By Job Taminiau, Jeongseok Seo and Joohee Lee

No one in large cities would want to have a nuclear or a coal-fired power plant in their residential boundaries. Recognizing environmental and health risks of conventional power plants, it becomes increasingly unthinkable to propose the construction of such power plants near populous areas. Instead, remote locations are sought, often at the expense of local populations, and the produced electricity is then transferred to the areas of demand.

Here ‘ethical’ cities, who are concerned about detrimental impacts of their electricity consumption on supplier communities, are faced with a dilemma: either they have to build some fossil-fueled or nuclear power plants in their cities to supply electricity they need; or they have to live with shifting health or environmental consequences of such power plants to others. Besides, building large power plants in urban centers can be uneconomical as the capital cost will likely be more expensive than remote rural areas largely due to higher property prices and O&M costs will also be greater due to higher transportation costs for fuel sources, such as coal, natural gas or uranium.

Researchers at CEEP have investigated this dilemma and proposed a reorientation of the energy supply focus to include the possibilities and opportunities that are available within city boundaries. This idea has taken shape in the form of the ‘solar city’, putting forth the notion that cities can capitalize on the incoming solar energy that is collected daily but remains unused unless it is ethically and economically captured. While solar electricity is ready-made for this purpose, other energy technology options or energy saving measures can also be considered. In effect, rather than relying on the construction of additional capacity outside the municipal boundaries, the urban fabric is transformed to become a power plant itself, empowering citizens as ‘prosumers’ through a strategic and collective application of the solar city concept. Calculations performed by CEEP researchers have shown that megacities have great potential to address the economic and inequity problems of energy supply through this strategy: for example, a carefully implemented solar city strategy can account for 66% of Seoul’s energy need during daylight hours [1]. And its supply can be affordably provided to all [2].

Now, a recent study investigating the application of the solar city model has identified a viable financing strategy that allows for the gigawatt scale deployment of solar capacity [3]. Using Amsterdam, London, Munich, New York, Seoul, and Tokyo as case studies, the results show that over 300 million square meters of rooftop area could be available for PV installation and that the city-wide deployment of PV on this rooftop real estate would yield substantial energy, economic, and system benefits. The US$ 10 billion financing cost to install PV on approximately 30% of the commercial and public buildings in these cities—the building types primarily studied in the investigation—could, meanwhile, be addressed by approaching the capital markets through bond offerings.

The investigation does show, however, that city-specific policy, market, and finance conditions influence the viability of the strategy. For instance, Seoul’s low commercial retail electricity price set by the national regulator complicates the business case for a solar city strategy and can only be bridged by a more supportive policy framework, continued falling PV system prices, and/or by increasing electricity retail prices. Similarly, the investigation shows how London would need to rely on some level of policy support to allow for a cash flow capable of providing the foundation for the investment. Importantly, however, the study finds that New York City, Tokyo, Amsterdam, and Munich are all able to already implement a solar city strategy without additional policy support which returns its debt in 10 years or less.

These results are promising and can provide an alternative path that cities can take to solve their energy dilemma. Moreover, these six cities have options available to them to further improve the business case for a PV solar city application by modifying policy frameworks or, perhaps, through collaborative bond structuring. In any case, if the PV system price patterns of the past few years continue into the future, payback periods could be under ten years for most cities without any policy support.

Now, ethical cities have an option. One is to stick to the current path, that is, they consume electricity generated from fossil-fueled or nuclear power plants at the expense of supplier communities who must shoulder the risks. Or they can choose a strategy of leadership and start construction of a distributed solar power infrastructure within their own boundaries and contribute to the sustainable energy transition. The Mayor of Seoul, Mr. Park Won-Soon, has offered an interesting name for his city – “One Less Nuclear Power Plant” [4].

Notes
[1] Byrne, J., Taminiau, J., Kurdgelashvili, L., & Kim, K. (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, 830-844. https://dx.doi.org/10.1016/j.rser.2014.08.023
[2] Byrne, J. and Yoon S-J. 2014. Sustainable Energy for All Citizens of Seoul. Presentation at the Seoul International Energy Conference 2014. https://www.youtube.com/watch?v=HkTUrLbUt7Y
[3] Byrne, J., Taminiau, J., Kim, K., Seo, J., Lee, J. (forthcoming). A solar city strategy applied to six municipalities: integrating market, finance, and policy factors for infrastructure-scale PV development in Amsterdam, London, Munich, New York, Seoul, and Tokyo.
[4] Seoul Metropolitan Government. (2014). One Less Nuclear Power Plant, Phase 2: Seoul Sustainable Energy Action Plan

Photo credit: Forbes