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11.28.2018

Back in 2008, there was a lot of excitement about geothermal. Many major banks were backing large-scale geothermal projects around the world; a wide range of startups were promising to unlock new resources; and wind and solar hadn’t shown their explosive growth yet.  Then the financial crisis hit. In the decade since, growth in geothermal has been lumpy — relegated to a handful of supportive markets around the world.  Why has geothermal grown so slowly compared to other renewables? What’s holding it back? This week, we’re joined by Alexander Richter, the founder of the geothermal news site ThinkGeoEnergy. Alex has been following the sector for a long time — working in project finance, research and journalism. We’ll talk with him about the last decade of geothermal development. Then, in the second half of the show, we'll discuss The Green New Deal.  There’s a movement within the Democratic Party to push climate hard. What’s behind it? How would the New Green Deal work? (As a compliment to this conversation, check out the latest episode of Political Climate for a lot of the backstory.) The Energy Gang is brought to you by GE's Reservoir, a modular lithium-ion energy storage system that can slash construction costs by 50 percent. Find out more about what Reservoir can do for your electric grid, solar plant, wind farm, microgrid or thermal power plant. We’re giving listeners major discounts this fall. Use the promo code PODCAST to get a $50 discount for a GTM Squared membership and 20% off our final GTM conferences of the season. Get your GTM conference discount here.  Get your GTM Squared discounted membership here. Subscribe to The Energy Gang podcast via Apple Podcasts, Spotify, Google Play, Stitcher or wherever you find your audio content.

11.28.2018

Photo Credit: Zhu Difeng / Shutterstock There is a myth that cooling technology is just for those who live in hot and humid climates. Let me break this illusion. Cooling is needed all around the world. How else do you think we would keep the food fresh and safe to eat? Or create and preserve medicines for people to shield their lives? Even the Internet relies on cooling technology to keep servers in massive data centers from overheating.

11.28.2018

Enel recently announced a strategic, three-year plan that boosts the carbon-free portion of its power portfolio from the current 48 percent to 62 percent by 2021.  Looking ahead, the European energy distributor will spend 42 percent of its money on renewables — which it called “the driver of Group growth” — and just 9 percent on thermal generation. Four percent of capex will go to supporting Enel X, its e-solutions division launched in 2017 comprised of acquisitions including Demand Energy, enerNOC and eMotorWerks. The plan comes on the heels of a similar 2017 plan that focused on digitalization and streamlining Enel’s businesses. This year, Enel said prioritization of generation decarbonization will allow the company to seize on the financial opportunities associated with climate action. It’s part of a multi-year pivot started in early 2016, when Enel put forward a vision of a utility “ready to lead the energy transition.”  “The transformation underway in our industry is presenting challenges, but also opening new opportunities,” said CEO Francesco Starace in a statement about the 2019 through 2021 plan. “Today’s Enel is a more sustainable, efficient, profitable and lower-risk organization.” Elta Kolo, grid edge research manager at Wood Mackenzie Power & Renewables, said the latest plan fits squarely within Enel’s transition-focused evolution.  “They’re full force on the energy transition,” she said, adding that the plan also lines up with European policy objectives.  All told, Enel plans to spend €10.6 billion (nearly USD $12 billion) on renewables and add 11.6 gigawatts of capacity through the plan period, an increase from its previous plan that forecasted an added 7.8 gigawatts through 2020. At the same time, Enel will draw down thermal capacity by 7 gigawatts. Enel also outlined investments in electric vehicles. About €220 million ($248 million), 20 percent of Enel X’s capex, will go to infrastructure that supports “sustainable mobility.” Separately, the group said it would install 455,000 electric vehicle charging points. The energy company also plans to install 46.9 million smart meters and spend €5.4 billion (over $6 billion) on digitalization. Enel also noted that fiber optics will continue as a priority for Enel X, “as a key enabler of smart city infrastructures and digital platforms,” with joint ventures including Open Fiber in Italy and Ufinet in South America.   "The activity in fiber optics is critical in the digitization efforts in gaining efficiencies across retail, distribution and direct to customer services,” said Kolo. “It will be interesting to see how those joint ventures evolve."  The overall plan falls in line with Enel’s past statements about the energy transition. When it launched, the company fashioned Enel X as “a key component of the group’s strategy to lead the ongoing energy transition,” which Enel said was changing the role of utilities. Buying up clean energy startups like those rolled into Enel X, the company said, allowed it to “accelerate the transition towards new businesses.” Kolo said Enel will likely pause on acquisitions for now, focusing capital on the new companies it’s already bought. “If we look at the €27.5 billion in forecasted gross capex between 2019 and 2021, the majority of that is spend on capital with only 4 percent allotted for the development of the distributed practice Enel X,” said Kolo. “Although that 4 percent adds up to €1.1 billion, I think Enel will focus that spend on giving the grid edge acquisitions of Enernoc, Demand Energy and especially eMotorWerks the platform they need to scale across Enel’s global footprint rather than continuing to expand acquisitions.” The utility has also moved to get rid of “assets no longer fitting with its strategic guidelines.” In its 2017 plan, Enel said it would offload €3.2 billion in existing assets, with a focus on thermal generation and reducing engagement with operating companies in “non-strategic” markets like some areas of South America.

11.28.2018

Fears about the energy consumption of cryptocurrency mining have been temporarily quelled by a slide in the value of cryptocoins, including bitcoin itself. The world’s most popular cryptocurrency was trading at around $3,700 at the end of November, down almost 55 percent from its $8,200 value a year ago and more than 79 percent from its all-time high of $17,900 in December 2017.  Bitcoin had been trading at a fairly stable rate of between $5,000 and $7,000 since June but began to slide mid-November onwards. It lost almost 41 percent in value between Nov. 13 and Nov. 26, sparking panic among crypto investors.  “Bitcoin is in crisis,” cried Bloomberg. “The virtual currency’s behavior since the start of the year doesn’t just look like a bubble bursting; it looks more like a currency under attack.”    Other major cryptocoins fared no better. At the end of November, the world’s second-largest blockchain currency, ethereum, was down around 78 percent from a year ago and 92 percent from its all-time high in January.  And bitcoin cash, widely seen as bitcoin’s main competitor, was down 89 percent from a year ago and 97 percent from its December 2017 peak. Bloomberg noted that the coins’ depreciation since December of last year had wiped around $700 billion off cryptocurrency markets. That’s the same amount as was used to bail out U.S. banks after the subprime mortgage crisis in 2008. Most of the fall in cryptocoin values happened at the beginning of this year, when investors panicked at the prospect of regulatory crackdowns in key markets such as China.  Like bitcoin, though, ethereum and bitcoin cash had been trading in a fairly stable fashion in recent months. The reason for the latest decline is unclear, although some observers blamed uncertainty from a planned division, or "hard fork" of bitcoin cash to form a new currency. While further losses are bad news for investors, the crypto crash could have a silver lining in terms of global energy consumption. Blockchain-based cryptocurrencies have traditionally relied on a process called proof-of-work for transaction validation and new currency creation.  Proof-of-work relies on computational problem-solving that increases in difficulty along with the value of a cryptocoin, a process known as mining. In bitcoin’s case, the computing effort is believed to require as much energy as a medium-sized country. Concerns over bitcoin’s energy use didn't diminish after the currency lost much of its value in early 2018, because the cryptocurrency’s previous peak spurred the creation of a host of alternative coins based on blockchain. Even at the start of November, a paper in Nature claimed that cryptocurrency mining for four popular coins — bitcoin, Ethereum, Litecoin and Monero — was taking up more energy than real-life mining, for an equivalent market value.  “While the market prices of the coins are quite volatile, the network hashrates for three of the four cryptocurrencies have trended consistently upward, suggesting that energy requirements will continue to increase,” worried the authors. There are signs the latest drop in crypto values may have changed the picture, though. According to the Digiconomist Bitcoin Energy Consumption Index, created by PricewaterhouseCoopers data consultant and blockchain specialist Alex de Vries, bitcoin energy consumption fell around 27 percent in the last two weeks of November.  The cryptocurrency still uses more energy than Bangladesh, though. Scott Clavenna, chairman of Greentech Media at Wood Mackenzie Power & Renewables, said bitcoin’s high energy consumption was not only a sustainability problem but also an issue for those dreaming of a truly decentralized currency. “Mining has been a classic double-edged sword,” he said. “As a rewards-based approach to securing a network, it has proven successful in supporting the growth of bitcoin and other cryptocurrencies, but it also has led to a couple unfortunate outcomes.” As the price of bitcoin goes up, so does the incentive to invest more in energy-hungry mining equipment, he said.  Consequently, the mining ecosystem has consolidated around players who can afford massive mining operations or who band together into large mining pools.  “We have a bitcoin market today that consumes tremendous amounts of electricity for questionable value, while not quite delivering on true decentralization of a financial system because of mining consolidation,” Clavenna said. “The falling price of bitcoin can be seen as positive in this light. Reducing the reward for mining is the only way to reduce overall network power consumption and may have an impact on further consolidation as well.” Jesse Morris, chief commercial officer for blockchain platform developer Energy Web Foundation, added: “It will be very interesting to see what happens to the size and energy intensity of the bitcoin mining pool in particular.”  Many miners will drop out of the bitcoin network because the current price cannot cover the cost of mining operations, he said. At the same time, though, with fewer participants in the bitcoin mining pool the difficulty of the algorithm should drop. “I’m not entirely sure what will happen to energy consumption net-net, but it will be very interesting to see how many miners drop out of the market in this downturn,” Morris said.  “However, for those businesses genuinely using blockchain and digital technologies to solve problems in the real world, the work continues.”

11.27.2018

Pacific Gas & Electric could soon get a legislative lifeline to help manage the threat of multibillion-dollar liabilities from this month’s Camp Fire, a move that could be critical to shield the utility from the looming threat of bankruptcy.  The bill from California Assemblyman Chris Holden, expected to be introduced as early as next week, would amend a critical provision of state law SB 901, the wildfire omnibus bill passed in September. Among its provisions, SB 901 will allow PG&E to issue bonds to pay for the potential liabilities of the deadly wildfires of 2017 — but it didn’t extend that option to fires this year.  Holden’s proposed bill would extend this provision to 2018, giving PG&E the option to raise bonds to cover the potential liabilities it faces in the wake of the Camp Fire. With 85 deaths confirmed to date, the fire has become the state’s most destructive in history. PG&E has not been found responsible for either the Camp Fire or the Tubbs Fire, both of which are still under investigation. But the California Department of Forestry and Fire Protection (Cal Fire) determined in May that PG&E lines were the cause of several fires that killed at least 15 people and razed over 5,000 homes last fall.  PG&E faces multiple lawsuits from residents who lost loved ones and property in the Tubbs Fire, which was far more damaging than the series of fires it was found liable for causing by Cal Fire this spring. Analysts have estimated the total potential liability could be as high as $15 billion for that fire.  As for the Camp Fire, current estimates put the damages in the $7 billion to $10.5 billion range. While the cause is still under investigation, PG&E reported a day after the fire that it “experienced an outage on the Caribou-Palermo 115 kV transmission line in Butte County,” in a location and at a time close to those identified as the ignition point of the Camp Fire.  PG&E shares lost nearly half their value in the week after the Camp Fire started, prompting it to borrow all of the cash available under its revolving credit facilities, roughly $3.1 billion, a move that analysts noted could be a precursor to a decision to file for bankruptcy protection. Moody’s downgraded PG&E’s credit rating to near-junk status that week, noting that its wildfire liability exposure exceeds its current market capitalization.  The freefall prompted California Public Utilities Commission President Michael Picker to take the unusual step of declaring that regulators would seek to avoid a PG&E bankruptcy. Picker said the CPUC should use the powers given to it by SB 901, as well as by asking the legislature to alter the law to allow PG&E to raise bonds to pay for fire damages, as Holden’s proposed bill would do.  PG&E’s exposure to wildfire liabilities is heightened by the state’s “inverse condemnation” legal standard, which holds utilities responsible for all damages caused by their equipment. Outgoing Governor Jerry Brown had wanted to include inverse condemnation reform in this year’s wildfire package, but the proposal was dropped from the final bill under heavy opposition from insurance companies, homebuilders and the groups representing PG&E customers suing the utility for last year’s wildfires.  Holden told Bloomberg on Tuesday that his bill won’t take on inverse condemnation reform. With the legal standard still in place, it’s possible that PG&E could face liability for wildfires if its equipment played a role in starting the fires, even absent a showing of negligence on its part. PG&E reported this month that it has about $1.4 billion in wildfire liability insurance for the period of August 2018 to July 2019, an amount dwarfed by its potential liability for the Camp Fire.  To manage this exposure to liability, SB 901 instead gives the CPUC several tools to limit the amount that PG&E or other utilities would have to pay. For PG&E’s 2017 wildfire costs, the bill asks the CPUC to conduct a “stress test” that takes PG&E’s financial status into account, and limits costs to the “maximum amount the corporation can pay without harming ratepayers or materially impacting its ability to provide adequate and safe service.” Any costs over that threshold would be allowed to be covered through bonds issued by PG&E and backed by increased rates on customers. SB 901 also provides for the CPUC to review future fires through a “reasonableness” review, to determine which costs can be passed on to ratepayers, versus those that must be borne by the utility’s shareholders. This provision only applies to fires in 2019 or later, however.  Kellie Smith, a consultant for the California Assembly's Utilities and Energy Committee who is advising Holden on the bill, told Utility Dive that the broader goal is to forestall disruption that could come in the wake of a PG&E bankruptcy.  PG&E managed to keep operating the grid through its previous bankruptcy after the state’s 2001 energy crisis — although at a cost of roughly $10 billion to its customers, and tens of billions of dollars to the state as a whole. But today, PG&E is much more closely intertwined with the state’s ambitious green energy and carbon reduction goals, with billions of dollars in renewable energy procurement, grid modernization and distributed energy integration investment at stake. 

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