Brian Marrs’ Post

The 'unholy trinity' in electricity markets: fat tails, tail dependence, and aggregative risk - why does the electricity business have "missing markets?" And, would long-term hedges help promote clean energy? 📣 Great paper, "Hedging and Tail Risk in Electricity Markets" from the Oxford Institute for Energy Studies by Farhad Billimoria, Jacob Mays, and Rahmat Poudineh about why it is so rare to see long-term hedges in power markets. Are electricity prices just too difficult to hedge 5-10+ years, or are we just bad at assessing the underlying risks? 💡 Yes and no. The paper contains a fantastic, technical walk-through of extreme value theory, and borrows concepts from Drs. Carolyn Kousky and roger cooke to explore how to assess price risks in power systems with only conventional (coal, gas) units and ones with mixed conventional and solar and wind units. 🔦 The results show a power market with diverse resources - even weather dependent ones like solar and wind - should be easier to contract into long-term hedges because tail-diversity improves. The paper sets up useful insights for policy constructs that seek to improve revenue certainty for clean energy development. #powermarkets #utilities #cleanenergy https://lnkd.in/d3Sg7P85

Imagine living in an apartment building without power...for weeks, maybe months, at a time... This is the sad reality that faces hundreds of thousands - potentially millions - of Ukrainians going into next winter. Just over half of Ukraine's energy generation, 10 of 18 GWs, has been purposely targeted & destroyed. It may cost $50B to rebuild the Ukrainian power system over 5-10 years. Hundreds of utility workers have died in harms way while trying to restore power. CNN has a great piece on the extent of the damage to the grid in Ukraine, and efforts to use back-up generators, solar power, and other means to prepare for next winter: https://lnkd.in/g6bMBsZB Please consider a donation to the Red Cross in Ukraine. #utilities #slavaukraini

Solar power went from 1GW a *year* to 1GW a *day,* in ~20 years, fantastic and rare non-linear growth in the energy industry - Great way to start summer! This week's Economist offers an insightful review of the incredible innovation and growth behind solar PV, and how solar is still set to remarkably change the energy future in the next decades to come. From The Economist..."in 2004, it took the world a whole year to install a gigawatt of solar-power capacity (1gw is a billion watts, or a thousandth of a terawatt); in 2010, it took a month; in 2016, a week. In 2023 there were single days which saw a gigawatt of installation worldwide. Over the course of 2024 analysts at BloombergNEF, a data outfit, expect to see 520-655gw of capacity installed: that’s up to two 2004s a day." #solar #cleanenergy https://lnkd.in/g4PwkvtY

📣 Microsoft is thrilled to announce an agreement to purchase 40,000 agricultural soil-based #carbonremoval credits from Indigo, a company focused on sustainable agriculture and biological solutions. 💡 Revenues from carbon removal sales directly prompt growers to adopt regenerative practices. Healthy soils are vital to our collective future, and have a big role to play in addressing climate change. 🔦 Row crop soil carbon programs are unique vs. conservation or pure forest restoration projects in that they incentivize carbon removal on working lands, thereby minimizing leakage. 🔬 Indigo is expanding the field of soil organic carbon evidence and modeling, as evidenced by the recent announcement that CAR has approved the latest validated version of their model, DayCent-CR 1.1.0. Thanks for the leadership, Katie Sierks, Phillip Goodman and Monica Duda, and we value all the great collaboration, Roman Tarnovsky, Max DuBuisson, A.J. (Ashok) Kumar and Dean Banks. We value the legal support from K&L Gates and due diligence support from Carbon Direct. #climateaction #sustainability https://lnkd.in/gmueg_UG

📣 Science & quality are the foundation of Microsoft sustainability programs, especially carbon removal - please see Katie Sierks's post below and apply if you want to lead the creation of brand new solutions/markets!

Go big or go home! 📣 Microsoft is excited to announce a 20-year agreement to purchase *8 million* tons of high-quality, nature-based #carbonremoval from BTG Pactual Timberland Investment Group in Brazil. This is our third offtake deal in Brazil this year, and underscores #LATAM in climate solutions. 🚀 To our knowledge, this is the world's largest carbon removal credit transaction to date. Credits will be delivered from TIG’s $1B reforestation strategy in #LATAM, for which Conservation International serves as Impact Adviser to help TIG achieve positive ecological, climate, and social impacts. 🌳 The TIP strategy aims to protect and restore approximately 135,000 hectares (i.e. 330,000 acres) of natural forests in deforested landscapes, planting hundreds of millions of trees in total, ~75M of which will support delivery of credits to Microsoft. 🙏 Thanks for the leadership Catherine Martini, Katie Sierks, Annie Guo, Phillip Goodman and Monica Duda, and we value the incredible collaboration with Mark Wishnie, Cedric Rhodes, Mitchell Kosches, Matheus Moura, Maria Clara Uquillas, Gerrity Lansing, and M Sanjayan. We also recognize the great leadership of Tania Cosentino and Team Microsoft Brazil, who are leading the digital revolution and also supporting our company's ambitious hashtag #sustainability goals. Obrigado! 🙏 🙏 We value the legal support from Elisabeth Yandell McNeil and Eric Freedman K&L Gates, and technical due diligence support from Van Butsic, Bodie Cabiyo, Mila Stieglitz-Courtney, and James Burbridge at Carbon Direct. https://lnkd.in/gfh_WMtC

Well said, Andy Davis. Happy Father's Day!

Great profile in GreenBiz Group from Margaret Morales about Microsoft's afforestation collaboration in #Panama with Ponterra, Carbon Streaming Corporation, and Rubicon Carbon - 🌳 The business model behind nature-based carbon removal can be tough: 8 months of structuring, 50 financial model iterations, site visits, technical assessments, etc. 🌳 Annie Guo and her team (shout out Ariel Hayward, Ross Bernet, Catherine Martini, and Steph Harris!) have done brilliant work in finding commercial solutions to scale better and faster. #carbonremoval #afforestation #sustainability https://lnkd.in/gJgTC8rz "The investors’ long-term outlook enabled the deal to overcome one of the biggest barriers to financing nature-based carbon projects: time. While many investment funds have a five- to seven-year return expectation, and many carbon buyers are looking to secure credits in the near future, those timelines don’t match the much slower rate of carbon sequestration in restoration projects, which can take several years to pick up as saplings grow."

🚀 Rate design, rate design, rate design! 🔦 We need proactive, dynamic rate designs to pay down the past, optimize the present, and invest in the future of the grid. 💡 Great paper from MIT - Center for Energy and Environmental Policy Research, about how residential time-of-use rates can encourage early adoption of EVs, heat pumps, etc., but, maybe prompt higher peak loads and costly distribution network upgrades at high levels adoption. 📈 Subscription rates (demand charges), which have long been in use across Europe, offer a model for how leverage smart(er) charging to optimize local distribution networks. Residential subscription rates can cut peak network use by over 50% relative to energy-led TOU rates. Kudos, Graham Turk, Tim Schittekatte, Pablo Duenas Martinez, Paul Joskow and Richard Schmalensee #utilities #EVs #sustainability https://lnkd.in/gjaQGWYS From the paper: "While TOU pricing encourages the adoption of EVs and other technologies that can schedule demand to take advantage of low-price periods, as adoption of these technologies increases, their highly correlated responses to price signals tends to increase peak loads and network costs. It will be essential to separate network and energy tariffs and to implement a demand charge or subscription to provide incentives to control network costs...A well-designed subscription tariff has the potential to 1) mitigate the need for local capacity upgrades, especially at early adoption levels, 2) reduce the cost burden on non-EV households, and 3) provide low levelized charging costs for EV owners..."