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Seoul 1 GWp ‘Solar City’ Highlighted at Mayors Forum

The 2019 Mayors Forum (part of IREC held in Seoul in October) featured Seoul’s 1 GWp Solar City Initiative. FREE helped the City to design this ambitious program as part of the FREE-Seoul Metropolitan Government (SMG) Memorandum of Understanding (MOU). Dr,Byrne delivered the keynote at the Forum, which drew 37 mayors from 25 countries. Mayor Park Won Soon chaired the Forum.

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Dr. Byrne and Mayor Park Won-soon interview in Seoul, Korea

Seoul Metropolitan Government (SMG) plans to invest $1.5 billion in their strategy to deploy 1 gigawatt (GWp) of solar energy by 2022. As part of the MOU, FREE has provided the modeling and technical assessment of the city’s rooftop potential as hosts of a distributed solar power plant. FREE also calculated the economics of the project and used a financing structure it has developed for city-scale investment in such a project. (FREE has published results of it modeling and financing approach for 5 cities in addition to Seoul: New York City, London, Munich, Amsterdam, and Tokyo.)

In November 2017, Seoul Metropolitan Government (SMG) declared its intention to deploy 1 gigawatt of rooftop solar as part of its “Solar City Seoul” master plan. Over the next five years, Seoul city government plans to invest $1.5 billion to make the project a reality. This is a significant step forward in the future of Seoul’s sustainability contribution and follows in the wake of the very successful first stages of the city’s One Less Nuclear Power Plant (OLNPP) initiative. 1 Under initiatives like the OLNPP, Seoul focused heavily on promoting energy conservation and efficiency improvement. With this new Solar City Seoul plan, the city is ramping up investment in energy production as well. FREE applauds this direction chartered by the Mayor of Seoul, Mr. Park Won-soon.

FREE has been actively advising the city for five years on the prospects of becoming a “solar city.” As part of the Seoul International Energy Advisory Council (SIEAC), Dr. John Byrne has described to city officials the potential of rooftop solar across the 10-million people strong city. FREE has also published several refereed articles analyzing the emergent role of the solar city concept coupled with new priorities, such as policy effectiveness, solar financing support, and market mechanisms available to Seoul to explore this potential in detail. 2 For example, research we have conducted shows Seoul has a full deployment potential of about 10 gigawatts. 3

FREE attended the launch of the initiative. Mayor Park Won-soon and Dr. Byrne were interviewed by leading Korean newspapers on the strategy. During an interview with Kyunghyang Shinmun, Mayor Park underscored FREE’s role, noting that he “had an opportunity to take a view of the downtown area in Seoul from Namsan Mountain with Prof. Byrne. As I talked with him, I realized that Seoul has a significant PV technical potential.” 4

A striking feature of the Solar City Seoul plan is the commitment to increase household-level PV deployment through miniature solar generators installed on rooftops and verandas or so-called “mini-PV” technology. This prong of the plan will engage more than 100,000 households in helping to supply solar energy to the city! This is exactly in tune with the Mayor’s original pursuit of the idea that “citizens are energy.” The initiative will make solar energy a part of the everyday life of Seoul’s citizens and businesses.

FREE has worked extensively on the concept of the “solar city” – the citywide deployment of rooftop solar energy. Our work shows not only that Seoul has significant potential to develop itself as a solar city but that cities like New York, Tokyo, London, Amsterdam, and Munich possess similar resources. 5 Indeed, a paper published in the International Journal of Urban Sciences by the FREE research team highlights the fact that this opportunity is common to most cities around the world. 6 An investigation of the market, finance, and policy considerations associated with solar city deployment found that the concept is not only technically feasible but it also creates practical economic benefits, including job creation and expansion of local green industries, and results in significant environmental benefits by shrinking the city’s carbon footprint by more than 10 percent. 7

“I will make Seoul a place where PV can be found everywhere”, the Mayor said. The FREE team will be there to continue to help make this ambition become unavoidable reality.

  1. FREE published a blog article on the OLNPP initiative which can be accessed at: https://freefutures.org/one-less-nuclear-power-plant-seouls-commitment-to-a-low-carbon-and-non-nuclear-city/
  2. For more information on our publications, please see freefutures.org/publications
  3. Byrne, J., Taminiau, J., Kurdgelashvili, L., & Kim, K. N. (2015). A review of the solar city concept and methods to assess rooftop solar electric potential, with an illustrative application to the city of Seoul. Renewable and Sustainable Energy Reviews, 41, 830-844. doi://dx.doi.org/10.1016/j.rser.2014.08.023
  4. Translated from the Korean newspaper Kyunghyang (article, in Korean, can be found at: https://news.khan.co.kr/kh_news/khan_art_view.html?artid=201712072105005&code=100100
  5. Byrne, J., Taminiau, J., Kim, K. N., Seo, J., & Lee, J. (2016). A solar city strategy applied to six municipalities: Integrating market, finance, and policy factors for infrastructure-scale photovoltaic development in Amsterdam, London, Munich, New York, Seoul, and Tokyo. Wiley Interdisciplinary Reviews: Energy and Environment, 5(1), 68-88. doi:10.1002/wene.182
  6. Byrne, J., Taminiau, J., Seo, J., Lee, J., & Shin, S. (2017). Are solar cities feasible? A review of current research. International Journal of Urban Sciences, 1-18. doi:10.1080/12265934.2017.1331750
  7. Byrne, J., Taminiau, J., Kim, K. N., Lee, J., & Seo, J. (2017). Multivariate analysis of solar city economics: Impact of energy prices, policy, finance, and cost on urban photovoltaic power plant implementation. Wiley Interdisciplinary Reviews: Energy and Environment, , n/a. doi:10.1002/wene.241

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FREE Facilitates Tour by the Seoul Energy Corporation of U.S. Energy Innovations

FREE facilitated a coast-to-coast tour of innovative energy applications for a delegation from the Seoul Energy Corporation (SEC). Spearheaded by CEO Jin Sub Park, the visiting team included: Jung Min Yu, Chang Woo Cho, and Yong Dae Kim.

SEC is responsible for the supervision of and investment in energy policy programs in South Korea’s capital city of Seoul. In particular, the SEC leads the implementation of the innovative One Less Nuclear Power Plant (OLNPP) initiative which pursues energy reduction targets equal to the production of a nuclear power plant. The visit by the SEC delegation had the goal of observing and learning about innovative, ‘best practice’ energy technology, policy, and financing applications. Lessons learned from this tour might find their way into SEC programming in Seoul.

The tour began with a visit to the San Francisco Department of Environment to go over San Francisco’s climate goals and programming, with a special focus on the CleanPowerSF initiative and new efforts to integrate solar power and storage. CleanPowerSF is the city’s Community Choice Aggregation (CCA) program, which allows cities and counties to partner with their utility to offer clean energy at competitive rates to residents and businesses.

The SEC’s next destination was Philadelphia where it was hosted by FREE at the office of Drinker Biddle & Reath, LLP. The Deputy Treasurer of the Commonwealth of Pennsylvania provided a warm welcome letter to the delegation, encouraging the SEC to consider the Pennsylvania Sustainable Energy Finance Program (PennSEF) as a model that could be implemented in Seoul – PennSEF is a partnership program between the Pennsylvania Treasury and FREE.  To illustrate how the work done by FREE could inform the operations of the SEC, FREE team members presented the lessons learned in setting up large-scale energy efficiency, on-site renewable energy, and microgrid applications such as the Delaware Energy Efficiency Bond Series, the PennSEF program’s LED Street Lighting Initiative, and a Philadelphia Solar 86 MWp Finance Opportunity. Specific attention was paid to financing and policy challenges facing the SEC delegation and how some of the innovative elements of FREE’s work could potentially help overcome these challenges. FREE made several suggestions regarding the organization of research for SEC’s Research Institute to consider, based on FREE’s own efforts to integrate a research arm into the foundation’s institutional structure. A copy of FREE’s presentation is included here.

The SEC delegation and the FREE team in Philadelphia. From bottom left to bottom right: Baird Brown, Jin Sub Park, John Byrne, Joohee Lee. From top left to top right: Jeongseok Seo, Chang Woo Cho, Yong Dae Kim, Job Taminiau, Soojin Shin, Jung Min Yu.

Members of the FREE team then accompanied the SEC delegation to Princeton University to discuss their microgrid application and thermal energy storage strategy. The Princeton microgrid system includes a district energy system that provides electricity, steam, and chilled water to power, heat, and cool the buildings on the university campus. In emergency situations, the microgrid can operate independently from the grid – during the 2012 Hurricane Sandy, the system was able to continue operation while the rest of the grid was down.  A key innovation of the Princeton facility is its capacity to sell ancillary services to the utility grid based on an automated control system that calculates optimum economic benefit of the range of services available from its microgrid.

The final leg of the tour involved a visit to an innovative community energy governance model in New York City. The Brooklyn Microgrid is a network of neighborhood relationships which relies on peer-to-peer transactions built on blockchain technology. Operated by start-up LO3 Energy, the transactive system allows for direct interaction between neighbors in trading power to each other without requiring involvement from the utility.

It was an honor for FREE to host the SEC delegation and we look forward to working together in the future.

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Sustainable Energy Utilities and ESCO Financing Can Save Money and Reduce Carbon Footprints

By Kathleen Saul – Master of Environmental Studies Faculty at The Evergreen State College

Reprinted with permission from: https://www.evergreen.edu/sustainableinfrastructure

“The quickest way to double your money is to fold it over and put it back in your pocket.”   —Will Rogers

William Penn Adair, aka Will Rogers, lived at a time before the spread of electric lights, before highways criss-crossed this nation, and when only 76.2 million people lived in the 45 states of the United States (1900 data).  His words ring true today as they did back then.  Today, over 308 million people reside in the 50 states and draw upon its natural resources to power cars and buses, computers, lights, heating and cooling systems, industrial equipment and cellular phones, hair dryers and electric toothbrushes, toll booths on highways and checkout stands in grocery stores.  Energy–sourced from coal, natural gas, nuclear, hydro, solar, wind, and other sources—keeps the country buzzing.

As expected, using energy is not free.  We pay for electricity in dollars per kWh, for natural gas in dollars per mmBTU, and gasoline or diesel for a car, bus or minivan in dollars per gallon.  Those prices fluctuate depending on national policies, subsidies accorded providers, global affairs (such as wars in the Middle East), demand, and local taxes (such as carbon taxes or taxes to pay for road repairs).

In recent years concern over global climate change and the impact of energy use on climate has forced many people to take a harder look at their energy consumption patterns.  Appliance manufacturers have introduced more efficient versions of popular brands.  The Environmental Protection Agency (EPA) and Department of Energy worked to develop labels to make it easier for consumers to choose more energy efficient options.  Automobile manufacturers have increased the miles per gallon achieved by many small cars.  As a result, the energy consumed by each American has gone down over time.

But there is more to be done.  We have to turn our attention to the structures housing the computers and refrigerators, HVAC systems and televisions.  We need to look at personal residences and businesses.  This work starts with an energy audit.  After examining the structure and its energy profile, an energy service company (ESCO) provides a list of different options for making the home or business more energy efficient, how much each option will cost, and the amount of energy each will save.  The business owner or resident can determine how much invest.  They may decide just to replace light bulbs or may choose to invest in a new heating and cooling (HVAC) system, to replace leaky windows, and to add insulation to the attic and basement.  They will contract with the ESCO to do the work and to pay that ESCO based on how much money they save on their energy bills, from the start of the project until the total cost of the work has been repaid.  Figure 2 below illustrates a simple example:

Figure 2: A Simplified View of a New Way to Finance

If previous energy bills totaled $100 and new bills total $75 dollars per month, $25 per month (the hatched portion of the graph) will be paid towards the cost of the heating and cooling system, windows, and insulation.  There is no large up-front investment to worry about.  The bills are no higher than before the work was completed and, in the end, the building will be more energy efficient.  After the work has been paid off, bills will be reduced to $75 per month.

This same type of financing arrangement can also be applied toward renewable energy projects.  Rather than having to buy solar panels on credit, interested parties can work with a solar company which will install the panels and take the money that would have been paid to an electric company as the installment payment for the panels.  After a period of time, the interested parties become the owner of the panels and the electric bill drops to zero (theoretically).

The Delaware Sustainable Energy Utility (SEU) has built on this model to help increase the energy and water use efficiency of prisons and schools in Delaware, invest in renewable energy systems, and reduce the energy use of households.  The SEU, a tax-exempt entity, tapped the private bond market to raise $72.5 million with which to implement large scale, long-term sustainable energy measures.  These projects involve four interrelated contracts: a) A program agreement; b) A guaranteed savings agreement; c) An installment payment agreement; and d) An indenture (Sustainable Energy Utility (SEU): The Business Model of the SEU, https://freefutures.org/policybriefs/).  The program agreement describes the contracted relationship between the SEU, the ESCO(s), and other participants in the program.  It provides details about reporting requirements and monitoring programs, as well as specific targets for the programs.  The guaranteed savings agreement follows an audit by an ESCO and outlines the appropriate energy, water and other conservation measures, or renewable energy or distributed energy system installations that will be undertaken to reduce consumption.  The installment payment agreement details the plans for payments from the participant to the trustee.  The trustee works on behalf of the bondholders.  In the case of the Delaware SEU, the SEU is the trustee.  The relationship between the bondholders and the trustee is outline in the indenture.  Because the model relies on contractual agreements, the risk to any one party has been reduced.  Setting targets at the outset and providing monitoring throughout the life of the project both help ensure success of the energy efficiency and conservation projects.  Any deviations from the energy efficiency and conservation plans can be identified early and can be corrected.

In the case of the SEU, the figure looks slightly different than Figure 2 above.  Figure 3 shows that the Aggregate Guaranteed Savings over the life of the project will far exceed the Aggregate Payments made toward the project.  Thus, the concept is the same.  Regardless of the source of the funds, there is no large up-front payment and the contractually guaranteed savings will exceed the payments made.

Figure 3: Large Scale, Long Term Deep Retrofits (Source: Sustainable Energy Utility, SEU – The Business Model of the SEU)

Projects using this type of financing approach also have been implemented in Thane, India as part of the Campaign for Renewable Energy under Dr. Sanjay Mangala Gopal ; in Sonoma County, California and in Pennsylvania (See https://freefutures.org/).  Small scale, short-term projects can benefit from this approach, as can large-scale, long-term ones.   We can then put the money back into our pockets as Will Rogers bade us to do many, many years ago.

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The Scale of the Energy Access Gap

By Benjamin M. Attia
Access to electricity is a key catalyst correlated with economic development.

The International Energy Agency (IEA) recently estimated that over 1.5 billion people do not have access to affordable electricity, representing one quarter of the world’s population [1]. In the absence of aggressive new policies and significant financing, it is estimated that that number will drop to only 1.3 billion by 2030 [1]. The United Nations’ (UN) Sustainable Energy for All (SE4ALL) initiative, which is working toward a goal of global universal energy access by 2030, estimates that approximately 600 million of these unelectrified people live in Sub-Saharan Africa [2]. This number is expected to rise to approximately 645 million by 2030 under a business-as-usual scenario due to expected explosive population growth [2, 3]. This widening gap of energy access is a complex and multidimensional problem and represents an important hindrance to economic development and social change in the developing world.

Historically, the access gap since the initial commercialization of electricity has “consistently been between 1 and 2 billion people… as grid expansion has roughly paced global population” growth [4]. This suggests that the access gap is a reflection of a persistent lack of equity in distribution. In fact, in 1983, Krugmann and Goldemberg famously estimated that at 1983 global consumption levels, the “energy cost of satisfying the basic human needs” of every person on the planet was well within the available supply of energy resources [5, p. 60].

Today, the consumption and distribution inequalities are even more pronounced. In 2011, the average American consumed 13,240 kilowatt hours (kWh) per person per year, while the average Ethiopian consumed only 56 kWh [6]. Further, across all of Sub-Saharan Africa, annual per capita kWh use is one-sixth the load requirements of a relatively efficient American refrigerator [7]. Globally, the poorest three-quarters of the world’s population comprise less than ten percent of total energy consumption [8, p. 5].

The inequities that underline energy poverty and energy access are also fundamentally connected to climate change. Looking ahead, the world’s demand for electricity is estimated to increase by more than 70% by 2040, and the World Bank and IEA estimate that a doubling in installed energy capacity will be necessary to meet the anticipated growing demands of emerging markets [9], [10]. Despite the accelerating paradigm shift to low-carbon and renewable energy generation technologies, there is a paradoxical irony to the link between development and climate change which has left the poorest countries with the lowest contributions to greenhouse gas (GHG) emissions as the most vulnerable and most susceptible to the effects of climate change [11, p. 591, 12]. As markets evolve to value avoided GHG emissions [13, p. 215], reconciling the joint–and possibly conflicting– goals of development through universal energy access and combating climate change will accelerate, but at present, the inequity in energy access is only further exacerbated by the parallel inequities with respect to climate change adaptation measures.

Many scholars agree that access to electricity in itself is not fully sufficient to bring about the required economic and social development to break the cycle of poverty [14, p. 1058, 15, p. 2194]. It has also been widely settled that access to electricity is a key catalyst correlated with economic development and that a lack of electricity access is a key bottleneck to growth [16], see [17] for comprehensive rebuttal]. However, approaches for tackling the problems associated with energy poverty are often difficult to scale up because of the difficulties associated with navigating this uneven technical, sociocultural, agricultural, and institutional landscape, and, as will be demonstrated below, the multidimensionality of energy access inhibits scalability of any one catch-all solution.

The IEA estimates that 30% of those without access to electricity would best be served by grid extension, 52.5% would be best served by micro-grids, and 17.5% would best be served by stand-alone energy systems [3, p. 14]. There is a clear need for investment in rural electrification initiatives at all three levels and a clear gap in understanding routes and sinks for effective impact investing [3, p. 14]. National grid extension programs and firms selling small energy systems are generally much better funded than the community-scale solution of micro-grids, despite their significant potential market share and niche ability to provide scale benefits, rapid deployment, flexibility of business models, and energy storage, security, and reliability [3, p. 15]. The micro-grid space is rife with opportunity to build markets, innovate new business models, develop new financing mechanisms, and provide the sustainable development benefits of renewable electrification and increased economic potential.

As one development professional put it, “If rural [people] have power in their lives, they will have more power over their lives” [16]. Access to electricity is not the answer to the greater global problems of poverty and inequity, but can be a good place to start.

References
[1] “World Energy Outlook 2014,” Paris, France, 2014.
[2] SE4ALL, “Energy for all: Financing Access for the poor,” in Energy for All Conference, 2011.
[3] M. Franz, N. Peterschmidt, M. Rohrer, and B. Kondev, “Mini-grid Policy Toolkit: Policy and Business Frameworks for Successful Mini-grid Roll-outs,” EUEI Partnership Dialogue Facility, Escheborn, 2014.
[4] P. Alstone, D. Gershenson, and D. M. Kammen, “Decentralized energy systems for clean electricity access,” Nat. Clim. Chang., vol. 5, no. 4, pp. 305–314, 2015.
[5] H. Krugmann and J. Goldemberg, “The energy cost of satisfying basic human needs,” Technol. Forecast. Soc. Change, vol. 24, no. 1, pp. 45–60, 1983.
[6] C. Kenny, “If Everyone Gets Electricity, Can the Planet Survive?,” The Atlantic, 2015.
[7] “Power Africa Annual Report,” 2014.
[8] J. Tomei and D. Gent, “Equity and the energy trilemma Delivering sustainable energy access in low-income communities,” International Institute for Environment & Development, London, United Kingdom, 2015.
[9] “World Energy Outlook 2015 Factsheet,” Paris, France, 2015.
[10] R. K. Akikur, R. Saidur, H. W. Ping, and K. R. Ullah, “Comparative study of stand-alone and hybrid solar energy systems suitable for off-grid rural electrification: A review,” Renew. Sustain. Energy Rev., vol. 27, pp. 738–752, 2013.
[11] A. Yadoo and H. Cruickshank, “The role for low carbon electrification technologies in poverty reduction and climate change strategies: A focus on renewable energy mini-grids with case studies in Nepal, Peru and Kenya,” Energy Policy, vol. 42, pp. 591–602, 2012.
[12] J. Byrne, Y.-D. Wang, H. Lee, and J. Kim, “An equity and sustainability-based policy response to global climate change,” Energy Policy, vol. 24, no. 4, pp. 335–343, 1998.
[13] U. Deichmann, C. Meisner, S. Murray, and D. Wheeler, “The economics of renewable energy expansion in rural Sub-Saharan Africa,” Energy Policy, vol. 39, no. 1, pp. 215–227, 2011.
[14 A. Bhide and C. R. Monroy, “Energy poverty: A special focus on energy poverty in India and renewable energy technologies,” Renew. Sustain. Energy Rev., vol. 15, no. 2, pp. 1057–1066, 2011.
[15] B. Mainali and S. Silveira, “Financing off-grid rural electrification: Country case Nepal,” Energy, vol. 36, no. 4, pp. 2194–2201, 2011.
[16] D. Mans, “Back to the Future: Africa’s Mobile Revolution Should Inspire Rural Energy Solutions,” Huffington Post, 20-May-2014.
[17] L. A. Odarno, “Negotiating the Labrynth of Modernity’s Promise: A Paradigm Analysis of Energy Poverty in Peri-Urban Kumasi, Ghana,” University of Delaware, 2014.

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