Clean Energy Business and Policy

Beijing Institute of Technology School of Management and Economics Fall 2014

Course description: This course provides business and economics students with a broad-based understanding of clean energy in an integrated, interdisciplinary manner. The course covers technologies, economics, business models, finance, and policies. The emphasis is on emerging business opportunities in clean energy, and on the necessary background knowledge to understand those opportunities. The course takes a survey approach, and covers energy efficiency, , distributed power generation, clean coal, alternative vehicle fuels, electric transport, and new building materials and practices. For each of these, global market trends and the intersection of business, policy, and technology are examined. Each sector is covered uniquely, including electric power, transport, buildings, and industry.

Course Objectives: (1) Understand basic energy concepts and the types of clean energy technologies that are commercially viable; (2) Gain familiarity with a number of basic economic issues and global market trends related to clean energy; (3) Understand how public policies have historically shaped the economic viability for clean energy investments, and what types of policies will continue to do so in the future; (4) Be exposed to the wide variety of new business models and opportunities that are emerging in the clean energy sector, especially for renewable electricity and heat, low-emission transport, and green buildings; (5) Gain a broad overview of English-language literature on clean energy, including pathways and scenarios for long-term futures (i.e., 2030 or 2050), both globally and for China.

Course Outcomes: One of the important outcomes of the course will be exposure to a wide-ranging and contemporary set of business cases and opportunities for clean energy, along with provision of the background knowledge necessary to properly understand each case. (Background knowledge includes basic concepts, technologies, policies, economic issues, management challenges, and market trends.) Another outcome will be understanding of the book Reinventing Fire: Bold Business Solutions for the New Energy Era by and the , also with provision of the necessary background knowledge. And students will gain navigation skills to the vast English-language literature on clean energy.

Format: The course mixes lectures, class-wide discussion, question-and-answer sessions, and some small-group discussions.

Course Language: The course is taught entirely in English, including all reading materials, lectures, written assignments, and discussion. The one exception is that small group discussions may be in Chinese if all members of the group are able.

Time and Location: Graduate Building, Room 303 (研究生楼303 教室). Saturdays, September 20 to December 20, 18:30-20:55. (No class October 4.)

Credits/Hours: 2 credits/36 classroom hours.

Prerequisites: There are no course prerequisites. A few simple quantitative calculations on assignments are suitable for students from a variety of backgrounds.

Instructor: Eric Martinot, Professor, School of Management and Economics, Room 308, [email protected], office 68913922, mobile 18606165170.

Instructor Office Hours: Drop-in hours are Tuesdays 1:00-3:00pm and Thursdays 5:00-7:00pm. Students are welcome to visit without an appointment during these times, for discussion of course material or other subjects. Other appointment times can be arranged in advance.

Readings: All course readings are available as PDF files at both: http://pan.baidu.com/s/1qW8ZSEo and http://www.martinot.info/BIT. File names are based on first author and year published. The one exception is Amory Lovins, Reinventing Fire. This entire book is used for the course, and should be purchased (electronic or hard copy). Chapters 1 and 5 will be distributed to the class as PDF for the first weeks of the course. (Other chapters may also be distributed pending confirmation.) Readings listed as “supplementary” in the reading schedule are intended to provide additional background reading or reference on selected topics. Supplementary readings may be useful for research papers, but are not required for the course. Additional case studies and other shorter readings provided throughout the course. An extensive collection of web links to renewable energy knowledge is available at http://www.martinot.info.

Grade/Assignments: The course grade is based on the following:

15% each 1. Three short assignments (1000-1500 words each), approximately every 3-4 weeks. 45% total The assignments contain written essay answers to questions related to the lectures and readings. Each handed out two weeks in advance of its due date. 10% 2. Group presentation (December 20) 30% 3. Final paper (2500-3500 words) on either a business case study or a research topic of student’s choice. Further guidance on the final paper will be provided. Final paper will be due January 10. 15% 4. Attendance and participation in class 100%

Lecture Slides: Lecture slides will be posted to the course web pages by Friday night before each class: http://pan.baidu.com/s/1qW8ZSEo and http://www.martinot.info/BIT.

Syllabus Revisions: This syllabus is subject to revision, based on interests of the class, number of students, and further case study research. Updates will be posted to the course web pages and students notified.

Schedule of Topics

Class Date Topic 1 Sep 20 Introduction to Energy. Course introduction. Energy's role in social, economic, and sustainable development. Conventional energy technologies and resources. Oil, gas, coal, electric power, vehicle fuels. Basics of energy units and conversion efficiencies. 2 Sep 27 Clean Energy Technologies, Economics, and Policies. Renewable energy, energy efficiency, and advanced energy technologies. Electricity, heating, and transport. Clean coal, energy storage, electric vehicles, and smart grids. 3 Oct 11 Electricity Markets, Regulation, and Technology Trends. Power-sector transitions and policies, including technology trends, renewable energy policies, demand management, and electric utility regulation. Emerging technologies and market issues. Economic comparisons of fossil fuels, renewable energy, and demand- management. Cost of electricity and cost of conserved electricity. 4 Oct 18 Electricity Business Models. Conventional and emerging business models for electricity supply and consumption. Conventional electric utility business models before and after restructuring. Energy service companies, integrators, aggregators, and micro-utilities. Business models for integration of electricity and heat supply. Economic issues of stranded assets, cost allocation, net metering. 5 Oct 25 Transport. Energy efficiency and conservation measures in transport. Biofuels, hydrogen, and electric vehicles. Economic and environmental comparisons. Policies for sustainable transport. Future scenarios for low-carbon and low-emissions transport. 6 Nov 1 Transport/Mobility Business Models and Trends. Emerging business models for electric vehicles and electric mobility. Market trends. The case for business integration of electricity, buildings, and transport. Economic and market comparisons of conventional, electric, biofuel, and hydrogen vehicles. 7 Nov 8 Buildings and Industry. Energy efficiency and conservation measures for buildings and industry. Distributed renewable energy technologies for buildings. Policies and barriers for sustainable energy in buildings. Market trends. Management opportunities in industry. 8 Nov 15 Buildings and Industry: The Business Case. The business case for green buildings. Business models for distributed renewable energy for buildings, including energy- service companies, leasing, energy management companies, and micro-utilities. Energy-service models for energy efficiency in industry. 9 Nov 22 Policies and Innovation. Environment, emissions and climate policies and relative environmental impacts. Energy security policy. Local/city-level policies. Energy innovation and diffusion. Policies for energy innovation and capacity building. Interaction between policy, business, and innovation for clean energy. 10 Nov 29 Finance and Investment. Carbon markets, trading, and funds. Energy strategies of multilateral investment banks. Fossil-fuel price risk in decision-making. Major types of financing models for clean energy investments. Portfolio, risk-management and option-value approaches to energy investments. 11 Dec 6 Global Clean Energy Futures. Future scenarios for high shares of renewable energy, high levels of energy efficiency, and other clean energy technologies in electricity, transport, and buildings. Macro-economic comparisons across scenarios. Integration of electricity, heating, and transport industries. Long-term market trends. 12 Dec 13 China’s Clean Energy Future. What mix of technologies and policies is possible or desirable? China energy strategy to 2050. Consideration of transport, buildings, and power generation. Future scenarios for low-carbon and low-emissions transport. Business and investment implications. 13 Dec 20 Student Presentations

Readings by Topic

Class/ Topic Readings Business Cases Date #1 Introduction Lovins, Ch. 1 “Defossilizing Fuels” ----- Sep 20 to Energy GEA, Ch. 1 (Sections 1.1-1.7, "Energy Primer"); Chapter 15 (Section 15.8, “Electricity”) Randolph and Masters, Ch. 1 “The Energy Imperative and Patterns of Use”; Ch. 2 “Energy Sources and Sustainability”

Supplementary BP (2013a) [energy statistics] World Bank (2013a, 2013b) [economic statistics] GEA, Ch. 7 [energy resources] GEA, Ch. 15 [energy supply] Boyle et al, Ch. 2 and Appendix [energy units]

#2 Clean Energy GEA, Ch. 11 (Sections 11.1-11.9, renewables); Ch. 9 ---- Sep 27 Technologies, (Section 9.4.1, alternative road fuels) Economics, Geller, Ch. 2-3, “Barriers” and “Policies” and Policies Boyle et al, Ch. 12, “Costing Energy”

Supplementary Kammen and Pacca (2004) [economic comparisons] REN21 (2014) [global market and industry status] REN21 (2013) [overview of business opportunities] GEA, Chapter 16 (Section 16.3, storage, distributed generation, micro-grids)

#3-4 Electric Lovins, Chapter 5, “Electricity: Repowering Prosperity” PG&E Oct 11 Power Fox-Penner, Ch. 3 “The New Paradigm”; Ch. 4 “Smart Dong Energy Oct 18 Electric Pricing”; Ch. 10-13 “Business Models for AES Energy the New Utility Industry” EWE GmbH Laloux and Rivier, Ch. 1 “Technology and Operation of Enernoc Electric Power Systems” Prudent/Oxnard SMUD Supplementary Maui Electric Palensky and Kupzog 2013 [smart grids] IEA 2011 [balancing variable renewables] EC (2003) [external costs of electricity]

#5-6 Transport Lovins, Ch. 2 “Transportation: Fitter Vehicles, Smarter Tesla Motors Oct 25 Use” Nissan Nov 1 GEA Ch. 9 (Section 9.3, “Transportation Trends” and BYD Section 9.6 “Policies and Measures”) BP Lerch et al (2010) Iogen Archer-Daniels - Supplementary Midland Banister et al (2011) [transport, environment, carbon] Better Place Randolph and Masters, Ch. 13-15 [transport/land use] Sperling (2008) [transport technologies]

#7-8 Buildings and Lovins, Ch. 3, “Buildings: Designs for Better Living”; NTT Facilities Nov 8 Industry Ch. 4, “Industry: Remaking How We Make Things” Solar City Nov 15 GEA, Ch. 10 (Section 10.4 on measures, 10.5 on barriers, Vector Energy 10.8 on policies) LIG Austria Yudelson 2008, Ch. 2, “What is a Green Building?”; Ch. 3 Berkeley PACE “The Business Case for Green Buildings”; Ch 4 Alcoa “The Costs of Green Buildings” Dupont Home Depot Supplementary LADWP Harvey (2013) [sustainable buildings] Wurtenberger (2012) [business models] Randolph and Masters, Chapter 6 [buildings efficiency] Geller, Chapter 4 [market transformation policies]

#9 Policies and GEA, Ch. 22 “ Objectives and Instruments”; Ballard Power Nov 22 Innovation Ch. 24 “Energy Innovation Policy”; Ch. 25 Millennium Cell “Capacity Development” Tesla IPCC, Ch. 11 “Policy, Financing, and Implementation” (Others to be (Sections 11.1, 11.4, 11.5, 11.7) selected) Beck and Martinot (2004) [policies and barriers]

Supplementary IEA (2000) [industry experience curves] Sims (2009), Chapter 5, 7, 8 [local/city policies] (Other readings to be selected)

#10 Finance and GEA, Ch. 6 “Energy and Economy” (Sections 6.5 to 6.9 World Bank Nov 29 Investment on costs, investment, finance, and innovation) EIB IPCC, Ch. 11 “Policy, Financing, and Implementation” BNEF (Sections 11.2, 11.4.3) Carbon funds Perdan and Azapagic (2011) [carbon trading]

Supplementary UNEP/BNEF (2014) [clean energy investment trends] CPI (2013a) [carbon finance] CPI (2013b) [institutional investment in renewables] Hamilton (2009) [private finance] Groobey et al (2010) [project finance]

#11 Global Clean Lovins, Ch 6, “Many Choices, One Future” (To be selected) Dec 6 Energy REN21 (2013) [Renewables Global Futures Report] Futures Supplementary IEA (2014) [Energy Technology Perspectives] BP (2013b) [Energy Outlook to 2030] Greenpeace (2012) [Energy Revolution]

#12 China’s Clean ERI (2014) [China 2050 High Renewable Energy (To be selected) Dec 13 Energy Penetration Scenario and Roadmap Study] Future (Other readings to be selected)

Supplementary (Other readings to be selected)

References

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