Resilient Cities

Overcoming Fossil Fuel Dependence

ISLAND PRESS

Contents

Invest in Renewable and Distributed Energy

The global shift to renewable energy will fundamentally change the nature of energy economics and trade. Nations [and cities] with abundant low cost renewable energy will be the powerhouses of the renewable energy era and the natural home of energy intensive industry.

— Gerard Drew, in "Zero Carbon Australia: Renewable Energy Superpower"

In the first edition of this book, we wrote about a group of cities showing how to experiment with solar energy and wind power. They were proudly and bravely stepping into a largely unknown world, passionate about starting a journey that had to be embarked on no matter what it cost. These included Masdar City in the United Arab Emirates; Freiburg and Kronsberg in Germany; Malmö in Sweden; Perth, Adelaide, Melbourne, and Sydney in Australia; Cape Town in South Africa; Daegu in South Korea; Barcelona in Spain; London in the United Kingdom; Toronto in Canada; and Seattle, Chicago, San Francisco, Sacramento, Austin, Atlanta, and Honolulu in the United States. Today most of these cities are ramping up their commitments and countless others are joining them, as doing so is no longer an economic burden but an economic necessity. This chapter is about the rise of renewable energy and how it is providing new opportunities for resilient cities.

The major driving force behind this transition has been investment in renewable energy and distributed energy systems. Bloomberg New Energy Finance (BNEF) has documented this trend toward investment in renewable energy. BNEF's data show that the world's financiers are investing in renewable energy at twice the rate they are investing in coal- and gas-fired power systems. Many nations are well down the track of providing renewable power to their citizens, driven by a combination of policies, business, and community pressure through their cities. Some cities, such as Vancouver, British Columbia, and Christchurch, New Zealand, and countries such as Norway have had high renewables for decades, given their investments in hydropower. To replace fossil fuels with renewables globally, solar and wind power will be needed, in addition to a few other new kinds of renewables. In particular the rapid growth is in rooftop solar power, which is creating a whole new distributed energy system in our cities with multiple benefits for sustainable and resilient cities.

With non-hydro renewables as the guide, Spain, Denmark, Germany, and the United Kingdom appear to be the world leaders in the renewable cities transition, as set out in table 1.1.

As explained in the introduction, Denmark's growth in wealth decoupled from growth in fossil fuels as the nation struggled to establish this new approach to the economy. In 2015, with its economic growth based on renewables, Denmark was able to produce 40 percent of its power from renewables, and its goal is to reach 100 percent in the power sector by 2035, with 100 percent renewable energy in all sectors by 2050. On one day in July 2015 when the wind was blowing strongly, Denmark produced 116 percent of its power from renewables at peak time and 140 percent during off-peak hours; the excess was shared with Germany and Norway, which have hydroelectric storage that can take excess power.

The European Union has a target of 75 percent renewables across all energy sectors by 2050, with 15 percent by 2020. There is little doubt that the renewables transition is under way in Europe, and it is driving not just the global political agenda but also the global economic agenda there. The decoupling of gross domestic product (GDP) from greenhouse gas (GHG) emissions has been driven mostly by European cities, and this is likely to continue to drive the global agenda to decarbonize our cities and regions.

This chapter will address the following questions:

1. What is happening with renewables across the world?

2. What will happen to the power grid in cities as they transition to renewables? Will it still be needed if solar and storage become commonplace?

3. What will drive industry toward renewables?

4. What about city initiatives, buildings, and urban development? How can renewables be incorporated?

What Is Happening with Renewables Across the World?

BNEF has made a detailed assessment of the trends across the world and by region. Its assessment is that in the twenty-five years from 2015 to 2040, renewables will become the dominant power source in the world. Wind and solar will account for 64 percent of the new generating capacity, and globally there will be 60 percent zero-carbon power, replacing coal and gas, which will decline from 57 percent to 31 percent. See figure 1.1, which is based on trends under way now and indicates we are likely to reach the target of 80 percent by 2050 for all GHG emissions, though power is in fact likely to be ahead of other sectors.

These goals will be achieved because the cost of solar power will come down by 60 percent and wind power by 41 percent, becoming the cheapest energy options across most of the world. In some places and cities this is already the case. Prices for fossil fuels, especially oil and gas, have been very volatile over the past few decades and investors can now see a more reliable option in renewables, given their price decline certainty, universality, and political compatibility as the world becomes increasingly committed to phasing out fossil fuels.

In the United States, wind power supplies approximately 5 percent of the electric power grid. The U.S. Department of Energy reported that by 2050 wind could power approximately 35 percent of the electric grid in the United States (increasing to 10 percent in 2020 and 20 percent in 2030). It also reported that wind energy is getting less expensive every year as a result of policy changes and advances in technology: "Since the 1980s, the cost of deploying wind energy has dropped by 90 percent."

However, the United States is one place where natural gas is seen by the Bloomberg report to be significantly cheaper than renewables because of cheap fuel (see figure 1.2A–D). Natural gas will likely account for around half of the growth in power investment, given the need to replace aging coal-fired power stations. The other half will more than likely come from small-scale rooftop solar power, which is estimated to increase from 0.8 percent of total installed capacity in 2014 to 40 percent in 2040. As outlined below, the United States has largely been distracted from enabling solar energy as a good business opportunity, as compared with places such as Australia, perhaps because of the political and popular fight between coal and gas, as well as the differences in economic growth between the two places; however, if this changes, the costs of small-scale solar could become cheaper than gas much more quickly.

The big growth in renewables is expected to be in rooftop solar because it fits into a very popular niche and provides new opportunities for consumers (see the Perth example that follows). Thus, the next phase in most cities will be managing the switch to distributed power systems — smaller, localized systems — based on solar or wind energy. For rooftop solar, the cost of battery storage is reducing dramatically. This, along with system services such as demand response, control systems, and blockchain software (the software used to enable Bitcoin to be exchanged in a trustworthy way across the Internet), can create "citizen utilities," as outlined in this chapter. Distributed power is the vanguard of innovation in the energy sector and is likely to lead to a renewal of economic activity in those places that can enable it.

The rapid adoption of rooftop solar across the world is what is now called a "disruptive" process that will be driven by cities. This is a demand-led process with significant impact on the system within which the innovation happens, in this case the energy grid. Rooftop solar is disruptive because it is being driven by demand and it is disrupting the grid, in no small part due to the continuing decline in the cost of storage batteries as they follow the trajectory of rooftop solar. In Australia in 2016 the price of batteries dropped from A$2,000 per kilowatt-hour (kWh) to A$500, making the solar plus storage option truly competitive in most cities. If this use of rooftops for solar power gathers political and popular momentum in the United States, driven by cities with a commitment to decarbonize their future, then it is possible that the growth in natural gas in the United States will be slowed, as is inevitably happening in most of the rest of the world. Without this change from natural gas to solar, U.S. cities will miss out on the many disruptive innovations and opportunities associated with distributed power generation.

Bloomberg expects to see global growth in the use of rooftop solar, particularly in regions such as the Middle East, Africa, and the Asia Pacific. It estimates that between 2015 and 2040, solar photovoltaic (PV) power will account for most of the growth in the power sector, with 3,429 gigawatts (GW) of capacity coming online, around half of it in utility-scale and half in small-scale PV.

Wind and solar capacity are of course variable in their geography, so the story will vary across the planet as to which will be dominant, as shown in figure 1.3. The cost of wind and solar comes down rapidly when they are in good supply.

The costs of power options are not just technological costs, however. There is a whole system of costs associated with each type of power source. Figure 1.4 shows that the costs of solar power in Australia are half what they are in the United States, which is why the cities of Australia are now having the highest uptake of rooftop solar in the world. The difference is partly in the cost of panels and inverters, which come mostly from China, but the major difference is in the business costs of permitting, marketing, and financing rooftop solar, which were mainstreamed much more quickly in Australia in the past five years. Cities need to capitalize on the new economy that will come from their natural advantages, just as the energy cities of the past were based on coal, oil, and gas resources nearby. Cities can assist this process through setting targets for renewables, creating business opportunities by facilitating establishment of innovative renewables-based companies, reducing the costs of permitting, and enabling residents to invest in renewable energy for their households.

The majority of new power will be in the developing world, and it is here that some fossil fuel plants will continue to be built just to keep up with demand for power, using countries' own fossil fuel resources, as in India and to some extent China. In these emerging nations the ability of solar PV installations to fit into cities is even more obvious, as they can provide immediate power, and with batteries there is potential to leapfrog into the future. Thus it is possible that the emerging cities of the world will proceed faster in the transition to renewables than predicted by Bloomberg.

Three countries will dominate the new power capacity in Europe between 2015 and 2040, and each country will have a major influence on global trends because of its symbolic and political significance. They are as follows:

1. Germany will have the highest renewables power capacity, with 74 percent by 2040. It will be the first country in the Organization for Economic Cooperation and Development to demonstrate how to balance variable energy flows with flexible flows across its network. Battery capacity is likely to grow fastest here.

2. France has been the dominant nuclear power nation, with over 50 percent of its power from nuclear energy; but a 19 GW reduction resulting from retirements of nuclear plants will bring this to less than 20 percent by 2040. Small-scale rooftop solar will be the main source of replacement, growing to 30 percent of the power supply.

3. The United Kingdom has been building very large offshore wind power installations, but the new conservative government has begun to phase down the subsidy on this. Conservative governments will try to stop the renewables transition. Nevertheless, the growth of solar has begun to take over and will probably be unstoppable; Bloomberg expects it to grow to 44 percent of installed capacity by 2040 (31 percent from rooftop solar). Fossil fuel power will shrink from 60 percent to 15 percent, and the last coal-fired power station in the United Kingdom (which invented the technology two hundred years ago) will be turned off in 2032.

What Will Happen to Our Cities' Power Grids in the Transition to Renewables?

Solar power is not just coming, it is here. But what does that mean for our centralized grids? Will it mean we won't need a grid? Will we be able to live in splendid self-sufficiency with our own power? We now have an unlikely emerging demonstration city, Perth, Western Australia, that is enabling us to learn something about distributed rather than centralized generation and in particular to see a new phenomenon we have called "citizen utilities." In this future grid, based on solar PV and battery storage, consumers are likely to create their own way of managing their local electricity needs and determine how they dispose of their excess electricity.

Moving toward Distributed Energy

In global cities built around fossil fuels, the belief developed through the twentieth century that the most effective and efficient approach to providing energy was through large centralized production facilities and extensive distribution systems that transport energy over relatively long distances. These systems have proven to be vulnerable, yet many utilities and cities are fearful of the growth in renewables because of grid stability and energy security. As the cost of small-scale rooftop solar has become a major driver of future energy provision, it is necessary to create more local, distributed microgrid systems with smart grid control technologies and batteries for stability. This distributed energy offers a number of benefits, including energy savings through the ability to better control power production, lower vulnerability, and greater resilience in the face of natural and human-caused disaster, including terrorist attacks. The same idea is being used for water and waste.

The cost of providing the infrastructure necessary for distributed power, water, and waste systems is not a significant issue. For example, in Hopetoun, a remote settlement in Western Australia, a mining company and the state government had to assess how best to build the town's infrastructure to support a large influx of people for a new mining venture. They assessed three options: centralized, distributed, and decentralized (household based). The results showed that the distributed option was half the cost of the others and would save $0.5 billion in 2008. However, the utilities were not keen to try this unfamiliar approach. In more recent times the cost of small-scale, integrated energy, water, and waste systems for remote and rural settlements has become much more established.

In Perth, the number of households with rooftop solar PV is now around 25 percent, with more than 200,000 systems having been installed since 2010, translating into 550 megawatts (MW) of generating capacity, the largest power station in Western Australia. The purchase of solar PV in Perth is continuing to grow at more than 30 percent per annum. The entire process was not facilitated by any government program. It was simply a new market that was taken up by many households during the recent economic boom in Perth. Australia in general has been growing rapidly in its adoption of solar PV, with 1.5 million households with rooftop solar PV panels, which are likely to produce over 18,000 MW of power by 2031.