked: “Can you explain to me what a Solar wind farm is”!

What are they all talking about? The ACT Government aiming at 90% renewables by 2020 and the initiatives to make it happen at minimal costs.

Where was it being talked about? Reported by John Mitchell in the Bungendore Mirror 2 April 2014. Had it been 1 April it could have been considered a joke!

EV’s – not cost, heat management the issue.

The advisor to the minister responded to a call from a colleague – we want to talk about saving an industry. Advances in electric car technology can make it viable to say many of the limits for production are no longer the problem – the batteries that is.

We went looking for the facts, and a quick search then found a story ( http://www.bbc.com/autos/story/20140204-a-false-charge ) Why do electric vehicles use so many batteries? From that story we learnt the cost of batteries are only part of the issue. It is the battery technology that is the dominant problem. “The world’s most recognisable electric vehicles (EVs), such as the Tesla Model S and Nissan Leaf, run on hundreds, or even thousands, of small battery cells.” Then there is the type of battery construction “BMW’s new i3 electric runabout spreads 96 battery cells across eight modules in its pack. The Leaf uses almost 200 thin laminated film cells that are packaged into 48 modules, and the Model S has more than 6,800 small lithium-ion battery cylinders.”

However, cost is important in the decision on the number of cells to be used. Explaining Tesla’s decision to use lap top type batteries: “Leigh Christie, an EV engineer, says manufacturers’ embrace of smaller batteries boils down to cost. “The capital cost for manufacturing equipment for 18650-size cells is as about as low as it gets,” he wrote. “This cell has been manufactured longer than pretty much any other lithium-ion cell.”

From what is said http://www.quora.com forums note “a nuanced view of why so much variation exists around how many batteries an EV uses, and why the industry is not quite ready for a mega-battery.” So it is not that mega batteries are not available, it is they are more expensive to produce. And, smaller batteries offer temperature control benefits, and were “easier to stack in unique ways to distribute weight and make use of small spaces in a vehicle chassis.”

All that said on further reading it becomes obvious heat is and the managing of heat is the bigger cost issue. Yes, that is correct the cost of managing heat and heat from EV battery cells is something all manufacturers must learn to manage. “The gaps between the cells allow for cooling and minimize the possibility of thermal runaway,” and “That’s why Nissan’s flat laminated cells are designed with a large surface area that quickly disperses the batteries’ heat. Because of this, the Leaf does not require a separate battery-cooling unit, such as those in the i3 and Model S.”

Co2Land org must now conclude electronic vehicles still need more time to be mainstream and the issues with the batteries are the matter that needs the most attention. Namely,

The cost of manufacture, the number required to be diverted from other product needs for similar batteries, the size range available, the matter of managing heat.

Therefore to be fully desirable those problems and issues need to be overcome for long-term success.   It follows we have success in making plant available, we just need technology to catch up with the battery needs.

Solar mean and means

It is not ‘means’ tested. But it can mean a nightmare. The phone call: My business is wanting to purchase a small scale solar PV array, and I noticed the contract will not guarantee my price, and the price potentially will increase indirectly because the import of electricity will not remain a constant and directly because it is likely the Small Scale Technology Certificate (STC) will not be fixed for the duration.

Why is import of electricity important? The price of electricity is generally either regulated or contestable. Regulated prices are reset according to an application for price changes – you are a price taker. In short, the price changes each reset period and usually set by state government bodies. In a contestable market set by rules of the national body, to reduce your energy consumption you can carry penalties and price risk. Hence, you might find you have to pay a higher price because you have reduced your import of energy needs. Therefore there is no incentive to reduce your energy use.

Next matter is the popular selling point of Solar, and it is the opportunity to benefit from the export of energy. It follows that just as import prices changing is a risk, so is export energy a price risk. Especially when feed in tariffs (FITs) are being phased out, and in Australia – a review of the Renewable Energy Targets (RET), and the promised repeal of the carbon pricing mechanism could see a collapse of the renewable certificate price. The new’ish’ government is hopeful ‘affordable’ energy will follow the review.

So, if you want to protect your purchase by way of a price guarantee from third parties. You most likely cannot if you are larger than 7.5kWp (residential) but under 300kWp. Why? The energy retailers have no interest because of uncertainty exposing them to the price shocks, and commercial buyers of power have a line drawn in the sand of an economic value of no less than 300kWp export capability.

So, if paying a fixed price is important to you – then you should choose an installer who guarantees the price quoted – clearly and irrevocably. Is it possible? Yes, but the vendor needs to be courageous and needs to laterally rethink how they operate. But, we will save that thought for another post.

Still interested in Solar. Onward then we go: What can still be done in Australia to reduce the upfront cost of solar power systems even after hearing “the solar rebate ending”. There is still a financial incentive from the Australian federal government for installing solar. But you need to be quick if you consider the report on the RET review will reach government by July and ‘put to death by the Reich’.

What is tipped to go is the solar subsidy for anyone buying a solar system of up to 100kW. It is called the STC program. Which stands for Small-scale Technology Certificate. Whilst CO2Land org has previously been concerned that the STC is a distortion of the market, it believes any change should be phased out and not shut off suddenly. Another thing to consider is the STC scheme is not described as a rebate (even though it is = it is politically difficult to call it that). If you check what The Clean Energy Regulator says on their website, it says:

“Under the Small-scale Renewable Energy Scheme the reduction in the cost of your solar panel is not a rebate. You will not qualify for any Government-based financial recompense at the completion of any process relating to STCs.”

The meaning of this is that the cash you get off your solar system price does not actually come from the government. It is a government scheme that compels other people to buy your certificates.

So it is a government run scheme, using other people’s money, and it becomes confusing when you consider the question what must change when all government schemes use other people’s money – is it not?  So, if you are confused over why does a scheme that will save you money and tick the box as a financial incentive be considered to have to walk the plank.

The solar Financial Incentive is a subsidy to assist with the upfront cost of installing a Solar Power System. Currently, it is not ‘means’ tested in any way. However, the criteria for claiming it are:

1) Your system is less than 100kWp in size.

2) You get it installed and designed by an accredited professional.

3) You use panels and inverters that are approved for use in Australia.

We said FITs are being phased out, but each state may differ in what is offered. So check out the following, as an example: The Feed In Tariff (FiT). “The FiT is a State Government subsidy in which some states pay you for the electricity that your solar system will export to the grid”.

How to get involved in the Solar Financial Incentive Scheme involves:

1) The regulator creates Renewable Energy Certificates (RECS).

2) The government mandates that fossil fuelled generators have to either build a certain amount of renewable generation (wind/solar) or buy the right to other people’s renewable energy systems in the form of RECs.

3) When you purchase a solar power system for your roof, the government gives you a number of RECS depending on the size of your system is and the region of Australia it is installed.

4) The special type of RECs that you get for under 100kWp solar system are called “Small Scale Technology Certificates” (STCs).

5) You (or more likely your installer) sell the STCs to the fossil fuel generators and use the cash to offset the upfront cost of the solar system purchase.

6) The STC price is a bit like a share price – it fluctuates on the open market depending on supply and demand. E.g. when the solar industry is booming (usually just before the rebate is cut!) then the STC price drops and vice versa.

7) “You can see the current market price of a STC here. Look for the number in the box in the bottom RH corner labeled: STC”.

8) Almost all solar system prices you see advertised will already have the solar Financial Incentive included in the pricing. So watch out for that too.

Earlier we said the amount of solar rebate that you can claim depends on where you live: It is broken down into zones that roughly mean live in the lower southern parts (zone 4) and get less incentive than other parts with central west parts (zone 1) getting the most.

But, beware of a small number of unscrupulous companies that use the “Inflated STC Price Scam” appear to be deceiving the customer into thinking they are getting a great deal and then hitting them with a bill for thousands more than the quoted price when the system is installed.

——

Be clear on what you want:

CO2Land org is aware that many installer/vendor quotes are virtually silent on saying they guarantee what is said in the quote as the STC price.

Co2Land org believes the truly good guys will be totally upfront and transparent that the final amount payable may go up (or down) based on the STC price on the day of the install.

It is up to you to make the decision to buy based on the facts. When ready to sign – why not say ‘This contract is signed for this fixed price only’ and make it a written condition, and have all parties endorse each copy!

 

The elasticity of renewable demand and controversity

Newly-elected federal Liberal MP for Hume, Angus Taylor, is a committed anti-wind campaigner and is reported to be against the NSW government decision to allow the “controversial” Collector Wind Farm decision. In the reported post it was said he hinted policy and that the Renewable Energy Target (RET) review would likely prove the undoing of the wind farm industry in Australia –

“Projects like this seem set to continue unabated until a national review – which the new federal government has committed to in 2014 – can reveal the true economics behind the industry,” he said. “The RET review will look into the massive subsidies for wind farms, which are forcing up electricity prices and propping up an economically unviable industry.”

Source:  Hamish Boland-Rudder, Reporter at The Canberra Times | December 5, 2013 | www.canberratimes.com.au .

Unfortunately, in this country, we have again simply decided that ‘a review’ will do, to ignore that real innovators will suffer. The statement may be best viewed if you dissect the last quote above. In particular: subsidies – the go against the traditional models for supply; forcing up – obviously painful to the traditional models; propping up – this is the corker, as it suggests unless it is the traditional supply model the demand balance cannot be effective. If you think even harder you can also come of the view energy efficiency will be discouraged as decreased demand for energy will threaten the ‘viable’ industry. The most interesting part of all this politicking is that it ignores that what is driving all this angst is that technology is quickly overtaking the industry. Technology that is outmoding conventional supply systems. Like all technology advances it takes courage to move forward, to encourage the uptake and reward the innovators. But, alias my dear for that we need a review and force unreasonable cost to those with the shallow pockets.

However, is the secret deal as simple as reducing subsidies and reducing prices? Unfortunately economics is not that simple it also involves elasticity.

The business of BIOCHAR

The problem can be called “Marketing Myopia”, and the claim was made in relation to the uptake of BioChar. Quickly scanning to understand what was meant by that term the Business Dictionary was most helpful. Marketing Myopia – A short-sighted and inward looking approach to marketing that focuses on the needs of the company instead of defining the company and its products in terms of the customersneeds and wants. It results in the failure to see and adjust to the rapid changes in their markets.

The concept of marketing myopia was discussed in an article (titled “Marketing Myopia,” in July-August 1960 issue of the Harvard Business Review) by Harvard Business School emeritus professor of marketing, Theodore C. Levitt (1925-2006), who suggests that companies get trapped in this situation because they omit to ask the vital question, “What business are we in?” Read more: http://www.businessdictionary.com/definition/marketing-myopia.html#ixzz2lJq5Y3wT

So: What is the business of BioChar? It can elicit a number of different answers that can supply at least 11 different industries. What might change is the name that suits the industry. For instance it may be called Bio-Carbon for industrial applications, and can be called carbon black, or graphite.

Applications in industry can be:  Insulation, Air decontamination, Decontamination of earth foundations, Humidity regulation, Protection against electromagnetic radiation (“electrosmog”), Exhaust filters, Controlling emissions, Room air filters.

  • It can be part of Industrial materials: carbon fibres, plastics.
  • Its use in Electronics: Semiconductors, batteries.
  • Use in Metallurgy: Metal reduction.
  • In Cosmetics: Soaps, skin-cream, therapeutic bath additives.
  • In Paints and colouring: Food colorants, industrial paints.

In Energy production:

  • Pellets, substitute for lignite.

In Medicines:

  • Detoxification, carrier for active pharmaceutical ingredients.

In apparel and footware:

  • Fabric additive for functional underwear, Thermal insulation for functional clothing, Deodorant for shoe soles.

In sleepware:

  • Filling for mattresses, filling for pillows

For protection:

  • Shield against electromagnetic radiation.

Then for applications of decontamination and waste handling:

  • Soil additive for soil remediation (for use in particular on former mine-works, military bases, radio transmitters sites and landfill sites)
  • Soil substrates (highly adsorbing, plantable soil substrates for use in cleaning waste water; in particular urban waste water contaminated by heavy metals)
  • A barrier preventing pesticides getting into surface water (Sides of field and ponds can be equipped with 30-50 cm deep barriers made of biochar for filtering out pesticides)

Treating pond and lake water (Biochar is good for adsorbing pesticides and fertilisers, as well as for improving water aeration)

  • Use as or in a Biomass additive, Biogas slurry treatment, Active carbon filter, Pre-rinsing additive, Soil substrate for organic plant beds, Composting toilets.

Then for applications of the treatment of drinking water:

  • Use in: Micro-filters, Macro-filters in developing countries.

Then for numerous Agricultural purposes it can be used or invaluable for:

  • Silage agent, Feed additive/supplement, Litter additive, Slurry treatment, Manure composting, Water treatment in fish farming, Carbon fertiliser, Compost, Substitute for peat in potting soil, Plant protection, Compensatory fertiliser for trace elements.

But you will say some of these are activated carbon. What is the difference? According to Achim Gerlach and published in ithaka (ithaka is also the reference to the 55 uses of biochar above): “Activated carbon = biochar – Generally speaking, all activated carbons are originally biochars. Active carbons are however “activated” using acids or hydroxides or 900°C water steam. In doing so, their specific surface area increases from app. 300 m2/g to over 1000 m2/g. Activated carbon is 5 – 10 times more expensive than simple biochar, so it is possible to use 2-3 times the amount of biochar to achieve the same result – whether with regard to digestion in cattle or in a sewage treatment plant. As activated carbon is for the most part produced without adequate controls in South-East Asia or South America, the eco-balance often leaves a lot to be desired. Biochar by contrast is produced from controlled, locally grown raw materials using controlled production methods. There is no real difficulty involved in producing activated carbon from biochar.”

This still does not answer the ‘what business are we in’ question. It follows that you define your product by way of what it does. But in business it is a definition of purpose for whom the business does serve is how you tend to answer ‘what business are we in’. Now consider the question of whether your product is to be considered as sourced from a co-product, or a by-product. Looking at this logically, it could be seen that the former broadens the scope of available uses that go beyond considering it a variable price component. A by-product might not be a business, and is more likely to be treated in a similar way to waste and less likely to be refined.

If you understand business you will know that the value model assumes you will seek what the market will bear in terms of price and volumes. A by-product only seeks to dispose of the ‘waste’ at a level that mitigates the cost of production. The issue then becomes how do I guarantee a quality product if it is not priced correctly.

Therefore a successful business proposition will have the price set in terms of purpose, price of bioenergy plants and the need for the plants to be tweaked so as to be priced accordingly and as a minimum must have a value sufficiently above its inherent energy value for the use of, and, or the market intended. Why, your business customer base needs to be accommodated to broaden the available uses, and that will be more than agricultural soil amendment.

So what is the business your in? Conventional wisdom suggests you need to be “Cool”, have a willingness to collaborate with end users, understand the proposals of purchasing chars from many sources, spend as much time & effort in researching/ formulating/inoculating to get the biology balance right, and set yourself up as best practice biochar ‘finisher’.

What is a finisher? John Christy asked the same question on LinkedIn, and as best as CO2Land org can find is: A biochar ‘finisher’ is someone who augments it, packages, and distributes. All they want is a price and a place to sell to, and focus on energy production. Is there anyone doing this or willing to consider at this point. Christy continues saying “Offtake agreements are needed now in order to get the financing for these projects. Ideally we want a 20 year agreement to take a minimum amount of biochar, meeting certain criteria….or a memo of understanding would help”. Maybe, that is the tact your business can take too, to satisfy the customers need!

This post does not attempt to address the production or the farm scale platforms for biochar use other than mention some of the factors of the business that will affect how you will function as a business. Country to country the price and composition of biochar will differ. Like all product, the material inputs is important. Here in Australia we have a forestry industry that can provide feedstock from floor waste and we can calculate the manufacturing cost of biochar from that source, other countries might not have such a luxury and have other sources of feedstock materials. The point is well made by John “There is much to be done to define biochar quality, learn how to ship large quantities without significant losses”.

As a footnote references:

 

http://www.ithaka-journal.net/55-anwendungen-von-pflanzenkohle?lang=en

 

RET designs – Abbotititis or Rudasinus.

Do you have Abbotititis or Rudasinus. Bored with the election being in your face yet not meaning a thing.  Then there is ‘real’ again – It just means it will be reviewed and in the mean time your asset is at risk of being stranded because of the ‘Election’. You are told any decisions will need to be taken with a view of caretaker convention and then we will wait until the ‘dust settles’ and the view of the incoming Government is known.  Can you understand the frustration? Promises are being made yet we are told they are real until after the election!

Now lets look at the promised policy positions:

The Coalition talks of ‘real’ abatement in terms of energy efficiency. The flagstone is the Direct Action Plan. This plan will or may impact your business. We say this because the White Paper consultative process that the Coalition will initiate will only be known should they win office. Yes the ‘real’ is it will be a consultative process expressed as the opportunity for your business to provide input into the design of this ‘potential’ new policy framework. In more simple terms it means the details are not yet developed. However, the Renewable Energy Target (RET) has a commitment from the Coalition to retain a 5% to 25% reduction of emissions by 2020 compared with 2000 levels, but will review this commitment in 2015 (then other statements say 2014). That said they intend to wind back many of the provisions of the Clean Energy Future Plan including abolishing the carbon price and disbanding the Clean Energy Finance Corporation, the Climate Change Authority, the Climate Commission and the Energy Security Fund. Then we should note the Coalition intends to expand the existing Emissions Reduction Fund to introduce a buyback, and also plans to expand the Carbon Farming Initiative to achieve emissions reductions in the absence of an explicit carbon price – but the reductions must be ‘real’ against baselines ‘to be advised’.

It is most likely the Coalition’s plans to meet emissions commitments will be more disruptive to electricity supply industries and their downstream industries than labor’s.

Labor (why is it called Labor?) – Reported is among other things, this name makes it easier to distinguish references to the Party from the labour movement in general. Source(s): http://www.alp.org.au/australian-labor/l…

Maybe that is ‘unreal’!

 

Labor has two major policies for abatement changes. Continuing of the Clean Energy Future Plan, and the review of the Renewable Energy Target (RET).  The current RET compels large energy users to invest in renewable energy. This is to the benefit of industries such as wind and, up to an including hydro-electricity. The RET purpose is to introduce more capacity into electricity markets and push down wholesale electricity prices. Therefore the RET is challenging for fossil fuel electricity generators, and the changes will affect them directly and the upstream industries, including oil and gas extraction, brown coal mining and black coal mining, indirectly.

 

That said, Labor is committed to a 5% to 25% reduction of emissions by 2020 compared with 2000 levels, and an 80% reduction on 2000 levels by 2050. Labor has also taken the position and made an announcement of an early transition from the carbon tax to an emissions trading scheme in July 2014, bringing it forward from the previous announcement of 2015. Under the scheme the carbon dioxide equivalent would have a floating price linked to the prices of the EU’s emissions trading scheme. Under this policy, the price per tonne for carbon dioxide is likely to be discounted. The impact uncertainty is what will be the effect on the industry assistance packages included within the Clean Energy Future Plan.

Co2Land org said Labor supports the current 20% RET. This still holds true, as the responsible Department (name too long to mention) and advised work on the review of RET is suspended until further notice, and Labor has made a commitment to not review the target until 2016.

Labor’s changes to the Clean Energy Future Plan will create new winners and losers across energy-intensive industries. Labor’s changes maintain a pricing mechanism as a strategy to reduce carbon dioxide equivalent emissions.

 

Co2Land org has noted IBISWorld’s August 2013 Report has a more detailed outline of the positions taken by the Labor and Coalition parties on major issues impacting Australian industry including workplace reform, energy, resources, broadband network, transport infrastructure, manufacturing and education. They write:

“The 2013 Federal Government election will be dominated by concerns about the economy. The end of the mining investment boom and the continued decline of the manufacturing sector have set a pessimistic tone among Australian businesses.

The Labor Government has taken a ‘glass half full’ approach, pointing out Australia’s strong economic position relative to other advanced economies and successful economic guidance during the global financial crisis.

In contrast, the Coalition points out a widening Federal Budget deficit, a declining economic growth rate, low business confidence and a weak economic performance relative to neighbouring countries.

The winner of the election will have to balance the government’s role to provide fiscal stimulus and counter-cyclical spending with budget responsibility and a plan to reduce government debt.

The Productivity Commission has estimated that there are $12 billion worth of cost-cutting and efficiency savings available to the Federal Government.

The Coalition has backed away from providing a date for a return to surplus, but asserts it will be sooner than a Labor surplus.

Labor forecasts a return to budget surplus in 2016-17, driven by savings made during 2015-16 and 2016-17 when the economy is expected to be in a healthier state than it is presently.”

 

Wait a minute, recently the coalition did say they aim to save $31B – now we are confused – will the ‘real’ number please stand?

Please note: No Green was hurt in this discussion.

Energy Utilities changing Models – A Battery of Choice

As one would normally do, chat about renewables and impacts on the utilities business model while relaxing with friends. It was a case of too much uncertainty over how the consumer would be treated because of change. Central to the discussion was that a provider to the electrical distribution system could threaten the current regulatory and centralized generation models of ‘essential services’.

What does this mean?  The business as usual model is failing where supply centric economics demanded you build additional load capacity and transport the capacity to the place of need. This model also meant the assets, including the customer, was owned by the utility. If you think of it this way, Governments tend to discourage demand side solutions. Demand Management was tended to be more of a series of incentive programs for utilities to duplicate infrastructure to transport to the demand source.

So, what happened to change the balance? The obvious: Technologies improved, carbon became issues for society and clean energy and renewables were being shown as a better way to address the logistics of meeting demand where it was needed. As a result some of the conventional infrastructure was at risk of being a stranded asset and the need to build conventional infrastructure required incentives from Government to reduce the financial risk. For example, the Demand Side Incentive scheme (DIS) formulated at about 2004 is dramatically underspent but is comforting for utilities in being a facility to reduce the financial risk.

If we note the changes in the needs of society as a driver for change: Governments and their policies encouraged that traditional public ownership be phased out to pass the needs to private investment. Government was happy for this ‘fix’ as they see it as the asset is sold for a value and ongoing regulated charges and fees and taxes are being paid to treasury, and that is a public benefit. The perfect storm in Australia is this action is also one of the drivers for electricity tariff increases in Australia. Recently the state of Queensland announced a 21% increase to its general tariff.  A source, CO2Land identifies as SF said: “Therefore those consumers with solar PV are subsidising those consumers that don’t have solar PV”.

From that last statement we can assume government policy (Federal and State) is very much the catalyst that resulted in the model change. Whether the change was necessary was more of a political move in this instance. It followed that technology and innovation evolved and the model change was inevitable. If you follow the beliefs of the 5th Column existing, this was done by infiltration of the policy areas by a particular group. It follows, in contemporary Australia, Government policy is more reactive than before, and since the 1970’s the rule of law was modeled as to be reactive to the needs of the dominate influence. Below is an explanation of this view as posted by CO@Land.org on 3 April 2013. Where:

Co2Land org now asks: If we consider the four primary schools of thought in general jurisprudence :

  •   Natural law is the idea that there are rational objective limits to the power of legislative rulers.
  •  Legal positivism, by contrast to natural law, holds that there is no necessary connection between law and morality and that the force of law comes from some basic social facts although positivists differ on what those facts are.
  •  Legal realism is a third theory of jurisprudence which argues that the real world practice of law is what determines what law is; the law has the force that it does because of what legislators, judges, and executives do with it. Similar approaches have been developed in many different ways in sociology of law.
  • Critical legal studies is a younger theory of jurisprudence that has developed since the 1970s which is primarily a negative thesis that the law is largely contradictory and can be best analyzed as an expression of the policy goals of the dominant social group.

If you think of the debate of tariff increases. Then you should consider it may have been ‘an expression of the policy goals of the dominant social group’, as critical to that issue. We should then think about the set of claims that the “Renewable Energy Targets” (RET’s) had undesirable consequences, and how governments (Federal and State) now realise that the larger than expected number of early adopters who signed up for the long term contracts are now having a negative impact on state & federal budgets, and this is one of the dominate drivers for electricity tariff increases in Australia. For those needing an introduction to the scheme, the RET’s are a federal government initiative commencing during year 2001, and from those bills and legislation various states and territories introduced those targets as various incentive schemes for customers to invest in solar PV with generous feed in tariffs. This incentive had the effect of distorting the demand supply balance, and the popularity embarrassed and alarmed treasury. If we use SF as the source again; “Queensland Govt initially offered 44cents per kWh this has now been reduced to 8cents. That said the response from the customer was rapid with Australia now having 2500MW of solar PV with and average capacity of 3.5kW.”

CO2Land org chose to give an example of Queensland for convenience, as this states geography and population patterns influence the custom that those consumers with a service, are asked to provide subsidies to those that do not.  In the case of electricity you could argue the subsidy required is determined by the length of the extension cords needed. You might understand why that state found it Initially appealing that solar PV was a localized delivery point. However, managing the asset is a different matter.

We are seeing similar issues being evident from around the world – business as usual is failing as the utility model. The danger is stranded assets and less control being possible. A story titled The Clean, Simple Solar and Storage Solution to US Utility Business Model Woes .

http://www.renewableenergyworld.com/rea/blog/post/2013/07/the-clean-simple-solar-and-storage-solution-to-us-utility-business-model-woes?cmpid=SolarNL-Thursday-July4-2013&goback=%2Egde_67258_member_256399748

Tells of an interview with former United States Secretary of Energy Stephen Chu on utility business models.  While the gist of what he said wasn’t new to me, the clean and elegant way he laid out what he sees as the future of utilities and solar power is worth sharing.

Similar to how in the past telephone companies – he specifically named AT&T – used to own the entire telephone system from the overhead telephone lines up to and including the phone in your house, Chu feels that utilities ought to own solar panels and energy storage systems that they put on their customers’ roofs and in their garages. He said if utilities could outfit homeowners with solar panels and a 5-kW battery system, they could continue selling that customer power just as they do now. The utility would own the system, maintain the system and the customer would have no out-of-pocket expenses for it other than continuing to buy power at the same rate or at perhaps an even lower rate.

 In the three-minute interview, Chu didn’t explain another huge reason that utilities should consider this option: distributed generation used in this way counteracts the need to build additional generation as the load capacity needs increase.  And lastly and most important, the utility gets to keep its customer.

Utilities should probably get clear on their approach soon. When it’s just a quarter or a half of one percent of a utility’s customers that have their own PV and are selling their solar power to the grid at the retail rate, the utility doesn’t care. But energy storage and PV panel costs are dropping, and once that percentage of utility customers’  that are zeroing out their bill goes to 5, 10 or 15 percent then “it’s a big deal” said Chu.

Chu said he told utilities that PV and energy storage is going to come and they should “form a new business model” NOW so that what today is a potential revenue loss, could become an area of growth for them in the future.  Plus, he said this model would eventually lead to a more stable grid for us all. “

CO2Land org is finding it difficult to solely blame the RET Scheme as the problem. The evidence is the splitting of the RET’s scheme into a ‘small scale’ offering for predominately solar PV is the problem. It is appropriate to say any change to the utility models would and did have a cause and effect disruption on the industry, and cause and effect type of disruption suggests any intervention will introduce more shocks in the industry, and we can expect that ideologies will continue to influence the Governments policy advisors who are without a full understanding the implications. It also follows that a large dependence on small scale or residential solar PV services implies a need for significant workforce skills shifts to cater for the growth and scope of the model change for utilities to take control of the assets at a domestic level to be to be effective. That is a significant cost driver, and it is reasonable to ask why should the utility be the provider of choice for these services where it would serve to drive up prices?

In defence of RET’s large scale systems, it follows that large systems do not directly affect the utilities mechanism to preserve the current regulatory model, but they shift the balance so that the model needs to be reviewed of the purpose and objectives in the delivery of the product. It follows that centralised generation models are what utilities do very well, and large scale transportation and distribution are well established capabilities of the industry. Expanding that capability to large commercial rooftops and installations might be a good idea. However, it too is not without the need for change. Albeit less dramatic than small scale.

CO2Land org is not proposing we should concentrate on picking winners for the model change.  However, ‘the battery concept’ leads to deeper thinking. The demand initiative needs to be expanded and a battery concept is not just a means of storage of an electron! It can mean tools and equipment that is readily available to balance the total load needs, and not just peak demand requirements. We know solar’s great weakness is peak availability profile and traditional batteries concepts take up rare earth minerals to manufacture. Are they already defunct? A far more sensible battery concept is something that can utilise what we have already consumed and discarded to be returned to there natural elements while producing energy and balancing the supply needs.  If you prefer think of it as a provider it can be an insurance tool for a supply imbalance, So can what they do be a source of energy rationing and balancing that fits neatly into the traditional delivery mechanism.

One such battery concept is the waste to energy gasifiers and their products including pyrolysis retorts. These can easily be written into the current infrastructure and be part of any new regulatory mix – even provide a result for policy without implications – it is not creating anything new – just making something old new again!

For the future, CO2Land org can see a lot more independent renewable sources becoming the norm, and utilities will be using energy exchanges to sell power to customers. This differs from ownership of customers in that bidding could be managed power purchasing agreement with give and take provisions in the price. What regulators will have to deal with is that nationwide and globally installing microgrids for Businesses and Communities will need to fit into economic as well as technical delivery models. A real power of choice if you prefer to think that way.

Sun, Wind and Fire – renewable positioning in a policy trilemma

Sun, wind and Fire is not a story of the Gods – except you could draw a conclusion there is a battle for policy supremacy as a renewable energy source. There is a very rapid growth in renewable energy deployment in recent times, driven by rapidly increasing costs of fossil fuel stocks, and the movement to a low carbon energy system and improvements in the renewable technologies and materials. Are there problems? Yes, the elephants in the room are obvious but largely ignored. Some examples: Solar requires rare earth materials for the products, as does voltage batteries storage systems, and wind needs magnets produced in such a way that land contamination is a major drawback. Ironically, fire can be a battery of capacity and availability and utilise only common earth materials and most importantly make use of waste – and there is more – even revert waste to original elements and products.  Of course the bigger elephant for Solar and Wind is when it comes time for decommissioning. Why is this so, the analogy could be asbestos and who is paying for the removal programs – you.   Few if any governments want that issue known as it would require a future funds program as an assurance when only the positives of the now conditions are ‘sold’ as policy.

If you did not know, renewable energy technologies differ greatly from one another, and a range of issues has arisen that are common to most. This could be taken back to the problem that these tend to be dealt with on a renewable energy industry level forum basis rather than accepting that the problems are technology by technology issues in their battles for policy gods acceptance. Rarely, do you see the fora of the renewable industry admitting to issues to include large deployment growth rates, intermittency with respect to electricity production requirements, distributed rather than centralised deployment and scheduling of loads, the relatively immature supply chains & support networks, the quality issues of the production points, the land use changes for the provision and production of the materials needed, and the need to update regulatory frameworks & institutional inertia outside of our current frameworks.

On that later point, A report prepared for the Consumer Action Law Centre by Allan Asher, Foundation for Effective Markets & Governance November 2012 on http://femag.anu.edu..org.au/ , reads as: “The title of the report—”A policy trilemma: creating an affordable, secure and sustainable energy market”. “Identifies the central challenge facing the energy market—the need for it to deliver affordable, secure and sustainable energy services. The report draws on international developments, particularly from Europe and the United Kingdom, where there has been acknowledgment that, in energy markets, the goals of efficiency and competition have not necessarily ‘trickled down’ to satisfy the needs of consumers in these three key areas. Throughout, the report makes a number of recommendations to inform a policy and regulatory framework that has a more rigorous focus on the interests of consumers. Following publication of this report, Consumer Action will engage politicians, policy makers, regulators, and representatives of industry and consumers on reform measures that will best serve the long-term interests of consumers”.

Co2Land org notes that the messages of the ‘trilemma’ is the view of innovation needs to be incorporated into the ‘system’ where technical and commercial innovation encouragement through: Incentives, responsibility passed on to third parties for their delivery, and building on low carbon funding models. The point is also made that a capacity mechanism or system be incorporated for incentives through both generation and demand management as one of the key elements of the energy market reform (EMR) package.

Fire, has extraordinary abilities to be all that is needed, and as it only requires either common materials or waste to be reformed and it has the capacity to act as a bridging technology it is increasingly likely policy will need to take stock of the realities of the ‘sustainable’ attributes. In terms of the energy market fire products can be assembled as a “package” that compliments a range of utilities and could be deemed part of strategic infrastructure. With advances in ‘smart grid’ systems this is more likely as before the requirement of a high level of automation and remote management on the system was a detractor. Now it is a positive.

This idea is particularly attractive for biomass plants, as the advances and the idea would be to differentiate biomass plants from normal generators and that they can be regarded as “load following batteries” as integral parts of the grid infrastructure, rather than a separate input to it.

Why not call your local member of parliament or future hopeful to discuss innovative restructuring. Think of the idea of how a fixed return on biomass power plants is a true renewable and how other network upgrades can be addressed to accentuate ‘sustainable’, and the capacity requirements of balancing the system infrastructure.