China thinks big on power generation, delivery

The world's second-biggest economy, China, is setting its sights on a massive expansion of its electric power sector. The country is growing increasingly energy hungry as its already massive manufacturing sector expands — and the smog haze around populated areas grow indisputably denser.

Some power sector expansion scenarios laid out by Bloomberg New Energy Finance could address both power reliability and environmental concerns, however at least one scenario would require 88 GW in new power generation capacity every year from now until 2030.

That would mean a build-out equal to the entire generation capacity of the United Kingdom every single year. Still, if any country can accomplish this, it's probably China.

China, which by the way is already the world's largest single source of carbon dioxide emissions and the most powerful generator of electric power in the world, could add more than 1,500 GW of new power generation in the next two decades, according to Bloomberg's surveys.

In a scenario called "The New Normal," a reasonably progressive yet still conservative estimate of what China might do with its energy sector, this would require an investment just shy of $4 trillion.

At the same time, though, cuts in overall emissions could still be achieved as soon as 2027 through the adoption and integration of more renewable energy capacity and the phase-out of coal-fired power. Large hydropower would constitute more than half of new capacity. China is already home to the world's biggest and most powerful hydropower projects, and even more are being planned.

The New Normal plan also calls for an expansion of China's natural gas-fired fleet that would push down coal-fired generation from 67 percent of China's energy mix to 44 percent by 2030. Coal-fired power would still expand in this scenario by nearly 40 GW per year, it should be noted.

Separate from this planned massive power generation build-out, another way China is thinking big is its anticipated $100 billion investment in ultra high-voltage transmission lines (Read more about that here). The State Grid Corp. of China, which according to some estimates is the world's biggest utility, has either approved or is already building 20 such transmission projects.

These 20 high-voltage lines will form a massive network that will link up the densely populated and heavily industrialized southern and eastern parts of China with the west, where the country's hydropower potential is already better realized than just about anywhere else in the Eastern Hemisphere. China has already built the world's most massive and powerful dams in its eastern provinces, including Three Gorges, which at 22,500 MW generates as much electricity as 15 nuclear power plants.

Linking up the country's east and west with high-voltage power transmission is a smart way for China to make effective use of low- or no-carbon generation. Over the long term, this will help China's overall power portfolio become less polluting. Focusing on a well-built power grid with plenty of storm-hardening countermeasures and redundancies will prevent a scenario like we see in Brazil, which also uses massive dams to power far-flung population centers, but which suffers from regular outages when transmission lines are damaged or cut off.

As I write this, Brazilian authorities are working to restore power to eight states and tens of millions of people because a fire in northeast Brazil damaged transmission lines that link huge hydro assets from cities (See that story here). As China grows, it would do well to keep an eye on Brazil and remember what happens when you build out your cities and power plants, but neglect your transmission infrastructure.

Connecting BEMS in smart buildings to smart grid

By Allan McHale, Memoori Business Intelligence

Just look down a listing of enterprise energy management suppliers and you will find a mixture of some of the world's leading IT organizations and start-up software companies fighting hard to get established in this burgeoning market.

The two major prongs of this business lie in making smart buildings much smarter and the smart grid fully ADR right across the transmission and distribution network by providing a real-time analysis of supply and demand. These two markets alone have the potential to spend upwards of $225 billion by 2030 with smart buildings looking the more attractive and robust business. Installing smart grid is highly dependent upon changes to the regulatory control procedures and the utility companies finding the $2 trillion investment needed to deliver a fully operational smart grid around the world.

In the meantime, the utilities are coming under increasing pressure to reduce carbon dioxide emissions and are being forced to phase out their fossil fueled generating plants. In the U.S. particularly, they are encouraging their major consumers, coincidentally smart building owners, to join demand response programs and are entering arrangements to take their distributed power.

This provides a ready an fast-growing market for all those companies that have the software products and skills to interface buinding energy management systems (BEMS) in smart buildings to deliver demand response and distributed energy. This is therefore becoming a niche market, not least because we can't wait for ADR to produce a fully operational smart grid.

This market is currently worth around $350 million but the technical market potential to retrofit these two functionalities to smart buildings has a potential value of $30 billion and we forecast it should reach $2.65 billion by 2017. This is therefore a sizable business, but it is made much more attractive by the fact that by far the biggest component is the unrealized potential in existing smart building stock. It may be a smaller market, but it delivers a solution to a problem that must be solved — it can't wait for smart grid to be in place or smart buildings to incorporate a comprehensive enterprise energy management.

So for all of the budding energy management suppliers, that's the good news. The bad news is that there are some other suppliers out there that are hungry for this business. These are BEMS suppliers and energy service companies (ESCOs). Although not particularly well-known for their energy management prowess, they have been acquiring companies with this expertise for the past half-decade. These companies include Johnson Controls, Honeywell, Schneider Electric, Siemens and ABB. They are the world's leading suppliers and the last four are also leading suppliers of smart grid products and services.

This puts them in a very strong position for two reasons:

• They are in daily contact with the owners of smart buildings who are existing clients both through installing their BEMS and also taking their ESCO service. This gives them a massive heritage estate to work with.
• They have the practical ability to bring all the various electrical loads in the building together and not all are being controlled through BEMS. Both are important factors that will influence buying decisions.

Despite their strong potential hold on this market, energy management suppliers have an important role to play. This is likely to be unrealized unless they form alliances with BEMS and ESCO companies or their system integrators. This is particularly true for smaller energy management companies where they will need to target priority markets. This is a fragmented market with hundreds of thousands of smart buildings and identifying the buying influence will not be an easy task.

It is a different matter for major energy management companies because most of their clients will be owners of large smart building real estates and they will have contact with sources that will influence buying decisions on energy management purchases. These companies will be targeting comprehensive energy management systems in smart buildings. However even here, the interest in forming partnerships with the major BEMS companies.

Schneider Electric has just signed a strategic technology agreement with one of the world's major software companies, OSIsoft. OSIsoft will provide their PI System, a leading infrastructure technology for the management of real-time data and events while Schneider Electric, a global specialist in energy management, will provide innovative energy management solutions.

Connecting BEMS in smart buildings to smart grid to deliver demand response is a niche market that is needed now. It could be provided through smart buildings installing comprehensive energy management or waiting 10 to 20 years before ADR is operational within smart grid in the developed countries of the world.

The cost of installing it is less than 1 percent of the investment needed to deliver smart grid. The return on investment is attractive and it reduces the carbon dioxide emissions and gets the utilities companies out of a hole.

U.S. wind takes off

The U.S. wind energy industry is continuing to pay off for those who have invested in it, both in terms of power generated as well as manufacturing and jobs. This is according to a pair of studies the DOE has made public.

More than 13 GW of wind energy capacity was added onto the U.S. grid last year. That's double what was added the year before. To boot, more of these wind turbines and their parts (towers, nacelles, blades, gearboxes, etc.) are being built in the U.S.

The DOE estimated that 72 percent of the wind turbine equipment used in the U.S. was  manufactured domestically — up from about 25 percent in 2007.

Crucially, the report also reveals that the American wind energy sector now employs some 80,000 people who work at all levels — from building wind turbine blades to installing nacelles or performing needed wind farm maintenance.

Other factoids from the report that I thought were worth noting:

• Texas added 1,300 MW of new wind capacity last year, beating out California, an early adopter of the technology and home to some of the nation's oldest wind farms
• The country's cumulative installed wind capacity has jumped 22-fold since the turn of the century
• There are three states that get more than 20 percent of their power from the winds: Iowa, South Dakota and Kansas
• The price of a kilowatt hour of wind energy ran about 4 cents from 2011 to 2012
• There are now 69,000 distributed wind turbines operating in all 50 states

Even though 2012 is the most recent year for which such detailed figures exist, some of this information has trickled out before I wrote this. But the reason I wanted to write about these reports  even though the information in them isn't that new is because I get the feeling that the new reality reflected here hasn't sunk in yet for many. I still hear people talking about how wind energy is a flash in the pan or an unrealistic dream, and at this point I don't know how that still gets repeated.

There was a time to wonder whether wind power could make it as a viable power generation technology. For the U.S., that time has passed. Now the question has become: What is the best way to integrate wind energy onto the power grid without causing too many disturbances due to intermittancy.

If you want to see how wind farms have spread across the U.S. over the years, the DOE has an interactive map at their website. Click here to see it.