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Brazil and California: Partners on Renewable Energy Grid Integration

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PAUL GHIOTTO:
[SPEAKING PORTUGUESE] This is Paul Ghiotto from the
U.S. Embassy Brasilia Brazil. I Have the pleasure today
to begin our web chat with Angelina Galiteva of the
California Independent Systems Operator Board as well
as Renewables 100. This web chat is
hopefully the first of a series of web chats
with renewable energy experts from the
United States who have been participating
in a climate partners campaign with the State
Department through Mission Brazil, not only U.S.
Embassy Brasilia but also our consulates. To bring U.S. renewable energy,
energy efficiency expertise policy backgrounds and
lessons learned to Brazil so that Brazil can also develop
its renewable energy sector and hopefully to benefit the
greater climate and reduction of carbon emissions. Again by means of introduction,
Angelina was a guest of ours here in Mission Brazil
in November, 2015. She visited both U.S.
Embassy Brasilia as well as Consulate General
Giuseppe, and a series of substantive meetings,
largely discussing her role in a series of
reforms in California which have lead to a very rapid
introduction and explosion rather of solar
photovoltaic, wind, and other distributed
energy sources within the state of California. In her role as part of the
California Independent Systems Operator Board,
Galiteva has been a leader in promoting
renewable energy as well as reduction
of carbon emissions through a state that’s truly
a global leader in that area. So without further
introductions, I’d like to turn over
the platform to Angelina. ANGELINA GALITEVA:
Thank you so much, Paul. This is great. And I enjoyed coming to
Brasilia as well as Recife. It was a lot of fun. We had opportunities to
learn from each other and realize what mutual
collaboration can lead to and why it is so important to
have a platform where all of us all working together
towards renewables. This is not a one-time event. We actually had the
fortune of following up with the meeting
with Sergio Xavier from Pernambuco,
the Environmental Secretary in Paris where we
outlined some initiatives of working together. Pernambuco also signed
the under two MOU, which is a
sub-national initiative that California launched. And Pernambuco has
become a member of it. I will talk about that a little
bit later in the presentation. And we are going to be
moving forward hopefully with projects that can
showcase the abilities of U.S. companies to deliver renewables
as a solution to Brazil as well. And this is very much a
collaborative effort that was followed up by a
visit from a delegation here in California where we
had the fortune of talking to some U.S. companies
such as CitiSolar, Tesla, and others in terms of Stanford
and universities, UCLA, water companies
and water agencies having an interest in
implementing renewables, energy efficiency, and water
programs for Brazil on a collaborative basis. So hopefully this will be
a continuous effort where there can be mutual learning. And certainly the
desire is there. The similarities are there. And we hope that this
will be something that we can brag about on
a global scale very soon. So let’s start with
the presentation as a follow up on what we have
done with a visit in Pernambuco and Brasilia. Do we have the presentation up? Great. OK. So the explosion
of renewables has happened not only on a very
local level here in California and other areas, but
also on a global scale. Next slide please. The total investments in
renewables and technologies for 2015 has been overwhelming. It has surpassed the investments
in fossil fuel energies, specifically led by
solar. $1.5 trillion went into solar large-scale
utility-scale projects. And interestingly
enough, $2.2 trillion went into distributive
energy, which is also a very large part and a
large portion of what we’re delivering on to the grid and
making sure that customers have access to clean renewable
energy and they’re empowered to make choices. And nothing empowers
customers more than having control of their own
energy use and energy systems on their [INAUDIBLE]. Renewable energy
also– next slide– represented 65% of new U.S.
electric generation capacity in 2015. The renewables are overtaking
investments over fossils on a scale not only
internationally but what we see here in the U.S. as well. The presentation will focus on
some of the global initiatives, the national initiatives,
then in California how we’re implementing and where
we think the future is as well. The future for coal is
not looking so bright. The next slide. The value of the top
four U.S. companies has declined 99%
since 2011, which is a pretty massive number. And some of the other
larger projects– and we can click through this in
terms of– next slide– in terms of what has happened
to coal companies overall. Peabody filed for
bankruptcy this April, which was a surprising move, but
not in the context of where all of these other
companies– please click through– disappearing
over time have demonstrated that this is a situation where
fossil investments is basically a divestment by
value destruction. As you can see, only the
index for renewable energy is looking positive
between 2013 and 2015, which is the year ago today. Now, not only are prices
of renewables coming down. We’ve seen that happen. Next slide. But we see what countries
have achieved to day. Which although is not very
impressive– next slide– with the goals to 2040
is a substantial market. So we’ve got predictability
of investment based on regulations, which
is very important– having a regulatory scheme that
is transparent, long-term, and consistent
enables us to foresee from a financial perspective
where the market is going. So the huge decline in energy
prices in terms of renewables, which is over 80% for solar
in the last three years alone, can continue as a boom globally. Now let’s go back to California. Next slide. You need to have the
regulatory system. SB 350, the Clean Energy And
Pollution Reduction Act of 2015 is the regulatory structure
that actually frames the future of the Californian grid. We have had the portfolio
standard, which is 33% by 2020. We’ve exceeded that. Actually I got an email
from the ISO grid operator a couple of days ago, basically
saying we’re operating at 33% now. We’re going to be doubling the
energy efficiency in building. We’re are going to be focusing
on electric transportation. And most importantly–
and you’re on the right slide–
we’re going to start looking at a west-wide grid. This is the situation that we
have now in the United States. California is on the
west side and it’s one of nine grid operators
in the U.S. As you can see, most of them are focused in
the middle and the east side of the country. Then there’s a big empty space. And then there’s
the California ISO. In order to have
benefits from renewables you need to have
regional integration. I was at the Bloomberg New
Energy Finance Forum in April. And Secretary John Kerry
made a presentation. And he referenced this
slide, basically saying, what’s going on? Why do we have this big
empty hole in the middle? And you should be doing
something about it. So yes we are and
hopefully we will have an integrated west-wide
market soon emerging in California and throughout
the west, led by the ISO. Next slide. So ISO by the numbers– this
is by far the largest ISO, one of the largest
in the world, very similar to the European ones. And we collaborate with the
Europeans closely as well. We cover 80% of the
state and we are starting through a very
innovative energy balance market to start working in our
neighboring states as well. Next slide. Our role basically
is first and foremost to maintain reliability. You could be 80%,
100% renewable, but if you have
blackouts or brownouts, that’s a big problem. So reliability is key. Then implementing state policy,
which is now the 50% goal. 50% renewables by 2030. And keep in mind, very
importantly, that’s 50% goal does not include
large-scale hydro power, and it does not
include roof-top solar. So that’s an
additional 15%, 20%. So technically the 50% is
more like a 65%, 70% goal. And the 33% is more
like a 50% goal overall which we have achieved. Next slide. Critical balance between
deploying renewable energy resources– making sure that
you are not being prohibitively cost expensive and keeping
indeed a downward pressure on costs. And interesting
enough, renewables are helping us do that. And of course
maintain reliability, which is the top goal. Next slide. This is the famous duck chart. And every time we
talk about California, every time we talk about high
percentages of penetration of renewables on
the grid you need to be aware of the duck chart. The duck chart is basically
solar coming online in the middle of the
day suppressing prices, and towards the end
of the day, 6:00 PM. You have a huge ramp
of about 10,000. We expect it to be
30,000 megawatts by 2020 for a two-hour period. Now this demonstrates
that you need to have diversity and
flexibility in your fleet. You can have the renewables,
but in order to have them efficiently you need to be
able to handle the duck chart. Put the duck on a diet. Make sure that you shrink the
belly to the extent you can. And lower it’s head down
so it’s as flat as possible over the day. The next slide. So what we’ve seen is
that the midday load drops 22,000 megawatts. We didn’t foresee
this five years ago. This is quite a new phenomena. And we were thinking about
electrifying the transportation sector and kind
of decided that we want to push electrification
of the transportation sector to start charging at night. Now what we need to be
doing is charging those cars in the middle of the
day, and zapping them when the peak use to a car
in the middle of the day, around noon or 2 PM. Now what we are seeing is that
the peak is no longer at 2 p.m. It’s 6:00 to 8:00 PM. So we need load shifting. And that presents some
challenges, but also opportunities. And with the steep ramps
we need to make sure that we are able to operate. Can you implement
renewables fast? Well it is a great
success story, and in terms of bringing
resources online and bringing them on fast, you need
to be able to realize that you can bring
a lot of megawatts online very, very quickly. In 2010 we started
with only 85 megawatts. That is large-scale
transmission online in California, which
is not impressive, by any means, number at all. And we had about 3,000
megawatts of wind. Wind actually had
more of a success in the beginning in California
because the resources were cheaper and the
renewable portfolio standard worked for it better. By 2015, because of the
regulatory framework, because of the goals
and the transparency, we had 6,000 megawatts
online, which is the equivalent of
building three nuclear power plants very quickly. And we had 5,000, almost
6,000 megawatts of wind. Again, wind is not a very
great resource in California, but we do want the diversity
so we are building it. As we move forward
towards 2030 there is the debate about how
much renewables we’ll have. That’s the next slide. But overwhelmingly
all the studies show that it’s going to
be between 70% and 80% of variable resources, which
means wind and or solar. So we’ve got to be
able to figure out, how do we balance
those resources? How do we provide
grid stability? How can renewables balance
renewables and make sure that we can still
continue to invest in these low cost and
increasingly lower cost resources cost effectively. Because what is
becoming very clear is, if you go lowest
cost with your RFPs, while you’re at
20%, 30%, maybe even 40% penetration of
renewables, that’s OK. You can integrate it. You’ll probably see
predominantly wind and predominantly
solar installations. In California we saw almost
80% of solar installations and solar bids. But as you move beyond the
50% it becomes a new game all together. And you’ve got to change
the play in diversification and make sure that you have
flexibility and diversification and a very strong grid that
can back up at penetration. Next slide. And you also need to be working
with the distribution sector. Traditionally the transmission
and distribution sector haven’t already made
it as close here. But now we need to, because
as you see that big red bump above the grid, above
the green on this slide. This is curtailment. This is over-generation
in the middle of the day. You don’t want to
be shutting down wind and solar plants
producing cost effective energy and kind of wasting
it because you don’t have abilities to store it. So storage becomes
very critical. Ability to move that power
becomes very critical. And having the know-how
not to be wasting it but incorporating it becomes
very critical as well. Next slide. What’s interesting also
is efficiency programs have had a very, very
strong effect in California. So if you see from
2005 to 2014 and ’15 we’ve had more or
less of a flat demand by the yellow line in terms
of how demand has grown. But as you look at the need
for transmission between 2010 and 2030, it’s an
exponential investment that has to take place. And that is something that we
need to be aware of as we move and transition towards a much
more heavy renewable dependence system. The grid becomes very
critical, especially the regional
integration and the grid starts to play a larger role. The large the graphic
horizontal footprint the better. The larger the
vertical visibility into the distribution grid
all the way to the customer becomes critically important
so that you can forecast. Because forecasting
becomes key in terms of how you are able to allocate
resources throughout the grid. And actually we’ve taken
forecasting to an extreme where the ISO right now
has too full-time whether meteorologists
on staff, and they claim that they’re better
than the Weather Channel. They can predict
when the sun will be shining, when and where
there will be cloud cover, and where and when the
wind is blowing and how. So we have pretty good
predictability on the grid. Valuable resources are
indeed variable, yes. But they’re also very,
very highly predictable and in that sense very reliable
because we can count on the sun shining and the wind
blowing everyday. Next slide. So it’s becoming
increasingly clear, again as I said that regional
collaboration is key. And we didn’t want to go
through a regulatory scheme and be mandated to
do it but the ISO decided, why don’t we take our
software and our incredible IT capabilities and make them
available to our neighbors across the west where
they can take part in a five-minute energy
imbalance market, five-minute a head. It’s a regionally diverse fleet. All we’re doing is
optimizing the system and dispatching their
system for them. And being able to optimize
the existing assets and utilize those savings
to be able to build up the grid for western
collaboration. Completely voluntary–
you can come in or leave at any point in time. You don’t have to
give up your autonomy. We are just making
sure that you can take maximum benefit from the
system that you already have. And why is that necessary? Next slide. That big empty hole that
we saw in the middle of the west, that’s actually 38
separate balancing authorities. Separate balancing
authorities are extremely inefficient because
everybody has to carry reserves and everybody has to make
sure that they’re islanded and in case of an emergency
they can operate independently, which leads to huge
inefficiencies across the west. And it’s very, very
difficult to be able to incorporate a
comprehensive renewable system if you have separate
balancing authorities throughout the west. So each balancing
authority balancing load and generation is
very, very difficult. If you are able to match the
generation with the load. That would be the next slide. Instead of everybody
having to do separately, if you do it from a centralized
system through the energy imbalance market, you diversity
of the balancing resources, you increase flexibility,
you decrease the need for reserves, which is very,
very important because that is economically efficient. And you decrease integration
costs for everybody. And everybody benefits from
participating in the market. It’s a very economic decision. Next slide. So what we’re doing
technically is combining all of the balancing authorities. And all of these
entities that you see there– Puget Sound, Pacific
Core, NB energy, Arizona Public Service have already joined
the energy imbalance market. And we launched it actually
in November of 2014. It has operated for a
little bit over a year with tremendous success already. So you’ve got automated dispatch
which results in balance and avoids congestion. It’s completely voluntary
as I said with no exit fees. And it allows resources to
be centrally dispatched. The next slide basically
shows the entities that are participating
and that are interested in being
a part of the market so that they can take advantage
of this optimized system. Next slide. In order for that to
succeed, again you need to build up transmission. And these are all the
transmission interconnections that have already
been beefed up or that have been incorporated
in order to make sure that you can move power back
and forth, east and west. And although
California has always been an energy importer,
what we’re seeing now is that California
is also exporting power, which had
never happened before and we were able to do it. The success story–
next slide– is also something that happened this
April with Berkshire Hathaway. Berkshire Hathaway
owns PacificCorp which joined the
energy imbalance market and you saw [INAUDIBLE]. But Berkshire Hathaway
also owns Mid-American, which is a power company in
the middle of the country which participates in the [INAUDIBLE]
territory, another integrated market. And they actually
operate in Iowa. In the next slide– it
was very interesting. I have never known
but Berkshire Hathaway is not known to be the
most environmental company on the face of this earth. And I, as part of
Renewables 100 never knew that they had a 100%
renewable energy wind power goal for Iowa but
indeed they do. And they are announced, actually
on April 13 their latest project, which brings
them up to 85% when it’s completed of powering
Iowa will wind power. This would not have
happened if they did not have an integrated market. So PacificCorp is
one of the first ones to join the energy imbalance
market in California because Berkshire
Hathaway had that ability to know that in Iowa
and in other places they were able to
integrate renewables very cost effectively, move to a
predominantly renewable system, and keep their prices as one
of the lowest in the United States. They had the seventh
lowest in the U.S. They’re not going to us for
any rate increases to do that. And they’re going to follow a
similar scheme in California as well. And they already unveiled,
at the end of 2015, the largest solar
project on the face of this earth– their
Solar Star Project, which is 700 megawatts. And it’s here
outside of Lancaster, which our delegation
from Pernambuca actually incidentally visited. They were the first
international visitors– actually the first visitors
to visit that site. And we were told that
the day before they had had Warren Buffett and
Bill Gates tour the site. So we missed them
by a day but that’s what this project is like. It was very quiet. It was very neat. They didn’t brag about it. I’m glad they
bragged about Iowa. But we’re looking to see
more renewables come online from traditional energy
companies moving away from fossil towards renewables
on an economic basis. And there’s nothing wrong with
making green from green power. That’s all OK. Next slide. The benefits from the EIM
are very much economic. And you can see from
this slide where your initial start-up
costs of– let’s take PacificCorp of $20
million are paid back in the very first year where
they’re making between $21 and $129 million, depending on
how close they’re integrating. And their annual costs are
going to be $3 million. And this is going to be
repetitive year after year. So the argument is
not, if we join the EIM but why not join the EIM
and realize those benefits for our customers if we are an
energy generator in the west. Next slide. Again, huge success story
launched in November of 2014 that EIM has already realized
more than $45 million. And it looks like the first
quarter is doing OK as well. If you go to the next
slide– because it’s expensive to invest
in transmission. Even if nobody else were to
join but just PacificCorp are over a 20-year
period we’re going to have a combined benefit,
without any additions or changes in the system, just
from the efficiencies alone, of $3.4 to $9.1 billion. So that’s going to pay
for the transmission upgrades in and of itself. And its a voluntary system,
basically maximizing operational efficiencies,
which is a beautiful thing. You don’t need regulations. You don’t need anybody coming
in and telling you what to do. You can come or you can leave as
long as it’s a benefit to you. Next slide. The one thing we
didn’t anticipate, which was very interesting
was governance. That you have to change
the governance because all of our western neighbors, even
though they love California and would like to
have our presentation, and they would be very
happy in the west-wide grid was not called the California
Independent System Operator, because the Arizona
folks and the Idaho folks don’t view themselves
as Californians. They would like to have it be
called Grid West or something else or Western Operator System,
or West-wide Operating System, and of course have
representation on the board and on the governance. So we are going through
a governance study and how we make that happen–
and is everybody equal? Does everybody have equal votes? Is it different? How do we change it? It’s kind of an
exciting process. Lots of arguments that we
didn’t foresee are coming up. But as you can see
from this slide we have to complete it by
the end of this quarter in order to move forward. So we’re moving very
quickly and to make sure that that actually happens. The ISO governance is going
to be the big sticky wicket. And I think we’ll work it out. It’s looking like we would. But it’s the small stones
that overturn the cart. So the study impacts from the
regional market have come back. They’re overwhelmingly positive. And we’re looking at
making sure that we’ve got a good governance
structure that’s proposed and acceptable to all. So what you’re seeing
here– next slide– in terms of regional
transmission organizations and the big empty space in the
middle on the map with the nine operators. That would be the next slide. What with the Federal Energy
Regulatory Commission, which is the slide after
that, didn’t foresee in 2000 but were unable to
implement because it had to be a voluntary compliance. And the west of course
said no, we’re independent. We will not have a
large-scale operator. It was actually a west
grid, a midwest, southeast, and northeast grid. And why Ercot Texas is in and of
itself alone as a purple entity we don’t know. But that’s what they did see. It’s important to have that
regional collaboration– next slide– as our
friends from Europe also showed us towards the
single European market. The price coupling regions
are also a voluntary market that actually took
place in Europe with seven grid operators
from different states. What is very
important, of course, is– next slide–
transmission again. European transmission
integration was critical for all
of these countries to be able to participate. And actually interconnecting
to Norway’s large-scale hydro reserves was critical, because
Norway’s hydro balances everybody else’s renewables. And that it actually a
role that Brazil could play into the future as well. We saw– next slide–
on May 5th a same price in the whole market, which
is what they were aiming for. And of course in
the next slide you can see how the Norwegian hydro
balances the wind from Denmark in order to be able
to allow Denmark to go to a very high
percentage of wind integration into their portfolio. Solar is also very important. Next slide. I had shown these slides
before but very impressive because we had a big
drought here in California in 2012 to 2015, which
actually still continues. So our hydro resources, as
a result of the drought, were diminished. What we also had in
2012 was 2,000 megawatts disappearing from a large
nuclear power station because there was a nuclear leak
so that plant was shut down. And what this slide as well
as the next slide demonstrates is that the installation
of solar, those 5,000 megawatts that
took place actually made up for the loss
of the hydro reserves as well as the nuclear reserve. And the slide after that
shows the net difference, that we would have
experienced rolling blackouts had it not been for the
solar coming online. So it was actually solar
that saved the day. The next slide
demonstrates something that’s closer to home, but is
basically new projects applying for interconnection in Chile. We’re seeing very much the
same scenario that we saw here in California– overwhelmingly
renewable and overwhelmingly solar-based. And that is what you
will see in the beginning because that is the lowest cost. And the auctions are
actually working. So the next slide
basically says the growth is fueled by new energy policies
encouraging clean energy, time block options, stable
economy, and great resources. The average PPA
prices are also very, very attractive of $79 a
megawatt hour or $7.90 dollars a kilowatt hour, which is within
the bandwidth of what most resources will be costing as
the result of new installations, probably on the lower scale. Operational costs are low and
you have no emissions as well. Next slide. So we’ve got an energy
of plenty because there’s plenty of energy around. And an energy of competition
between renewables. And then the next
slide basically showing that a lot of sub-national
initiatives are taking place to go to 100%. We’re seeing that very much
in the sub-national level. The next slide. The Under 2 MOU, which was an
initiative that California took would [INAUDIBLE] together. It was one initiative that
actually was very prominently featured at the COP this year as
one of the sub-national targets towards renewables and towards
a comprehensive reduction of greenhouse gases. California took this initiative
because they’re the six largest economy in the world. The government views this
as a moral imperative that we have to move
forward and make sure that we have a leadership role
together with other nations, focusing on under two
degree temperature growth. And of course the other
two, which is important, is two times per capita
of co2 emissions. And actually if you look
at per capita emissions between California
and Brazil, Brazil is at a lower per capita goal. So actually we wanted to make
sure that our partners would be able to achieve those
goals with us as well. Next slide. Unesco focused on
100% renewables and we’ve got all
Unesco sites committing to go to 100% renewables. The COP called for
100% renewables. Next slide. The G7 called for
100% renewables because we’re decarbonizing
our economies. Certainly the energy
infrastructure is 100%. Next slide. What is the future? Clearly it’s decarbonized
and clearly it’s decentralized with a huge
role for the customer to play. Next slide. We’re going to be seeing
the customer in a very much more customer-focused system,
which incorporates your rooftop solar, your electric
vehicles, your consumer control of storage,
rates and signals that help you participate
in the market, whether it’s through
your vehicle, whether it’s through
your storage system, just whether it’s
through your generation. And each household is
going to have the ability to participate in the market. Next slide. It’s a complicated
slide, but it’s intended to show how
the system is changing. And this came
actually from the ISO. To allow the markets
to incorporate, the individual
customize is aggregated. So we can indeed go to that
individual customer meter and control what happens on
the grid on the distribution and transmission side so we can
optimize the system vertically as well as geographically. Next slide. We need to expand
energy efficiency. Energy efficiencies create
key advanced demand response in order to be able
to incorporate more flexible resources on the grid. Next slide, storage. Storage is going to
be a game changer. Large-scale renewables require
large-scale storage as well. So you’re going to have ISO
services, utility services, customer services, all
the way from 10 minute, very fast, very rapid discharges
and charges to load-shifting which can be hours of
charging and discharging through large-scale
pumped hydro projects and everything in between. And we’re certainly seeing
programs that encourage that. Electric transportation–
next slide– is going to be very key as well
because that can shape the peak and stabilize the grid. Next slide. We’re evolving, and we
are evolving very rapidly. Just like the humans evolved,
the energy system is evolving. It used to be the same
for hundreds of years. Since the 1990s we have seen
a very rapid phenomenal shift towards a much more
decentralized and a much more customer-focused system, and
that’s the way it has to be. One that is dependent on
grids, but one that is also depended on microgrids and
a decentralized system, and making sure that
we are able to tap into every single
resource most efficiently in order to be able to
operate the grid that is increasingly renewable-based
and decarbonized. Whether people
tell us if we have the resources–
next slide– I just like showing this
slide because to power the whole world
with solar energy requires covering only 0.07%
of the world land area. So we don’t need too
much land in order to be able to power the world. It’s transmission. It’s how you store it. It’s how you deliver it. It’s how you capture it
and how you make it work. And if we only capture two
minutes of the solar radiation that hits the earth
every day we can power our world including the
1.2 billion people that have no electricity for a year. So next slide. So if these guys don’t
convince you– that’s the G7. I don’t know why they
have nine people here but it’s the G7
calling for action. And if the Pope
doesn’t convince you, I was just in Argentina
so I just can’t help it. Pope Francis was
very popular and he has called for renewables. Then you know what? We don’t have a plan
B. We need a plan B. We need to be sure
that we’re decarbonizing as fast as possible in the
most efficient way, sharing knowledge and experience
across the board, because we all have a lot
to benefit from each other. And we can make it work. So thank you very much. This is the presentation and
I look forward to questions. PAUL GHIOTTO: Excellent. OK. Our first question is
from Luis [INAUDIBLE]. And Luis is asking about high
renewable energy penetration levels and their effect on
instability and frequencies, their intermittency
with particular emphasis on wind and solar. And so his question
is, how has California addressed intermittency from
the system operator perspective? ANGELINA GALITEVA: Initially
it’s a learning curve. And it’s a learning process. Initially the grid operators
were saying, OK, 10%. Maybe we can incorporate
10% renewables on the grid. 20% is going to
be really tricky. But they incorporated 20%. It was fine. The 33% was going to
be very destabilizing so we had to learn a little bit
from our European counterparts who had incorporated more. And you need IT solutions. It was very much an IT solution. It’s a forecasting solution. And it’s being
able to incorporate more flexible resources
that allow you to operate the grid efficiently. What also was kind
of baptism by fire was the fact that we lost a
very large very stable resource in terms of the nuclear
power station coupled with the 24/7 supply of hydro
over a short period of time. So we had to quickly
beef up the transmission system and the generation. And it was renewables
that came to the rescue. So they learned how
to operate the system. And as you can
predict renewables, you can dispatch them
much more efficiently. And if you have a larger
geographic footprint, that certainly helps. We’re looking into the
future and needing to plan, not in five or
10-year increments but in 15, 20, and indeed
30 or 40-year increments. So looking long-term is
going to be very important. And diversity is important
and flexibility is important. So if you know
where you’re going and you’ve got
predictable goals, like now we know we
are going to 50%, and that’s a floor
not a ceiling. And we’re going to be
moving further beyond that as well, we’re
not going to be able to stop the
incorporation of rooftop solar because what we are seeing
on the distribution side is an installation of 8,000
rooftops every single month in California. So huge amount of
rooftop installations on the distribution
side as well. And we need to be able
to manage that grid. So we’re doing it
together with storage. We’re doing it together
with IT solutions. We see that all of the customer
increasing, energy efficiency increasing as well. This is all cutting edge grid. And it’s exciting for anybody
that wants to get in the field. And the grid operators are
bragging about how good they’ve become incorporating
renewables and that they can incorporate even more. So this is music to my ears. PAUL GHIOTTO: Excellent. No, that’s– we have
another question which ties in to the previous question. And this is from Ricardo. And he’s essentially
asking about the connection or connectivity of
wind and solar farms with the expansion of
transmission lines. And the question is, how are
the system operators and project developers coordinating
to ensure that there’s adequate transmission
prior to the construction of wind and solar
use in California? ANGELINA GALITEVA: Right. That is very, very key. And it’s not only in California. This is an issue that
exists everywhere that you have large-scale
projects being built and incorporated. I actually was able to visit
one of the most beautiful wind farms I have ever
seen in Recife. And there was
transmission lines. So it was able interconnect. It’s the ability of
the grid operators to coordinate with developers. And what we’ve seen
is identifying areas where there is
actually on the grid, and identifying areas
where there is a need and a lack of congestion kind
of is the first step areas and saying, if you
develop in these areas, this is how much
capacity we have. And you could
interconnect quickly and being able to provide
adequate speed back to the developers. We made mistakes along the way. Everybody made
mistakes along the way, where lots of renewable
development was taking place. Everybody wanted
interconnection studies. We did the studies
and of course you needed to increase and
beef up the system. What we didn’t account for in
the ISO was that 80% or 90% of the projects would
actually not happen. And you did need to
beef up the system but that slowed down
projects incorporations. So very, very close coordination
between the grid operators and the developers. And indeed, identifying
for the developers the areas where you can
incorporate more renewables very quickly is key
in order to provide that synchronization
between project development and interconnection. The last thing you want is
what our current happenings of the European states is. They have a wind power
project that has developed, not transmission in
which to interconnect. So they’ve got to have
generators operating those wind turbines so that they’re
actually working, not to have them just
sit idle there and rust. So that is not something
you want happening. You want to have transmission
and development happen hand in hand, and make that as smooth
and as predictable as possible. PAUL GHIOTTO: Well
this is also a question that leads to a further question
from Allison in [INAUDIBLE]. And Alison is asking if
distributed energy would be a way for Brazil– that
you see a distributed energy solution, particularly rooftop
solar as a means for Brazil to address some of its
energy demand forecast into the future. And that also leads to your
point regarding California, the insulation of over 8,000
rooftop solar installations per month. How is California
shifting or handling intermittency and
the various issues related to distributed
energy entering the system with such a good
rapid uptake of distributed systems? ANGELINA GALITEVA: It’s true. And you can’t stop it. I mean, a homeowner
wants to install solar, they’re going to install solar. And you shouldn’t
be stopping this. We have an executive
order that calls for all new construction on
the residential side up to 2020 to be zero net energy. Which means every home will
be generating electricity. And that’s OK. You also are going to have
the same standard apply to commercial and industrial
buildings starting in 2030. So new construction is going
to shift towards incorporating energy and energy efficiency
measures right from the get-go, like we incorporate
super-efficient windows, title 24, like we incorporate
interconnectivity into the new construction now. This is something that I believe
is key to developing worldwide, and especially in sub-Saharan
countries or countries that have no electricity. The 1.2 billion people, if we’re
going to very quickly move them to an electrified
system, it’s probably not going to be necessarily
a centralized grid right from the beginning. But it microgrid with solar
on every rooftop, community solar, biomass, wind, storage,
electric transportation, showcasing that in
an island effect you can achieve a quality of
life which of course brings then education and industry
and enterprise much faster with distributed resources
then centralized. So depending on
pricing signals, Brazil is in a bit of a unique
situation because over 90% of the country is
already electrified. Prices are not very expensive. This is something that we
saw in Argentina as well. So if you send the right
pricing signal and the subsidies are not on what is
being subsidized right now, decentralized resources
but some of the distributed resources– you’re going to
give people the incentive to not only self-generate, but
also utilize energy much more efficiently. So sending the
right price signals in terms of what energy really
cost for the consumer has been a driver for the
installation of solar in California. We don’t see incentives
playing such a big role now. When you’re paying $0.30 a
kilowatt hour for your energy, solar makes infinite sense. You’re paying less. You’re saving money. You’ve got energy efficiency. As you saw energy
efficiency is a huge player. We haven’t had low
growth since 2005 even though the population
has almost doubled. So it’s actually
a very key factor. So pricing signals
are important. Availability of
solutions are important. Financing is very key. And just incorporating the
need for zero-net energy into the construction
portfolios and mandates is going to be
something I think we’re going to see increasingly,
not only here, not only in the U.S. And
Europe but worldwide. PAUL GHIOTTO: That was
an interesting viewpoint because I think one
of the questions that the Brazilian audience
would be interested to know is, what incentives have been
most effective in California to encourage the rapid
uptake, particularly of solar, given that that’s the
best resource in California? There’s a great deal of
interest in identifying whether those were state-level
renewable energy portfolio standards. Were those federal incentives,
such as federal tax credits? What do you see has
been the biggest driver for renewable
energy growth in the California system? ANGELINA GALITEVA:
It’s a combination. Certainly the renewable
portfolio standard initially when
renewables were more expensive along side the feed-in
tariffs in Europe was critical. We all paid a little bit more
for the initial renewables that we developed. And we all incorporated
the resources even though they
were more expensive. But again, the beauty of a
renewable portfolio standard are feed-in tariffs and the
beautiful renewable technology is that this is not a subsidy. Even though it’s been called
a subsidy, it’s an incentive. The definition of an
incentive is over time it’s reduced and goes away. And that has happened. Incentives have been reduced
by more than 90% worldwide, and costs have been
reduced by more than 80% as well correspondingly. So now renewables, as a
result of these incentives, have become one of the
cheapest alternatives. And they have become
an economic decision. One of the drivers
in the U.S. of course for large-scale projects
is Berkshire will say and other developers
is the tax credit. The investment tax
credit of course bring the cost down even more. So you can have power purchase
agreements in California that are being signed
at $0.06 and below, although the real price
is more like the 7.9 cents that we’re seeing in
Argentina and other places. The price here is reduced
by the tax credits and some of the efficiencies
that we have as well alongside the good
resources in terms of solar. But the diversity is important. We do need to make sure
that as we have incentives that we shape the incentives. It’s not necessarily
the lowest cost, but it’s also the best fit. So you need to
develop geothermal. You need to develop more
hydro resources, more baseline resources that are
renewable-based. And you need to
develop more storage. Even if it’s the most
expensive storage. Because if you’re only
using it two hours a day or two hours every other
day, it makes sense to install a very
expensive battery, because it’s still
going to be cheaper to operate than the
base-load power plant that you don’t need
to be operating 24/7. So planning long-term,
integrating long-term, working with our neighbors, and
working with the distribution systems is going to be
very critical from here on after because incentives
and portfolios aren’t going to be playing
such a big role anymore. We are the lowest
cost alternative. And whether you have a
mandate or not in Iowa, they’re transitioning to
80%, 100% renewable energy just based on cost. We’re going to see that
happen on the West as well. PAUL GHIOTTO: Very interesting. And here in Brazil
as you know they have the advantage
of having over 70% of base load power electricity
generated by hydro electricity. And so one of the
questions– you had noted that hydro concern
clearly is space [INAUDIBLE]. In regards to energy storage,
we received a question from Giuseppe asking
how energy storage– what is California doing in
the world of energy storage? And how is California
leading the way in the corporation
of energy storage, particularly in non-peak hours? ANGELINA GALITEVA: Right. I mean, Brazil has
a huge advantage with the large-scale
hydro because the large-scale base-load
hydro is also very flexible and can be used to balance
wind and solar resources. So incorporating 20%, 30%,
or 40% of wind and solar on top of the 45%
hydro is actually a very symbiotic relationship. What we’re seeing here
in California alongside– we love hydro. We love the ability
to have hydro. What we count in our
portfolio standard is only 30 megawatts and below
of smaller hydro projects that are part of the renewables. But the large-scale hydro
certainly plays a role as well. It is influenced by drought. So that has to be
taken into account. But when you do have it, it’s
a very valuable resource. We’re also focusing
on the customer-side, on the utility-side. So what types of
storage projects are going to benefit a system
that runs predominantly on renewables? And you do need to have
those incorporated. And we realize that
storage is probably, you know, 15, 20 years
back behind renewables. And storage is more expensive. And we do need to have a
scheme to incentivize it. So California
launched an initiative where all utilities
have to purchase 1,300 megawatts of advanced storage. This does not include
large-scale hydro because we consider that to be
already commercially viable. This includes all
cutting new technologies, whether it’s fly wheels, low
batteries, batteries of itself or other creative ways
for storing energy. We even have one company
that is proposing to run an empty train
up and down a hill, very much like pumped hydro. But instead of
water going up it’s a train going up and then
train cars coming down. It’s an exciting proposal. And they actually
won a contract. So the utilities, when
they ran the RFPs, not only purchased what
they were mandated by law but they purchased
double or triple of what they were mandated. Because in specific sites
and with specific customers, even the expensive
storage made sense. And it made sense in
offsetting distribution costs and it made sense in optimizing
the distribution system. So yes, we are investing. We’re making sure the
utilities are incorporating more expensive storage into
the grid, finding where it’s cost-effective as well. We are all learning
in the process. But we believe that now
we are transitioning from supporting renewables as
a new resource with incentive and bringing the cost
down to achieving the same result, hopefully
even faster on the storage-side where we supporting new
cutting edge technologies, achieve market penetration,
and reduce cost per volume. PAUL GHIOTTO:
Thinking of storage, we received a further
question in which California’s compared to Brazil in
the sense of looking at the potential for
large-scale renewable growth with the possibility
of that growth being far from
population centers. So it’s kind of a
two-part question. One, is California looking at
areas for large-scale growth, thinking particularly
in desert California, southeastern California that
might be far from population centers such as in Brazil? And if so then how does
that add to additional costs and or finance for the
large-scale transmission and the possibility of
future cost of storage? ANGELINA GALITEVA: This is where
integration becomes very key. And this is where
integration is important because right now storage is
expensive on the large scale. And it’s easier to be bought
or have additional transmission build and actually transport
the excess energy from where you have the great
wind conditions and the great solar conditions
on-site to where it’s needed. So we see a lot of large-scale
project development happening out in the deserts. And that needs to be brought to
the loan centers on the coasts and also transported to
some of our neighborhoods as well when they need it
because of the time difference. We can actually shift
renewable resources and cost effectively bring
them to our neighbors through the energy
imbalance market as opposed to having to curtail. So definitely where
the resources are is not always where
the load is, which is why centralized very
efficient transmission systems do need to be constructed. And that’s something
that we see in Brazil. That’s something
that we see here in California and the west. It’s something that we see
in Europe and in Germany. The wind resources
are in the north but the load is in the south. So beefing up transmission
becomes key and the renewables green initiatives,
which is actually an NGO that is a partnership
between civic society and grid operators who are
building transmission has become very key in
making sure that pathways are identified for cost-effective
and optimizing transmission in Europe as well. We’re going to need
to do that here. It’s something that’s
going to need to happen pretty much around the world. And as we developed
wind in Wyoming, Wyoming doesn’t have
such a great load, but if we’re interconnected
through the markets with Wyoming,
certainly California can be a market for either
Wyoming or New Mexico wind. And vice versa, Wyoming
and New Mexico and Arizona can take California
solar resources. And we can optimize the
system across the board. Brazil is already integrated. So that’s a huge benefit. You already have large-scale
transmission in place. That can certainly be beefed
up and that can certainly be utilized as well. And it’s as you
incorporate and you integrate closer
with your neighbors in the north-south,
that would be something that should be taken in because
incorporating with neighborhood countries that can benefit from
the large-scale hydro resources that Brazil, and the
balancing– Brazil can become the Norway of South
America, which is what Norway does. Norway is 100% hydro, and it
balances the renewable loads in the rest of Europe. And everybody wants to
interconnect to Norway. So there’s definitely
lessons to be learned. And what we have
discovered is, there’s no need to reinvent
the wheel individually. We should be collaborating. We should be working
together, because we have a lot we can learn from Brazil. There’s a lot that
Brazil can learn from us and the Europeans,
and collaboration is going to be key. PAUL GHIOTTO: The question
regarding long range transmission of power,
particularly here in Brazil leads to the question
of investment and how California has been
able to attract investment, particularly in large-scale
portable take projects. But it also leads to
a question from Elise, who’s also interested in
investment in solar thermal or concentrated solar power. And so which may be
a little bit more cutting edge or
perhaps a riskier investment and certainly
a higher cost investment. So two parts. First, how has California been
able to attract investment, particularly in large scale,
utility scale solar projects. And the second– we talked
about battery storage, but could you also
speak a little bit about the two forms
of solar technologies that Elise had mentioned–
solar thermal and concentrated solar power and the role
they’re playing in California’s renewable energy. ANGELINA GALITEVA: OK. So first, we were able
to attract investment because again, when you’ve got
the elements of transparency, longevity, and
consistency, which we had with the renewable
portfolio standard, and you have a need
for those resources to come online to meet
regulatory mandates, people know that their
investment is secure because it’s backed up by
a power purchase agreement from a utility which is
a credit-worthy entity. It has a 20-year contract. We don’t see many merchant
plans on the renewable side. We probably will see more. But this was
certainly stimulated by PPAs and by
auctions, which is what we are seeing happening
in other parts of the world as well. The Europeans did it
through a feed-in tariff. And that of course
gave stability the same way, because it
guaranteed interconnection. It guaranteed implementation. And they don’t have
as much land area as we have here in California. Their systems are smaller
and more distributed. But their amounts are
very similar in terms of the incorporation
of renewables. So having a stable regulatory
framework is important. And that really is key. Even though the prices are low–
they have an economic edge– having that stability
provides investors the comfort level to provide
low-cost investment, and they feel that that
investment is secure, and it’s long-term
so it’s bankable. So that is very key
and very important. In terms of the resources, we’ve
seen an overwhelming amount of solar photovoltaic
come online because it’s the cheapest
and the most stable. We haven’t seen as
much solar thermal, not because solar thermal
isn’t as good a resource, it’s just a little
bit more expensive. And we actually did visit
a solar thermal site here with the a delegation
from Recife. Geographically it works
in very specific areas. California is not necessarily
ideal for solar thermal. It’s a little bit
more expensive. Brazil, some areas are OK. But if there’s cloud cover,
intermittent cloud covers, that influences the systems as well. So it’s a little bit more
of a sensitive system and it doesn’t work everywhere. It requires specific
geographic locations. So for us, solar thermal
and solar concentrate is just more expensive and not
graphically as advantageous as solar PV, which is what
we’re seeing on the solar side. PAUL GHIOTTO: Excellent. One of the questions that we’ve
also received here in regards to various investments in the
renewable sector in Brazil is how are renewable investors
working with the system operators and
regulators to determine where to invest in California? Because a question
here in Brazil is, how do you make a determination
where the solar resources or wind resources might
be most attractive? And so that’s a
question that’s asked. What is the role of
government in ensuring that the resources are
properly identified, and then that way
investment could be directed at those kind
of optimal resources first? Or is the reverse–
is the market taken a different approach? Has the government not been
involved in identification of renewable resources. ANGELINA GALITEVA: Initially
the government wasn’t. And we saw this here and we
saw it in Europe as well. But as you’ll achieve
higher penetrations and you don’t want
haphazard development, and you want to identify areas
that you want to protect, and you want to make sure that
you are developing where you have the least impact
in terms of resources, in terms of natural
monuments, in terms of access to transmission. Coordination between the
government and the grid operators has become
more important. And it does make sense. I mean, if you’re going to
have large-scale development and you want to make sure
that your project is bankable, you want to develop it where
that you’re know that you’re going to get interconnection. You know that
interconnection is not going to cost that
much or at least you have a private predictable
cost for the interconnection so you know that your
full cost is up front. The beauty of renewables goals
is that the cost is up front. It’s a technological investment
and it’s an up front investment because your fuel is
free and your maintenance costs are pretty low. So if you’re going to be
making that up front investment it better be in a location
that is the optimal location for that resource. Now it may be where
you’re looking for the great solar
installations, where you have the best solar
insulation and you’re close to the grid for a
large-scale project certainly. But if you’re an
individual warehouse or you’re an individual owner
of a small-scale facility, you have the land mass and
your avoiding high transmission costs. Why not develop on site as well? So we’ve seen a mix. We’ve seen distributed
generation develop on site where that makes sense for
the individual customer and they’re able to integrate
it directly into their meters, whether that’s a
farm or a winery. Huge, huge amount of
solar going on at wineries and on dairy farms as well. Or whether you’re building
a large-scale 100 to 700 megawatt project and you’re
right next to the 500 volt transmission line and it’s
easy to build a substation and incorporate because
there’s room on that line that has already anticipated
the construction of large-scale projects. So Brazil identifying
areas where it’s advantageous to
develop various resources, whether it’s a
good wind resource or a good solar
resource, and making those maps available
to developers will actually make
everybody’s life easier, including the investors in
having that predictability. And then what mix
of technologies you’re going to have is
also going to be interesting if you can showcase
to a demonstration as to where that
mix can take place. And I have to give a
plug to Fernando De Noronha, the island. And if you can bring
up those slides. We’re in Recife and we’ve
got obviously a good audience from Recife. And this is an island that’s
close to Recife’s heart that is going to showcase
moving to a carbon-free system and be able to demonstrate
the utilization of microgrids, advanced
transportation, advanced generation, 100% renewables. It also happens to be a UNESCO
site so certainly UNESCO can be targeted as supporting
their 100% renewable energy initiatives for
all Heritage sites. So this is going to be
maybe a working laboratory and an action plan where we
can showcase how California and U.S. technologies can
collaborate with the Brazil environment to showcase a
holistic approach on an island basis. PAUL GHIOTTO:
Fernando De Noronha is certainly a jewel in Brazil
and throughout the world. So I think that– ANGELINA GALITEVA: You
should go and visit. PAUL GHIOTTO: Absolutely. David Mooney from the National
Renewable Energy Laboratory went. And so we’d love to have
increased work in Fernando De Noronha in the future. And with that, Angelina, I
wanted to wrap the web chat and say thank you very much for
supporting not only this web chat but the Climate
Partners Brazil program through your visit and through
your ongoing collaboration. And we will certainly
look forward to remaining in close
contact with you because California’s leadership
has definitely demonstrated, not only to the
Brazilian audience but truly to a global audience
that you can make rapid strides in renewable energy integration
while maintaining grid stability and bringing
costs down for consumers in a very short period of time. And so we certainly look
forward to continuing this conversation. We encourage everybody to join
the Climate Partners Brazil website. And with that, this
is Paul Ghiotto signing off from the
U.S. embassy in Brasilia. And thank you again, Angelina.

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1 thought on “Brazil and California: Partners on Renewable Energy Grid Integration”

  1. Vidrax says:

    Unfortunately, for now, they are not giving much attention… It's not sign of a lazy nation, cause most of us do acknowledge that our life style when compared to most of rest of the world have preserved our resources living under the line of poverty, at least when compared to other nations, but wont take much until we realizes that we need to join this global initiative…

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