The Clean Energy Moonshot — a California Pilot Project

Note: this paper is posted online at WorldBusiness.org/Clean-Energy-Moonshot along with an accompanying video.

The Clean Energy Moonshot — A California Pilot Project

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” ― R. Buckminster Fuller

Introduction: Global Warming is a Call to Action to Achieve 100 Percent Renewable Energy

Business and policymakers around the globe are waking up to the scope of the global warming crisis. Global warming has become an undeniable force: unprecedented storms, droughts, floods, fires, desertification, rising sea level, ocean acidification, and rainforest depletion threaten the life support systems of our planet and the social system of our species.

Science tells us that we are on track for an unprecedented catastrophe for human civilization. Without swift action, our pollution of the atmosphere with greenhouse gasses expelled from the extraction and burning of fossil fuels have already begun to trigger irreversible feedback loops, which will exponentially accelerate the heating of our planet. This scenario is unacceptable for business and for society as a whole; global warming is a mortal threat to the existence of human civilization as we know it.1

With this great crisis comes great opportunity: the implications of this paradigm shift for business are many including massive new growth opportunities; creation of entire regional economies and new economic sectors; a renewed focus on high tech industrial products that can be developed, manufactured, installed, and maintained in the United States; the development of energy control technologies and other exportable manufacture goods that can lead to an export boom; and an opportunity for businesses to lead in the effort to halt global warming.

The business community currently has the technology and capital to support the transition to the next energy paradigm—an energy system that does not add greenhouse gas to the atmosphere; a system that harnesses the almost limitless

1 For a consensus view of the risks associated with climate change, see the 2014 report from the Intergovernmental Panel on Climate Change (IPCC) http://www.ipcc.ch/report/ar5/wg2/ Important note: because of the consensus process, the IPCC is generally overly conservative in their reporting, meaning the actual timeline for action is shorter and the impacts will be even greater than predicted by their dire report.

energy provided by renewable resources. 100 percent carbon-free, nuclear-free energy is not only possible; it is vital to the future of our civilization. However, if we are to meet this challenge, we must sprint to this new energy paradigm.

We see the global implementation of 100 percent renewable energy as the top priority for businesses that are truly “marketplace smart” and conscious, as renewable energy represents the evolution of business away from a system of exploitation and towards an organizing principle that consciously takes care of the planet and the people business serves. Throughout the conversion to renewable energy, achieving steps along the way will unlock untold wealth to further fuel the development of the post-fossil fuel world.

The Clean Energy Moonshot project is an ongoing design and implementation effort of the World Business Academy, a 501(c)(3) nonprofit think tank, which, for 27 years, has worked to change the way business operates by helping to create the conscious business movement and associated business practices that help leaders, workers, and businesses thrive. This project is the result of decades of the Academy’s research in renewable energy, micro- and macroeconomics, finance, politics, and whole systems design.

It is the Academy’s purpose to transform the planetary energy system. This is the pathway.

The Moonshot to Renewable Energy: It Starts in California

To catalyze this shift, we propose a challenge along the lines of President John F. Kennedy’s 1961 “moonshot” challenge to land a man on the moon and return him safely by the end of the decade. We offer a similarly ambitious and game- changing challenge: 100% carbon-free, nuclear-free energy in California within 10 years. We Know a 100% Carbon-Free, Nuclear-Free Energy System Is Possible According to a 2012 study by University of Delaware researchers Willett Kempton and Cory Budischak,2 renewable energy production and energy storage using hydrogen gas could fully power a large electricity grid by 2030 at costs comparable to the nonrenewable systems in use today. Utilizing a computer model for wind, solar and storage calculated to meet demand for one-tenth of the U.S. grid, their results debunk the conventional wisdom that renewable energy is too unreliable and expensive.

2 Kempton and Budischak, “Cost-minimized combinations of wind power, solar power and electrochemical storage, powering the grid up to 99.9% of the time,” http://goo.gl/uK8NuE 2

“Using hydrogen for storage, we can run an electric system that today would meet a need of 72 gigawatts, 99.9% of the time, using solar, offshore wind, and inland wind,” according to Budischak. The Kempton-Budischak study does not factor in the positive effects of adding significant geothermal and Ocean Thermal Energy Conversion resources to the energy production mix, which could provide additional base load power and accelerate the study’s timeline.

Also supporting possibility of a 100 percent renewable energy system is the 2014 study from Stanford University Professor Mark Z. Jacobson and colleagues,3 which proposes that all-purpose California end-use power demand, including energy for ground transportation, can be met with 25 percent onshore wind, 10 percent offshore wind, 15 percent concentrated solar power, 15 percent solar PV power plants, 10 percent residential rooftop PV, 15 percent commercial/government rooftop PV, 5 percent geothermal, 0.5 percent wave, 0.5 percent tidal, and 4 percent hydro.

While our plan differs from the Kempton-Budischak, and Jacobson plans, we take this groundbreaking research as proof that the renewable future is not only possible, but the technology to achieve it is here today. The academic consensus is that the zero carbon energy future is here, now. And we can afford to implement it.

The Transition is Happening Now and is at a Tipping Point When compared with current goals and benchmarks, achieving 100 percent renewable energy for the entire State of California in 10 years is an ambitious goal. Some might even call it unrealistic. However, former Vice President Al Gore, in a recent article titled “The Turning Point: New Hope for the Climate,” reminds us that reality has far outstripped initial projections when it comes to the degree and scope of developing renewable infrastructure. He also points out that we are currently crossing the economic tipping point for solar and wind energy in many regions across the planet, including California:

We are witnessing the beginning of a massive shift to a new energy- distribution model – from the "central station" utility-grid model that goes back to the 1880s to a "widely distributed" model with rooftop solar cells, on-site and grid battery storage, and microgrids. […]

At the turn of the 21st century, some scoffed at projections that the world would be installing one gigawatt of new solar electricity per year by 2010. That goal was exceeded 17 times over; last year it was

3 Mark Z. Jacobson, “A roadmap for repowering California for all purposes with wind, water, and sunlight,” http://web.stanford.edu/group/efmh/jacobson/Articles/I/CaliforniaWWS.pdf 3

exceeded 39 times over; and this year the world is on pace to exceed that benchmark as much as 55 times over. In May, China announced that by 2017, it would have the capacity to generate 70 gigawatts of photovoltaic electricity. The state with by far the biggest amount of wind energy is Texas, not historically known for its progressive energy policies.

The cost of wind energy is also plummeting, having dropped 43 percent in the United States since 2009 – making it now cheaper than coal for new generating capacity. Though the downward cost curve is not quite as steep as that for solar, the projections in 2000 for annual worldwide wind deployments by the end of that decade were exceeded seven times over, and are now more than 10 times that figure. In the United States alone, nearly one-third of all new electricity-generating capacity in the past five years has come from wind, and installed wind capacity in the U.S. has increased more than fivefold since 2006.4

The trends Gore points to are critical to the Clean Energy Moonshot. It already makes economic sense for most Californians to install rooftop solar systems. With some significant but very possible regulatory changes and strategic investments in local energy systems, this economic incentive can be accelerated and harnessed to achieve a statewide 100 percent renewable energy system.

California Is the Launchpad California has been the birthplace of revolutions throughout history. The major cultural and technological innovations of the modern era have taken place in the Golden State—from the Summer of Love to the birth of the microprocessor, California has proven to be the most fertile place on earth for new thinking and new industries. The next leap forward is 100 percent local energy systems and California is poised to again lead the world into the next paradigm.

In his January 2015 Inaugural speech for an unprecedented fourth term, Governor Jerry Brown demonstrated alignment with the strategy and the technological approach of the Clean Energy Moonshot.

In his speech, Brown outlined bold goals for reducing California’s carbon footprint by 2030:

4 Vice President Al Gore, “The Turning Point: New Hope for the Climate,” June 2014 http://www.rollingstone.com/politics/news/the-turning-point-new-hope-for-the-climate-20140618 4

• Increase from one-third to 50 percent California’s electricity derived from renewable sources; • Reduce today's petroleum use in cars and trucks by up to 50 percent; • Double the efficiency of existing buildings and make heating fuels cleaner.

“We must also reduce the relentless release of methane, black carbon and other potent pollutants across industries. And we must manage farm and rangelands, forests and wetlands so they can store carbon. All of this is a very tall order. It means that we continue to transform our electrical grid, our transportation system and even our communities,” Brown added.

Brown went into some detail about the new technologies and systems that must be built to meet these goals:

“I envision a wide range of initiatives: more distributed power, expanded rooftop solar, micro-grids, an energy imbalance market, battery storage, the full integration of information technology and electrical distribution and millions of electric and low-carbon vehicles. […] Taking significant amounts of carbon out of our economy without harming its vibrancy is exactly the sort of challenge at which California excels. This is exciting, it is bold and it is absolutely necessary if we are to have any chance of stopping potentially catastrophic changes to our climate system.”5

The most powerful Governor in the US just issued a call for a bold systemic solution that fundamentally shifts the way Californians create and use energy. Now is the time to take up his challenge and exceed it.

The Clean Energy Moonshot now has a launchpad—it’s time we must come together to build the rocket and ready for liftoff.

The Pathway to 100 Percent Fossil Fuel-Free Energy: Local Renewables, Community Microgrids, and Hydrogen Storage

There’s a reason that almost everyone in the developing world now has access to international communications: wireless technology. If companies had relied on building (and maintaining) telephone wires across the planet, the communications revolution would never have taken place. When the world relied on a centralized copper wire system to enable a phone call to occur, globally only 23% of households

5 Governor Jerry Brown’s Fourth Inaugural Address, January 2015 http://www.latimes.com/local/political/la-me-pc-brown-speech-text-20150105-story.html#page=1 5

had phones. Now, after the cell phone revolution, approximately 86% of households now have access to a phone.6 Similarly, our current centralized energy system is restraining the rapid deployment of renewable energy.

Right now we rely on high voltage transmission lines crisscrossing the planet to transport electrons from giant power plants to consumers. This system is inefficient, with a great deal of generated energy being lost along the path to consumers. Transmission lines are also extremely fragile, are in need of constant repair and replacement, and are highly vulnerable to terrorism.

However, the current grid’s largest flaw is it’s inflexibility—it is almost impossible to build new power lines quickly, especially in a state like California, the state that invented NIMBY or “not in my backyard.”7 8 Most current plans to bring renewable energy online rely on massive new installations of transmission lines—a political non-starter. If we want to replace all fossil fuel with renewable energy, we must create a flexible and scalable system with incentives for decentralized energy production.

The answer is simple: empower consumers to create as much power as possible where it is used—right on their rooftops at the local level.

Build Community Microgrids: Local Power Generation, Local Management Currently California relies on a massive and delicate electricity grid—an expansive network of aluminum alloy wires, copper wires, transformers, power plants, substations, relays, sensors, towers, and other infrastructure. System managers “wheel” or transfer power all around the Western United States to maintain adequate service and to literally keep the lights on in businesses and homes all across the vast service area. In order to ensure reliability, the system greatly overproduces power and pushes it back and forth across the grid.

6 UN Report on Telecommunication Access: http://goo.gl/UQ4FMp 7 Even in Texas, the regulatory delay of 10 years to build new lines has caused dramatic reduction in wind power deployment. T. Boone Pickens failed to overcome this challenge and abandoned his drive into wind energy when he could not get the electricity from his Texas wind farm to customers in Dallas. 8 In a 2011 report titled “Project No Project – Progress Denied: A Study on the Potential Economic Impact of Permitting Challenges Facing Proposed Energy Projects,” the US Chamber of Commerce outlined the vast hurdles and delays that make expanding centralized energy production and transmission impossibly slow and difficult to finance. https://www.uschamber.com/sites/default/files/legacy/reports/PNP_EconomicStudyweb.pdf 6

An alternative system using local power production and distribution in a collection of interconnected neighborhood-scale microgrids could strengthen and gradually replace the existing statewide grid.

A microgrid is a small-scale electricity system with clearly defined geographic boundaries that includes power production and power use. They can range in size from a single building to an entire neighborhood or larger. Microgrids currently exist all over the world, ranging from simple systems using small generators to provide electricity to a handful of connected homes, to more robust systems which power entire communities in Germany, university campuses in California, or military bases around the globe. The beauty of a microgrid is its simplicity: it’s an independent system that produces and manages power locally, where it is used.

A Community Microgrid encompasses the geographic area served by an existing substation. Microgrid technology allows for the local production, distribution and storage of vast quantities of renewable electricity and the creation of local energy markets. The incorporation of local energy management and storage gives microgrids one critical advantage over large grid systems; an advantage that is essential to the transition to a 100 percent renewable energy system: microgrids with storage can integrate an unlimited amount of renewable energy.

The massive grid system, which relies on centralized power generation, is limited in its capacity to integrate distributed energy resources such as rooftop solar panels, neighborhood solar projects, and local wind turbine installations. Because of their local scale, microgrids can be built to accommodate intermittent renewable energy supplies, balance predictable demand shifts with supply, and store renewable 7

energy, allowing for more efficiency and a vastly greater amount of renewable distributed energy to be deployed at the local level.

Our strategy calls for a shift away from the massive, centralized grid to neighborhood-scale local microgrids—or what are known as Community Microgrids. There are ~3,000 substations in the State of California. These substations are the connection point between the large grid system and the smaller distribution wires for neighborhoods that supply power to homes and businesses. We envision a future where each of these ~3,000 substations become it’s own independent Community Microgrid, providing reliable service, local management, and local energy markets to the neighborhood-scale service area.

Transition from centralized energy production with long distance transmission to distributed energy production and locally managed Community Microgrids. A defining characteristic of a microgrid is that it has the capability to provide power to its users without connection to a larger grid – a feature known as “islanding.” This independence makes these systems robust during storms or disasters when large swaths of larger grids fail. While each system would be independent, interconnections between the microgrids would give neighboring microgrids the power to support each other in case of an emergency. A “networked,” or honeycomb system of interconnected microgrids would be a much more robust energy system that could weather any storm or earthquake.

Networked Community Microgrids would be able to support neighboring microgrids in emergency situations. Experts Agree: Microgrids Are the Future Many experts agree that the energy system of the future should consist of interconnected microgrids. Energy economist Dr. Lorenzo Kristov, Principal for Markets and Infrastructure Policy at the California Independent Systems Operator (CAISO), and California Institute of Technology Scholar Dr. Paul De Martini, coauthored a visionary paper titled “21st Century Electric Distribution System Operations,” outlining a future energy system based on the distributed microgrid concept.9 “Microgrids: A Regulatory Perspective,” is a detailed exploration of the advantages of microgrids, written by staff at the California Public Utilities Commission, the regulatory body that directly oversees the independently operated utility companies.10 Taken together, the body of academic work supporting microgrids is a clear signal to regulators, business, and California politicians that local power systems are the future.

One major challenge that is now holding back the adoption of 100 percent renewable energy is the intermittency of renewables.

To solve this, our plan combines existing microgrid design with a promising technology for energy storage and base load energy generation – hydrogen gas for storage and fuel cells for base load energy production. This new design creates the

9 “21st Century Electric Distribution System Operations,” http://resnick.caltech.edu/docs/21st.pdf 10 “Microgrids: A Regulatory Perspective,” from the California Public Utilities Commission (April, 2014) http://goo.gl/OWZkq7 9

possibility for fully integrated 100 percent renewable energy systems (including the creation of renewable transportation fuel) at the local level.11

Deploy Local Renewable Energy Systems, Fuel Cells and Hydrogen Storage With the systemic shift away from centralized power production and toward Community Microgrids, distributed energy production can flourish. Our plan calls for the widest deployment possible of proven technologies for energy efficiency, passive energy collection, and local energy production such as solar PV and small wind turbines. The goal of this deployment would be to create as much power as possible from rooftops within the Community Microgrid service area.

Community Microgrids will be powered by distributed renewable energy systems installed in every appropriate location within the microgrid service area.

The deployment of solar energy systems is increasing at an exponential rate. Navagant Research forecasts that annual revenue from solar installations will exceed $134 billion globally by 2020.12 The International Energy Agency estimates that solar is on track to provide more than half of the world’s energy by midcentury, with solar photovoltaic accounting for over 15 percent (the rest coming from solar thermal energy).

11 For a detailed description of this new system design, please see “Role of Fuel Cells in a Microgrid,” by Rinaldo S. Brutoco, http://goo.gl/VGEjrG 12 Solar PV Market Forecast 2013, Navagant Research, http://www.navigantresearch.com/research/solar-pv-market-forecasts 10

The growth of the solar industry has already created economies of scale and other market forces that have helped to drop the price of solar energy by 80 percent between 2008 and 2012 according to Bloomberg New Energy Finance.13

Along with current subsidies, solar panels make economic sense for almost all residents of California (and many other US states with high electricity rates). The 2015 announcement of a 50 percent renewable energy goal by California’s Governor is a market signal that the incentives programs for solar will only get stronger, further accelerating the continued adoption of solar power by individuals and businesses.

With the development of Community Microgrids, the widespread deployment of these neighborhood-level systems could meet the needs of communities and actually supply excess energy, which can then be stored for later use in homes, businesses, or even cars.

Hydrogen for Renewable Energy Storage and Transportation Fuel Any excess renewable energy created within the Community Microgrid can be stored for later use.14 By powering an electrolyzer with renewable energy, wastewater can be split into hydrogen and oxygen. The hydrogen gas can be stored in carbon fiber tanks, and then used later in a fuel cell to create electricity, powering hydrogen-powered electric vehicles or utility scale fuel cell power plants.

13 Bloomberg New Energy Finance graph of solar prices 2013, http://goo.gl/jlAJTE 14 Our strategy focuses on storing excess renewable energy using hydrogen gas as the storage medium. However, we appreciate that there may be a role for energy storage using batteries as well. 11

Excess renewable energy powers an electrolyzer, which splits the molecules of purified wastewater into hydrogen and oxygen. The hydrogen is captured and stored, for later use in fuel cells to create electricity. This system creates a stable storage of renewable energy that can be used for any energy-intensive process. Hydrogen infrastructure is already being deployed for California’s transportation sector, with the first zero-emission hydrogen-powered Fuel Cell Electric Vehicles (FCEVs) already for sale in California (Hyundai has rolled out the first hydrogen FCEVs15) with more makes and models due in 2015.

Toyota, having walked away from an existing deal for battery cars with Tesla, is now focusing on bringing their FCEVs to market in 2015.16 Toyota recently decided to accelerate the conversion of automobiles to hydrogen propulsion. They have offered their patents for free to other car manufacturers and the public. The State of California has allocated $200-million over ten years to subsidize the creation of the initial refueling infrastructure needed to support these vehicles, including six stations that will provide 100% renewable hydrogen to customers.17 Like the battery-based electric vehicles currently available, FCEVs have no emissions other than pure water and unlike EVs, FCEVs can refuel in three minutes and have a range approaching 300 miles.

Hydrogen from renewable energy is the perfect carbon-free substitute for oil that will allow our society to move away from fossil fuels with minimal disruption. Like oil, hydrogen can be used for a wide variety of energy uses and proactively stored as

15 Hyundai Fuel Cell Electric Vehicles Come to Market: http://goo.gl/PVF0wK 16 Toyota Breaks with Tesla in Favor of Fuel Cell Cars: http://goo.gl/s3ujBV 17 Announcement of Hydrogen Station Funding: http://goo.gl/xWNhtk 12

a strategic reserve to prevent extended and unforeseen shortages resulting from severe weather events. Using current technology, hydrogen gas stored at 10,000 psi can be economically transported from the place it was created (assuming a 200-mile radius) and still be profitable at the equivalent cost of $3.75 per gallon of gasoline. This price point is approximately equal to the current cost of gasoline in California. The cost to store, transport and use hydrogen will decrease over time as we expand the energy infrastructure and develop more efficient technology just as the cost to capture and use wind and solar has fallen dramatically with increased use. As we’ve seen with past renewable energy developments, this fact is key: the more we use it, the cheaper it becomes—an economic force that is exactly the opposite of scarce fossil fuels. As a result, renewable hydrogen opens the door from the scarcity economy to the abundance economy and will create multiples of wealth greater than the cost of conversion.

Natural Gas and Hydrogen Fuel Cells for Base Load Power As explained above, our Community Microgrids integrate systems to create and store hydrogen gas with this surplus energy created when renewable electricity is abundant (when the sun is bright or the wind is strong) and hydrogen fuel cell power plants to redeploy this stored energy when needed, to “buffer” the intermittent renewable energy systems.

14.9 MW Grid Support Fuel Cell Energy Plant, Bridgeport CT

Currently utility companies are building natural gas turbine plants to create base load power to provide support for intermittent renewable energy sources. Instead of building new natural gas turbines, and in doing so, committing California to at least 25 years of carbon-based power generation (or to premature abandonment as “stranded assets” at great expense to California ratepayers), we should instead build natural gas fuel cell power plants, which can inexpensively be transitioned to use 100 percent hydrogen at any point in the future. Unlike gas-fired turbines, fuel cell plants are silent and release virtually zero “criteria pollutants” (e.g. carbon soot, SOX, 13

NOX, etc.) that have negative health effects on local populations. These advantages make permitting and siting much easier, allowing safe integration in populated areas. Proof of Concept: Microgrids Save Money Microgrid installations of a similar scale are already proving to be hugely successful. The microgrid at the University of San Diego campus provides 42 Megawatts of power to its facilities (comparable to the amount of power used by ~42,000 homes). The UCSD grid provides 92% of the campus’s power and provides reliability for the sensitive laboratory equipment, avoiding power interruptions that could disrupt research.18

The Microgrid at UC San Diego protects sensitive equipment from power disruption while producing 92% of the campus’s energy and saving ~$800,000 a month compared to utility power costs. The UCSD installation saves the 1,200 acre campus approximately $8 million per year.19

Imagine the cost savings if every community in California were able to manage their own power in this manner.

California can be the proving ground for the wide deployment of Community Microgrids. As the first movers, the companies and investors involved in this deployment will have the opportunity to lead the global deployment of this system, which has just as much promise in the rest of the developed world as it does in California.

18 UCSD Microgrid “Keeping the Lights On,” http://goo.gl/j6ygO3 19 EnergyBiz “MicroGrids Would Enhance Smart Grids,” (September, 2013) http://goo.gl/LGKhU3 14

The Future: California Becomes the Global Leader in Renewable Energy

By working with regulators and partnering with businesses and organizations working on microgrid and fuel cell deployment, the Academy will develop two Community Microgrids to demonstrate the viability of this modular, scalable conversion to renewable energy.

Once proven, we will work with political leaders to help implement 100 percent renewable Community Microgrids across the entire state. As a result, California will become the global leader in advanced energy “Sunrise” industries: fuel cell manufacturing, hydrogen storage, hydrogen gas for transportation, microgrids, buffer battery arrays, advanced pulse regulation switches, associated information technology, and control systems.

This solution is applicable in every community in the world. The 100 percent renewable Community Microgrid solution can integrate with existing energy systems, gradually replacing aging grids. Or this solution can be built from the ground up in developing communities, which currently do not have electricity infrastructure.

This solution, coupled with pioneering leadership and investment here in California, can catalyze unimaginable growth in the advanced energy industry.

As with microprocessor technology and biotechnology, there is no upper limit to the expansion of the 100 percent renewable Community Microgrid solution.