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AUGUST 24, 2022

Good morning!

We connect the dots on the three big U.S. climate laws that have passed over the last year, and we have a Voices article on what smart meters can learn from smart phones.


Cipher will not publish next week. We’ll be back in your inboxes Sept. 7.


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Send your energy photos, story tips and more to news@ciphernews.com or reach us directly at amy@ciphernews.com and anca@ciphernews.com.

DATA DIVE

Trifecta of new laws snaps U.S. climate policy into place

Source: RMI, Government Accountability Office, Joint Committee on Taxation. Agency spending & tax expenditures data is unavailable for 2018-2021.

BY: AMY HARDER

The U.S. government has passed three laws in the past year that together amount to an industrial policy aimed at combatting climate change.


The infrastructure law (enacted last year), the CHIPS and Science Act and the Inflation Reduction Act (both signed into law this month) combined mean U.S. federal spending on cleantech over the next decade will likely be at least 3.5 times recent levels and 15 times levels seen in earlier decades, according to a recent report by the nonprofit RMI (see above chart).


“It’s not just the scale of the spending, it’s how strategically it’s being spent,” Lachlan Carey, co-author of the study and a senior associate at RMI, said in an interview with Cipher.


In the report, Carey and co-author Jun Ukita Shepard use common nouns to describe the different roles the new laws are taking on.


They liken the CHIPS and Science Act, which pours billions into research and development in a range of areas, including climate and cleantech, as the “brains” of the operation—operation being acting on climate change.


The infrastructure law is the backbone, providing the initial deployment and physical backbone needed to scale up new technologies.


The Inflation Reduction Act is the engine (presumably not one powered by fossil fuels!) that drives investment growth and stimulates more demand.

“Only by having all three pieces working together do you successfully and quickly accelerate technology transitions in all the sectors that we need to reach net-zero.” –Lachlan Carey, co-author of the RMI study

In other words, the whole is greater than the sum of the parts.

Although the last few decades of protracted and failed climate debates in Washington, D.C., have been hard, the harder part begins now: successfully deploying the laws.


Carey flagged some potential pitfalls, including the fact the U.S. may still not dominate in all cleantech manufacturing areas due to fundamental differences in processes, such as China’s dominance in solar photovoltaics.


He also said that any increase in protectionist policies—such as tariffs on dirtier products—could raise the cost of new technologies, the opposite of what needs to happen.


The need to build a lot more clean energy infrastructure—a topic we cover a lot at Cipher—is also not directly addressed in these laws. Congress is set to consider a proposal on this topic in September.


The ultimate success of this trifecta of laws will rest on everyone outside of Washington, Carey said.


“One thing we couldn’t capture effectively in that chart is the extent to which this funding will leverage multiples of private investment,” Carey said. “The real success of these initiatives is how much they are picked up by the private sector and how much they run with it.”


A couple of important caveats about the chart:


The annual averages for the three laws passed over the last year include both appropriations and authorizations, and the CHIPS data is based on authorizations (which sets the amount of money that can be spent), not appropriations (which actually doles out the money).


The chart also doesn't include agency spending and tax expenditure estimates for 2022-2027 due to the potential of overlap in the new laws, which means the data for that period could be undercounted.

Lunchtime Reads and Hot Takes

Biden’s Historic Climate Bill Needs Smart Foreign Policy — Foreign Policy

Amy’s take: An important and frank article, with this line: “…the hard truth [is] that our clean energy supply chains will remain heavily dependent on imports, particularly from China…”

U.S. will hash out clean energy details with global leaders in PittsburghPittsburgh Post-Gazette

Amy’s take: Cipher will be there! Will you?


Expansion of Clean Energy Loans Is ‘Sleeping Giant’ of Climate BillThe New York Times

Amy’s take: It’s a sleeping giant because of the private sector capital it will unleash. That point is implied in this article, but not explicitly stated.


The U.S. Finally Has A Real Climate Law. Get Ready For More Pipelines.HuffPost

Amy’s take: Come for the Dakota Access pipeline twist at the top, stay for the modeling caveat buried deep in this well-reported article.


Biden’s Climate Law Is Ending 40 Years of Hands-Off GovernmentThe Atlantic

Amy’s take: I’ve been extra impressed with Rob’s coverage lately. A story of his that we highlighted last week featured the RMI chart we featured today. This is a great quote from Josh Freed, a cleantech expert at the centrist think tank Third Way: “We are about to have a huge new set of vested interests who want the economy to be clean and benefit from that. We’ve literally never had that before.”

Analysis: Putin bets winter gas chokehold will yield Ukraine peace - on his termsReuters
Anca's take: Today marks six months since Russia invaded Ukraine. Besides the human tragedy, the war also threw Europe into a deep energy security crisis which will be felt for years to come. Good analysis on how Russia is using energy as a political weapon.

In Ukraine, a nuclear plant held hostage — The New York Times

Anca’s take: It’s all in the sub headline, really: “All that stands between the world and nuclear disaster are dedicated Ukrainian operators working at gunpoint.”


German Power Prices Smash Record as Energy Panic Engulfs EuropeBloomberg (paywall)

Anca’s take: Seems like a new price record is broken every few days as the energy crisis worsens. This article does a good job of painting the wider picture of the challenges across Europe.


Startup’s Hydrogen Breakthrough May Give New Life to Coal PlantsBloomberg (paywall)

Amy’s take: This could be exciting stuff from Down Under, especially the concept of the tech basically being a “drop-in” for existing coal plants.

Sex, drugs and … sustainability? Music festivals struggle to go greenPOLITICO

Anca’s take: Music festivals are super popular, especially as we ease our way into a (relatively) post-pandemic future, and this is a good summer read shedding light on how green and clean they really are.


More of what we're reading:

  • Japan set for new nuclear plants in post-Fukushima shift — The Financial Times

  • Germany and Canada sign hydrogen deal — Deutsche Welle

  • China warns against monopolies, hoarding in photovoltaic industry — Reuters

  • Why the climate bill’s impact might not match what many expect — The Washington Post
  • Belgian Prime Minister Warns of 10 ‘Difficult’ Winters for Europe — Bloomberg (paywall)
  • Top EU climate official Mauro Petriccione dies — POLITICO
VOICES

Why smart meters need to be more like smart phones

BY: MIKE PHILLIPS

Phillips is an expert on machine learning and founder of Sense, a home energy intelligence company. You can contact him at mike@sense.com.


Twenty years ago, a phone was just a phone, and you’d have to look elsewhere for maps, music and more. Today, thanks to the influence of consumer-facing companies like Apple and Google, smartphones have created an entirely new market for mobile applications for consumers. The same thing could—and should—happen with smart meters.


Smart meters measure how much electricity and other types of energy buildings use primarily for billing purposes and to help utilities run the power grid.


Introduced in 2006, smart meters were initially envisioned as a way to help customers better manage energy use. But they operate largely on data in the past (typically 15-minute averages delayed by hours or days), which make them incompatible with our always-connected, always-updated world.


It’s like printing out digital maps to refer to in the car. They used to be useful, but most of us now use live maps on our phones so we know where we are in the moment and what the traffic is like up ahead. Without this real-time experience, Google Maps and thousands of other mobile applications would never have achieved the success and engagement levels that we all experience.


When we started Sense in 2013 with the goal of making homes more energy efficient, everyone told us we couldn’t get consumers interested in energy. Since the average consumer spends only eight minutes per year interacting with their utility online, we shouldn’t bother to try because consumers are fundamentally not interested in their energy bills.


The apparent lack of consumers’ interest misses the main problem, which is that smart meters are like printed maps in our digital world. Just as  mobile phone applications would not have succeeded based solely  on historical data sent to your phone company, it’s no surprise that utilities have not been able to engage consumers using existing smart meters.


And like the transformation of phones, the utility meter can become a key platform for a range of consumer-facing applications, including (but not limited to) Sense.


We need to get out of the mindset that meters make data, the data goes someplace, and then applications and analytics are based on that static data. The current discussions among regulators and utilities are about data resolution, where the data goes and who gets access. These are reasonable arguments but miss the key point: as long as utility meters only provide access to static historical data, they will never yield engaging consumer applications.


I see three clear lessons we can glean from the success of consumer applications on smart phones.


First, we need devices—smart meters in this case—to have the ability to run a variety of applications.


Second, these applications need real-time access to the right data, like location for Google Maps on phones and high-resolution power data in the case of applications like Sense on meters.


Finally, we need to connect smart meters with better communication networks. Smart phones did not take off until the telecom data networks became good enough—with enough reliability and speed to support real-time applications. Existing utility networks were designed for historical meter data and cannot provide real-time experiences, but Wi-Fi and cellular can solve the problem.

We need better smart meters for their own sake—just like we need online maps to find our way no matter where we’re going. With smart meters, though, our collective destination matters most: tackling climate change. Clean and efficient electricity, empowered by smart meters, will be increasingly central to our world’s attempts to reduce emissions.

We need changes in how energy is consumed to enable utilities to meet their decarbonization goals. We need homes to be more efficient users of energy, we need to electrify more and more end uses, and we need demand flexibility to enable more use of variable low-carbon energy sources. Even with increasing automation of devices in homes, consumer decision-making will continue to have a big impact on how energy is used in their homes.


Consumers want to participate and want to have visibility and control over their costs, internal surveys we’ve conducted show. In our increasingly connected world, we need to give consumers tools and applications to better manage their homes. By adopting the latest generation of smart meters, which can run applications like Sense, utilities can play a central role in making homes smart—with benefits to the planet and your electricity bill.

AND FINALLY...

Windy beaches

Anca snapped this photo during a recent trip to Copenhagen, Denmark. Beachgoers enjoy a sunny weekend at Amager Strandpark with dozens of offshore wind turbines operating in the background. Denmark gets half of its electricity from wind and solar sources.


Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

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