This Little Think-Tank Goes to Market

RMI intervenes directly in markets to spread and scale profitable energy innovations

By David Labrador, senior writer/editor at Rocky Mountain Institute

SoCore Energy’s 3 MW Carrizozo solar project, in New Mexico, will sell its output at a record-low price to Otero County Electric Cooperative. 
RMI provided project analysis and supported the competitive procurement process. PHOTO: courtesy SoCore Energy

You may not know it, but when you take a flight, buy something that was delivered on a truck, heat your home with natural gas, or use electricity, there’s a chance that Rocky Mountain Institute is part of the market that you’re buying from.

At RMI, we believe that industry and business are the keys to transforming the global energy system and arresting global warming, because when markets lead, change happens at massive scale. The problem of climate change is global: no single government’s policy can solve it. Even now that every government in the world has united against climate change in the Paris Agreement, markets are still the key. But can markets create a low-carbon future on their own? The answer is, not soon enough to stop catastrophic warming.

Sometimes markets need a nudge to shift from old ways of doing business, despite having cheaper, better, lower-carbon alternatives that are market-ready. The radio industry didn’t move from AM to FM for decades. That’s why RMI, with support from our donors and partners, intervenes in markets to help transform their energy use. When all else fails (or is taking too long) RMI takes proven, market-based solutions that can be replicated and implemented now and helps them to scale rapidly by working through subsidiaries or market affiliates to demonstrate and spread them. Here, we describe how some of RMI’s subsidiaries and affiliates are filling unique and disruptive needs in the market.

Ian Kelly, an RMI manager, addressing attendees of the Business Renewables Center’s Members Meeting. PHOTO: courtesy Matthew Septimus

SAVING OIL AND GAS

The Global Race for Zero Methane Emissions Challenge

Methane gas is a byproduct of oil and gas production that dwarfs carbon with its global warming potential. Over 20 years, methane can warm the Earth 85 times more than the same amount of CO2 (25 times more than CO2 over 100 years). The oil and gas industry lets a lot of methane escape through leaking, venting, and flaring (intentionally burning excess methane) even though it is a primary component of natural gas; all that wasted methane is worth a lot of money! Harnessing the wasted methane and converting it into valuable energy would remove the equivalent of almost six gigatons of CO2 emissions every year, or 8 percent of global greenhouse gases. And the methane that is burned off in flares alone is worth $30 billion. RMI and the World Bank determined that 80 percent of that value can be profitably captured, but letting the industry know it’s possible is not enough. There are more than 16,000 methane flares around the world and the best business models and technologies for capturing methane and bringing it to market are not widely understood.

RMI director Richard Ward (foreground) and team working in the field on capturing methane emissions. PHOTO: courtesy Richard Ward

That’s why RMI’s Global Race for Zero Methane Emissions Challenge is working to rapidly stimulate a new “flare to value” service industry that will operate at scale. Projects can be developed more quickly with modular, standardized technology solutions while attracting new finance and adopting much more efficient project development and contracting approaches. We’re presenting a business case to oil and gas operators that abates methane-emitting flares and vents at no cost to the companies, with no asset liability, and no operational risk. And it’s working: since late last year we have supported demonstration projects that test new contracting, new financial models, and fast deployment. In addition, 10 international oil and gas companies — BP, Eni, ExxonMobil, Gazprom, Repsol, Shell, Statoil, Total, Qatar Petroleum, and Wintershall — have signed on to a set of guiding principles aimed at reducing methane emissions that RMI developed with partners.

The North American Council for Freight Efficiency

A similar opportunity is present for trucking; heavy-duty trucks in the United States consume about 25 billion gallons of fuel every year, costing trucking companies millions of dollars and releasing billions of tons of CO2, and much of that fuel could be saved. Most trucks could be built and operated more efficiently with proven, existing techniques. The trouble is there are thousands of trucking fleets and they are uncertain about which fuel-saving technologies and business models are best. That’s why we work with an organization that RMI spun off many years ago, The North American Council for Freight Efficiency (NACFE), to intervene directly in the trucking industry.

With NACFE, we’re helping technology providers, trucking companies, and manufacturers make business decisions that save fuel and money. We publish an ongoing series of Confidence Reports that provide industry stakeholders with trusted information that increases confidence and successful investments in proven technologies. NACFE and RMI have completed 16 such reports covering nearly 85 technologies, and we spread trusted information through annual fleet fuel studies and online platforms.

NACFE and RMI also demonstrated the best ways to save fuel in a first-of-its-kind cross-country trucking roadshow called Run on Less. Over 17 days last year, seven tractor-trailers, loaded with their normal freight, converged on a trucking industry conference in Atlanta hauling loads from as far away as California and North Dakota and averaging 10.1 mpg, compared with a national average of 6.4 mpg for tractor-trailers. Fuel savings like that mean a lot to trucking industry folks, and Run on Less showed that they are achievable in real-world conditions, not just on a test track.

DISPLACING FOSSIL FUELS WITH RENEWABLE ENERGY

Since 2009, the prices of wind power, solar power, and battery energy storage have all fallen by between 66 and 86 percent. Now, buying those resources new is more economical than just operating existing coal and nuclear power plants. Yet due to inertia, complexity, and risk avoidance, consumers of electricity are slow to change over. Electricity markets are the greatest opportunity to decarbonize the global energy system, and RMI is acting in them through several market participants.

We’re catalyzing solar markets for users of all sizes, including utilities, communities, and corporations and developers. PHOTO: Jessica Reeder, courtesy Black Rock Solar

The Business Renewables Center

US corporations are some of the biggest customers of electricity; however, five years ago, only seven of them had ever procured renewable energy in large-scale, off-site deals. Corporations were mostly adding solar panels on their own roofs. Market barriers like deal complexity and risk were hindering corporations from buying wind and solar power at large scale. To help them, RMI founded the Business Renewables Center (BRC) with 28 companies, including renewable energy dealmakers and large corporate clients including General Motors, Kaiser Permanente, and Owens Corning. The BRC and its members share hard-earned knowledge about how to approach and operate in the renewables market, including standardized contracts and market intelligence. As a result, the market has taken off. Now the BRC has 230 members that have completed more than 12 gigawatts of renewable energy deals, which constitutes 96 percent of all large-scale renewable energy deals in North America not done by an electric utility. That massive corporate energy purchase further shifts grid supply from coal and gas plants to renewable power.

“Industry and business are the keys to transforming the global energy system, because when markets lead, change happens at massive scale.”

As part of RMI’s support for China’s efforts to transition to an economy powered by clean energy, we took the BRC to China in 2017. RMI’s BRC China team is partnering with corporate buyers to make it easier to procure renewable power there. Through in-depth research and relationships with buyers, generators, and the government in China, our team is identifying emerging opportunities and helping buyers find innovative ways to make use of recent power-market reforms.

Black Bear Energy

Not every company is a behemoth with utility-scale energy demand. For those with less demand, putting solar panels on their own facilities is a financially attractive and environmentally friendly strategy, as are battery energy storage and other elements of renewable procurement. However, the transactional complexity often lies far outside the expertise of a traditional real estate owner or corporate entity. To catalyze the market for meeting their needs, RMI seeded Black Bear Energy in 2015 to act as a buyer’s representative for large property owners and occupiers in their procurement of renewable energy and clean technology. Black Bear Energy is a for-profit company that helps clients deploy solar power and energy storage projects to their specifications at the most competitive terms in the market. Black Bear’s clients own, manage, or control more than 3 billion square feet of real estate, and counting.

Shine

The price of solar power may be dropping fast, but there is a sweet spot in the market where it can drop even faster: community-scale solar. At this scale — between 0.5 and 5 megawatts — solar generation benefits from economies of scale without requiring infrastructure to interconnect with the electric grid the way a vast solar farm does. In order to take full advantage of this opportunity, RMI created the Shine™ program to act as a buyer’s representative and to move the market toward standardized, modular solar technology that will cut project costs further and speed solar adoption. Community-scale solar is the fastest-growing solar segment and may be the right solution for customers as varied as multifamily dwellings, commercial, municipal, and industrial properties, electric co-ops, municipal utilities, and universities. Late last year, a Shine-supported development in New Mexico reported the lowest ever US price for community-scale solar power delivered to the electric grid: less than 4.5 cents per kilowatt-hour.

WattTime

Wind and solar power are putting more energy on the grid than ever before, but how much clean power is really displacing dirty power and saving the most carbon? Wouldn’t it be great if clean energy were generated where it takes the place of the dirtiest energy? Thanks to RMI’s WattTime subsidiary, customers have the power to choose higher-impact clean energy.

WattTime is the brainchild of researchers from the University of California, Berkeley who perfected the analysis of the exact emissions that power a grid at a specific time and place. They came to RMI to help bring their solutions to the mass market, and RMI incorporated WattTime as a nonprofit subsidiary in 2017. It is analyzing planned renewable energy projects to find what location will deliver the greatest environmental benefit for the same investment. Because of the variety of power sources on different regional electric grids, WattTime has shown that some North American solar projects displace as much as three times as much CO2 as similar projects in other locations. Developers and buyers of renewable energy projects want to maximize environmental benefits, and WattTime is showing them how they can both do that, and prove it.

WattTime’s automated emissions reduction technology is also helping customers large and small to choose clean energy — and can be embedded in any energy-using, internet-connected device, like a smart thermostat or water heater. The software automatically tracks the actual emissions impacts associated with electricity use — both in real time and with ahead-of-time predictions — enabling these devices to draw power from the grid when electricity is the cleanest. RMI and WattTime aim to make the technology ubiquitous so that the entire appliance market is optimized for the cleanest possible operating times.

Energy Web Foundation

When it comes to complexity serving as a barrier to the wide adoption of a technology, blockchain takes the cake. Most of us are uneasily aware that blockchains are what underlie digital currencies like Bitcoin, but would rather not get any deeper into it. And yet blockchain technology has the potential to revolutionize the energy sector by massively integrating distributed energy resources into the electric system. That’s why RMI joined with Grid Singularity, an energy focused blockchain developer, to found the Energy Web Foundation (EWF).

Blockchains are decentralized networks that securely run computations and record digital transactions without a central clearinghouse, allowing millions of assets to change hands and transactions to take place with unprecedented speed and security. And that is just what is needed to allow millions of energy devices — like HVAC systems, water heaters, electric vehicles, batteries, and the solar panels on your house — to provide services to each other, to utilities, and to the electric grid, and get paid for it. If utilities or grid operators had to keep track of every solar panel and every electric vehicle battery, the cost and trouble would be prohibitive. But with blockchains like EWF’s, all those resources can work together to provide services that, until now, only a billion-dollar substation or power plant could provide. EWF is working with affiliated companies to demonstrate applications like streamlined utility billing and smart tracking of renewable energy certification, as well as the management of energy service transactions.

“Electricity markets are the greatest opportunity to decarbonize the global energy system, and RMI is acting in them through several market participants.”

TAKING CARBON BACK

The Good Traveler

RMI focuses on using energy more cleanly to avoid releasing more carbon into the atmosphere, but we also get involved when clean energy isn’t yet an option. That’s why RMI administers The Good Traveler, a unique nonprofit collaboration with airports that helps organizations and individuals reduce the unavoidable carbon footprint of their travel.

The goal of The Good Traveler is to catalyze aviation-sector carbon reduction efforts such as aggregating funding for new sustainable aviation fuel while mitigating the immediate climate impact of a rapidly growing industry. Until additional sustainable aviation fuel supply becomes available, The Good Traveler program counteracts emissions through a diverse portfolio of carbon-offset projects that keep carbon out of the atmosphere. These projects include planting forests, building new wind and solar farms, and implementing energy efficiency technologies for heavy-duty transport.

You can offset your own carbon footprint through The Good Traveler the next time you fly. It’s a good deal: $2 offsets the carbon released by a 1,000-mile flight, about the distance from Dallas to Detroit. And if you participate, you’ll be directly intervening in the markets while helping transform global energy use to create a clean, prosperous, and secure low-carbon future. The vast reach and power of markets are what will ultimately change the world in time to save our climate. At RMI, we’re doing our best to expedite those transformations. We encourage you to join us in accelerating the clean energy revolution.

WEB EXTRA

For more information on this topic, visit rmi.org/our-work/