E3: Energy+Environmental Economics

Clients call on E3 when they need rigorous analysis that withstands the test of third-party review and regulatory scrutiny.

News    |    2014

November 2014

A research team led by E3 in collaboration with Lawrence Berkeley National Laboratory and Pacific Northwest National Laboratory has published a landmark report Pathways to Deep Decarbonization in the United States on the U.S. energy future. Based on analysis with E3's PATHWAYS model, the report describes the technology, infrastructure, and investment needed to reduce U.S. greenhouse gas emissions 80% below 1990 levels by the year 2050. E3's report is part of an international collaboration in which research teams from the 15 highest-emitting nations in the world are developing blueprints for a low carbon transition in their own countries.

E3 Chief Scientist Dr. Jim Williams and Mr. Trevor Houser, Partner of the Rhodium Group joined forces to present an introduction to China's energy system for California state agency personnel in Sacramento on October 20. About 60 agency staff participated in person at the California Energy Commission and online, as part of California's ongoing efforts to develop collaboration on climate and clean energy policy with China. E3's presentation: "A Primer on China's Electricity System: Planning, Pricing, and Operations."

October 2014

Dr. Elaine Hart of E3 contributed an article on renewable integration challenges and opportunities for the Stanford Energy Journal's "Rethinking the Grid" issue and participated in a round table discussion with other industry and academic leaders exploring the future of the grid hosted by the Stanford Energy Club.

September 2014

Arne Olson and Nick Schlag of E3 will participate in the Western Interstate Energy Board's (WIEB's) upcoming fall meeting in San Diego. Mr. Olson will be a panelist on The System Flexibility Forum on October 20-21. Mr. Olson and Mr. Schlag will present key findings from the E3 report, Natural Gas Infrastructure Adequacy in the Western Interconnection: An Electric System Perspective at the joint CREPC/SPSC/WIRAB meeting on October 21-22.

Kush Patel of E3 presented on developing a cost-benefit methodology for valuing distributed energy resources (DER) at the August 25-26th conference in Charleston, South Carolina organized by the Electric Cooperatives of South Carolina and the South Carolina Coastal Conservation League. This conference was in response to South Carolina's recently passed legislation, Act 236 or "the Distributed Energy Resources Programs Act" focused on setting targets for DER deployment and compensation over time. Mr. Patel also spoke on several panels providing guidance and lessons learned from E3's recent experience in performing DER cost-benefit studies in California, Hawaii, and in Nevada. E3 has been retained by the South Carolina Office of Regulatory Staff (ORS) to develop and evaluate the costs and benefits of the utility proposed DER programs in the state, such as net metering, incentives, and 3rd party ownership.

August 2014

E3 and DNV GL completed the second phase of their investigation into the adequacy of gas infrastructure to meet the needs of the electric sector in the Western Interconnection. The results of the study Natural Gas Infrastructure Adequacy in the Western Interconnection: An Electric System Perspective conducted for the Western Interstate Energy Board (WIEB) are summarized in Natural Gas Infrastructure Adequacy in the Western Interconnection: An Electric System Perspective, Phase 2 Report. Phase 2 focused on the question: Will the gas system have adequate short-term operational flexibility to meet increased volatility in hourly electric sector natural gas demand due to higher penetrations of variable renewable resources in the Western Interconnection? The purpose of the study investigation is threefold: (1) to focus the regional dialogue on the most important gas-electric coordination issues; (2) to assess the magnitude of any potential limitations of gas infrastructure to support the future demands of the electric sector in the regions evaluated; and (3) to provide guidance to policymakers, regulators, pipeline companies, utilities, generators, and electric sector planners on actions that may be needed to overcome potential challenges resulting from the increasing reliance on natural gas for power generation. This study is intended to provide a bridge between the two industries in the Western Interconnection, to foster communication and to educate participants on both sides of the gas-electric interface in a region where dialogue has, to date, been limited.

July 2014

Eric Cutter, Ben Haley, Jim Williams and C.K. Woo of E3 were coauthors on a recent article describing a water-energy avoided cost framework; also published online in the Electricity Journal. Energy embedded in the provision of water has been the subject of numerous water-energy nexus studies that are nearly unanimous in recommending integrated evaluation of energy and water savings from demand-side management (DSM). Joint implementation of DSM, however, remains a rare exception. The recommendations and tools developed to date are either overly broad or too specific to readily implement across multiple utilities. In this article, we link a forward-looking marginal water supply approach and the well-established energy avoided cost framework to jointly value water and energy efficiency savings. As a case study set in the San Francisco Bay Area of California, we evaluate cold water, hot water and energy efficiency measures. Avoided costs for water are far more impactful than embedded energy for efficiency measure cost-effectiveness. While several measures fail cost-effectiveness tests when viewed from an energy or water utility perspective alone, they pass under an integrated approach. Thus, the integrated approach supports rational cost sharing between energy and water utilities and facilitates cooperation and increased funding for DSM.

E3 has played a leading role in a new landmark study of what is technically required to deeply reduce global greenhouse gas emissions. "Pathways to Deep Decarbonization," prepared by research teams from the fifteen highest emitting countries, was presented on July 8 to U.N. Secretary General Ban Ki-moon in advance of international climate negotiations to take place in Paris in 2015. "This is exactly the kind of practical problem-solving that we need to tackle climate change," Secretary General Ban said. E3's Dr. Jim Williams, Dr. Fritz Kahrl, Jack Moore, and Ben Haley performed the U.S. analysis, identifying multiple technically feasible pathways to reduce U.S. emissions more than 80% by 2050. A follow-up economic analysis is in progress. The study has been widely cited in the press, including this article in the New York Times.

June 2014

E3 wrote a paper "Valuing Energy Storage as a Flexible Resource" that was submitted as comments in the CPUC Proceeding A. 14-04-006 summarizing key issues of the potential benefits of energy storage for consideration in the applications of PG&E, SCE and SDG&E for approval of their respective energy storage procurement framework and programs. The paper uses results from the E3 study "Investigating a Higher Renewables Portfolio Standard (RPS) in California" and subsequent REFLEX modeling work to demonstrate why curtailment of renewable generation is a substantial and quantifiable benefit that should be considered in valuing the relative benefits of both short- and long-duration energy storage. The overarching themes of this report are that a cost-effectiveness framework for energy storage should: a) include not just existing markets and avoided costs, but also the future benefits of reducing renewable curtailment under higher RPS levels, b) describe how the relative costs, benefits and tradeoffs of short- vs. long-duration solutions will be quantified and evaluated and c) include system level and portfolio costs and benefits.

E3 has been selected by the Tata Power Delhi Distribution Limited (TPDDL), a leading electricity distribution company in India, to develop a distributed energy resource (DER) plan for its service territory in north Delhi. The project is being supported by a grant to TPDDL from the U.S. Trade and Development Agency (USTDA). The project will consider solar, demand response, storage and other DER and will enable TPDDL to prioritize and deploy resources that will improve the reliability of its electricity network, reduce emissions, and lower overall power costs for its more than six million customers. Mr. Snuller Price, Dr. Priya Sreedharan and Ms. Amy Guy Wagner from E3 will work closely with Mr. Praveer Sinha, CEO and Mr. Arunabha Basu, Chief of Technology and Systems of TPDDL. Special emphasis will be given to assessing the financial and technical viability of power generation from renewable energy resources, the integration of demand response technologies on TDPPL's network, and the development of specifications for a pilot project. This study responds directly to TDPPL's goal of generating cleaner, more reliable electricity, while also positioning U.S. firms to provide technology solutions. This project supports bilateral U.S.-India government priorities, including increasing domestic energy production and implementing smart grid solutions, as identified during the ongoing U.S.-India Energy and Strategic Dialogues.

E3's Director of Policy and Strategy, Dr. Nancy Ryan, a former member of the California Public Utilities Commission, joined current Arizona and Hawaii Commissioners on a panel at the June 2014 Western Conference of Public Utility Commissioners in Seattle. Dr. Ryan shared her views on California's lessons learned from its current Renewables Portfolio Standard (RPS) program and provided insights into challenges the state must overcome as it goes beyond the current 33% RPS target. Dr. Ryan's main message to the western commissioners was that the region can realize a renewable future cost-effectively by building integration solutions into portfolios from the ground up. Dr. Ryan presented findings from E3's recent study on "Investigating a Higher Renewables Portfolio Standard in California" .

April 2014

Eric Cutter, Ben Haley, Jeremy Hargreaves and Jim Williams of E3 were co-authors on a recent paper "Utility scale energy storage and the need for flexible capacity metrics" to be published in the July issue of Applied Energy. E3 used a mixed integer linear program to optimize the dispatch of three bulk energy storage technologies and a conventional combustion turbine. Each technology was modeled as price-takers, co-optimizing their dispatch first in day-ahead and subsequently in real-time energy and ancillary service markets. Due to their more flexible operating characteristics, energy storage technologies earn much higher net revenues than CTs and participate more in the DA markets where most ISO procurement occurs. Our results show that the traditional cost of new entry (CONE) is no longer an adequate cost metric when flexibility is of equal or greater concern than peak capacity for long-term planning, as it is in California.

March 2014

Amber Mahone, senior consultant at E3, was invited to present on an energy efficiency panel at ACEEE's 2014 National Symposium on Market Transformation, on March 31st in Baltimore, MD. Ms. Mahone discussed ways to create a portfolio of energy efficiency measures that balances the need for short-term savings with long-term energy efficiency gains. Her presentation discusses the role of the societal cost test in valuing long-term energy efficiency, and draws from E3's work on achieving long-term greenhouse gas reductions in California.

E3 and DNV GL completed the first phase of their investigation into the adequacy of gas infrastructure to meet the needs of the electric sector in the Western Interconnection. The results of the study conducted for the Western Interstate Energy Board (WIEB) are summarized in Natural Gas Infrastructure Adequacy in the Western Interconnection: An Electric System Perspective. Nick Schlag and Arne Olson of E3 presented the study's findings at the Committee on Regional Electric Power Cooperation and State-Provincial Steering Committee (CREPC/SPSC) meeting on March 25, 2014 in Tempe, Arizona.

E3 helped the Port of Long Beach, the second-busiest port in the nation, obtain electric rate discounts and a program under which Southern California Edison (SCE) installs major electric infrastructure at no cost to the Port or its tenants. These measures will support critical electrification and environmental improvement projects at the Port, improving air quality in the region. The rate discounts are expected to total $350 million over the next 24 years, equating to a savings of about 15%. E3 Senior Consultant Michele Chait led electric rate negotiations for the Port of Long Beach.

Nancy Ryan, E3's Director of Policy and Strategy, was invited to address the March 11 meeting of the Plug-in Electric Vehicle Collaborative in San Diego, California. Regulators, utilities, automakers and other stakeholders come together in the collaborative to share insights and experiences on the roll-out of plug-in electric vehicles in California. Dr. Ryan presented findings from E3's recent study on Investigating a Higher RPS in California, highlighting the implications for the PEV market, charging infrastructure, and public policy.

February 2014

Dr. Ren Orans, Dr. C.K. Woo and Jenya Kahn-Lang of E3 were co-authors on a recent paper "Are Residential Customers Price-Responsive to an Inclining Block Rate? Evidence from British Columbia". In this article where BC Hydro's bimonthly billing data is used, the authors document statistically significant price elasticity estimates to provide BC Hydro with the support for using a residential inclining block rate (RIB) as a tool for energy conservation.

Texas's wholesale electricity market has undergone major regulatory changes over the past two decades. E3 Senior Partner Dr. C.K. Woo and co-authors Jay Zarnikau - an adjunct professor at the LBJ School, and Ross Baldick - an electrical engineering professor at the University of Texas at Austin, recently published an article "Did the introduction of a nodal market structure impact wholesale electricity prices in the Texas (ERCOT) market?" in the Journal of Regulatory Economics (http://link.springer.com/content/pdf/10.1007%2Fs11149-013-9240-9.pdf), analyzing how the transition from "zonal" to "nodal" markets in Texas, which became functional in December 2010, has affected prices. The analysis finds that the change in Texas's electricity market structure resulted in about a 2% drop in prices controlling for other factors such as natural gas prices, total system load levels, dispatchable generation levels, the treatment of local congestion costs, and the treatment of the revenues received by the market from the auctioning of transmission rights.

January 2014

In an ambitious, forward-looking study jointly sponsored by California's five largest electric utilities, E3 evaluated the operational challenges, potential solutions, and cost consequences of a higher Renewables Portfolio Standard (RPS) in California by 2030. The study benefited from technical input from the CAISO as well as independent review from a distinguished four-member advisory panel. The study utilized E3's first-in-class Renewable Energy Flexibility (REFLEX) model on ECCO International's ProMaxLT production simulation platform. The report and associated materials are available at Investigating a Higher Renewables Portfolio Standard in California.