This month, we’re looking at how and why Sunnova is trying to build off-grid neighborhoods, how the Biden administration is using financial engineering to help shape oil prices, why converting underutilized office space is actually important climate policy, and how the IRA is already driving domestic investment. And bike buses!
Have Sun, Need Utility?
Sunnova asked regulators in California to let it build off-grid neighborhoods in California, looking for opportunities to reduce costs by developing micro-utilities instead of connecting to the grid (which can be expensive, especially in remote areas).
That this is a topic of conversation at all emphasizes how far costs for building distributed generation have plummeted. While this approach is never going to be the typical solution for electricity, it will be interesting to see to what extent these off-grid micro-utility developments flourish in remote areas. By the way, these would presumably be all-electric homes, so no electricity, or gas hookup.
Mountainous areas in California are probably the sweet spot for this sort of development, between the high cost of power, the complexities of building transmission and distribution infrastructure on protected lands, and the high costs required to connect these areas to the grid. Link
More Fun Than a Barrel of Oil
Credit: Reuters/Adrees Latif
The Biden Administration is pursuing an innovative strategy to help address high gas prices, without significantly undercutting the transition to electric vehicles. As described by The Guardian:
The proposal would work by wielding the Strategic Petroleum Reserve, the federal government’s store of oil, in a way that sets a partial floor and ceiling on oil prices.
In short, when demand is weak and prices fall so low that pumping more oil becomes unprofitable, the government would buy at a price that’s high enough to buoy industry’s profits and store barrels in the reserve. When demand is strong and prices climb, the government can intervene by flooding the market with reserve oil, which could help bring down prices.
A substantive change here is adjusting how the Department of Energy procures oil for the strategic petroleum reserve – instead of just buying it on the spot market, the proposal would enable the government to use fixed price forward contracts to buy oil in the future at a predetermined price. Essentially, using options to set a price floor, while also planning to leverage the reserve to decrease prices if they climb too high (which could potentially reemerge with OPEC’s recent decision to cut production). Financial engineering to the rescue…?
This is a nice example of using all the tools at one’s disposal. This move was the product of some smart thinking, but didn’t need any new law or technological innovation to be created. We’ll see how this plays out over time, but I am guessing this will turn into one of those things that we’ll hardly remember when the government didn’t do financial engineering to help stabilize oil prices.
Office Conversions = Climate Policy
Credit: Library of Congress
In Chicago, a recent article asked whether there will be a “Google effect” brought on by the company’s acquisition of the Thompson Center, where underutilized office buildings in the loop get converted to housing?
Let us hope! Growing infill housing might not sound that sexy (or even related to climate), but research in California suggests it is actually one of the most impactful policies a local government can implement (dense buildings are a bit more efficient, but a lot of the gains come from people driving fewer miles). More on this topic from the New York Times: “A Key to Controlling Emissions: More Buildings in a City’s Unused Spaces”)
Here in Chicago, the city just recently announced an effort to support office to residential conversions in the LaSalle street corridor, which has a number of underutilized office buildings. This is well aligned with the fundamentals – older classic and art deco buildings tend to work well for residential conversions – they often have grand lobbies, and the floor plans of the buildings are amenable to apartments. On the other hand, generic rectangular office towers don’t work as well (too much of the footprint is far away from windows, and the plumbing is in unhelpful locations).
As the dust continues to settle from the major lifestyle changes brought on by the pandemic, expect to see more conversions of classic buildings (and hotels) to residential housing.
Policy Driving Electric Vehicle Investment
There was some grumbling after the Inflation Reduction Act (IRA) passed about how much effort it was going to take for electric vehicle manufacturers to build up domestic supply chains in order to qualify for the full EV tax credits. That said, things seem to be going in the right direction right now.
Just in the last month, LG Energy announced it plans to have six battery plants open in North America by 2025, and GM announced it is converting a drivetrain plant in Toledo to build parts for new electric vehicles, investing more than half a billion dollars in the process. These are directly related to the new subsidies passed. For even more, check out this New York Times piece on the subject.
One relevant point I’ve heard energy transition thought leader Jesse Jenkins make is that, if you are going to have to build entire new industrial bases as part of the country’s energy transition, you may as well build them in the United States. Seems like that’s on track so far!
What is a bike bus, I hear you saying? Well, it is not a bus – it is a cross between a bike ride and community organizing. Bike buses have just started to pop up in the last year or two (originally in Barcelona I believe); Organizers share a route with a timetable of when they’ll arrive at each ‘stop’ (such as a major intersection), and participants can grab their bikes and join in. Part of the allure here is that the critical mass of riders makes the experience more safe, and importantly more fun, for the participants.
If you happen to be in Chicago, the group Chicago Bike Grid Now is organizing recurring bike buses heading downtown from several different neighborhoods/directions on Wednesdays. This is one of those things that didn’t exist until quite recently, but I would guess will become a staple in communities large and small across the country within the next several years.
Credit: Lawrence Berkeley National Laboratory
Lawrence Berkeley National Laboratory is out with its annual data-rich report on utility scale solar. Fantastic reading for the energy nerd in your life! Among the findings: 90% of new utility-scale solar added last year used single-axis tracking; more than 12GW of utility-scale PV solar came online in 2021, more than a third of utility-scale solar projects in queues nationwide included batteries, and there are more than 600 GW of solar in development queues nationwide (compared to 51 GW of solar currently operating nationwide). Link
Big potential for bidirectional charging to help California keep the lights on. Link
The founder of Patagonia renounced his ownership (and billionaire status), donating the shares of the company to help fight climate change. Link
California is banning new natural gas furnaces and water heaters by 2030. California goes first; others follow. Link
Brookfield Renewable invested $500m in Illinois-based LanzaTech, to develop installations that upcycle carbon pollution into sustainable fuels and packaging. Link
This Inside Climate News article explores the ins and outs of using timber to help decarbonize building construction in cities. Link
The Office of the Comptroller of the Currency hired a climate risk regulator. Link
SunPower is partnering with Ikea to offer residential solar at its California locations. Link
The White House Launched a website, CleanEnergy.gov, to be a clearinghouse for information on how consumers can access incentives and benefit from the IRA. LinkMezli is a robotic lunch stand in a shipping container. It claims it can sell meals for cheaper than a comparable vendor like Chipotle (no building, limited labor). Presumably coming to a city near you before too long… Link