Earth Day offers an annual opportunity to reflect on and advance climate action, but this year’s observance brought with it some big news. Among other aims, the Biden Administration announced that the United States will target reducing emissions by 50 percent by 2030, as compared to 2005 levels. Other initiatives were announced around how to help developing countries establish net-zero strategies, how to transform the transportation sector and how to harness the potential of solar, wind and energy storage — among many others. That leaves the electricity industry with plenty to talk about and plenty to do. On this episode of Electrifying AI, Dr. Joe Nyangon, a senior industry consultant for power and utilities innovation here at SAS, joins us to break down the news and examine how the energy and utilities sector can move forward.
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- With more than 15 years of experience in the energy sector, Joe Nyangon leads the design and development of advanced analytics solutions targeting decarbonization, decentralization and digitalization domains at SAS. Joe was previously a postdoctoral researcher in energy economics and engineering systems at the Center for Energy and Environmental Policy at the University of Delaware. Before that, he was a consultant at the United Nations in New York and is a TED fellow. Joe earned a PhD from the University of Delaware and holds master’s degrees from Columbia University and the University of Greenwich. He’s an active member of the Institute of Electrical and Electronics Engineers, the Institute for Operations Research and Management Sciences, the United States Association for Energy Economics, the International Association for Energy Economics, and Project Management Institute.
- Sal Gill heads digital strategy and market innovation for SAS Energy & Utilities. He has worked for major energy companies and seen firsthand how electricity transforms lives, from bringing power to remote communities to pioneering innovations that will accelerate renewable technologies. As the global community continues to seek alternatives to satisfy its appetite for energy, Sal is constantly searching for new ideas that take advantage of both the electric grid, known as the largest machine humans have ever built, and the greatest enabler of our time, data analytics.
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[MUSIC PLAYING] SAL GILL: Hello and welcome to another episode of Electrifying AI. Our mission in these podcast series is to provide a venue for our clean energy enthusiasts to gain up-to-date insights on what's taking shape in the industry. In the process, we will help demystify the connection between the greatest machine ever built, the electric grid, and the greatest enabler of our time, data analytics. Now, to help us do that we'll have a series of guests throughout these episodes who come from a diverse array of roles in the industry to help share with us some sentiment, some thoughts on what are the latest happenings in the industry.
And for today's episode, we're very pleased to have one of our own, my colleague Dr. Joe Nyangon is a Senior Industry Consultant for Power and Utilities Innovation right here at SAS. He joined SAS recently, And we're very excited to have him. Joe brings with him more than 15 years of experience in the energy sector, having previously been a Postdoctoral Researcher at the University of Delaware Center for Energy and Environmental Policy. And he was also a Consultant at the United Nations in New York and is also a TED fellow.
Joe, it is such a great feeling to have you with this and being able to finally do this with you. We've been having various sorts of engagements throughout the short time you've been here at SAS. And we would love to first start off by understanding what just happened last week, some major developments we heard in the news from Joe Biden and team about climate change and some of the latest commitments that have come up. So why don't we start there. Please shed some more light into what these developments are and what they may mean for us.
JOE NYANGON: Thanks a lot, Sal. Thanks for that introduction. Yeah, so we've had really incredible happenings in recent days. So President Biden has just made an announcement pledging to reduce the US carbon emissions in half by the end of this decade, compared to 2005 levels, as well as aiming to increase net zero greenhouse gas emissions no later than 2050, which is actually twice the pledge from President Obama in 2015. So this is already very incredible.
SAL GILL: Wow, that's big.
JOE NYANGON: Now, there are many facets of this pledge that make it stand out. First is that it actually sends a strong signal to the rest of the world that America is back and is actually prepared to work on climate change. And second is that it actually formally brings together the administration's whole of the government approach by ensuring that climate considerations are incorporated across the US engagements domestically, but also abroad in many different ideas, mostly targeting asset-intensive industries.
Now, the other thing is that it also aligns budgets, as well as federal regulatory policy, and to some extent, aligns some of the disparate actions which have been identified not just at the federal level but also at the state level in order to drive the natural transition, as well as adaptation to climate change. And just lastly, Sal, on that is that this goal is also in line or even higher than what a group of corporations, including a number of notable companies like Ford, Pfizer, Shell, Facebook, and even Amazon asked for in a letter that they penned to the administration.
Now, this pledge is a big deal. And it actually shows real momentum. It is what is known under the Paris Climate Agreement as NDC, which is nationally determined contributions, which although it's non-binding is a non-binding pledge that countries are required to make to the rest of the world to stop the global warming at 1.5 degrees Celsius, it actually highlights the immediate effort that each country, as well as signatory to the Paris Agreement, needs to make to transform their energy systems, as well as to reduce emissions at rates which have never been seen before in history.
Now, the other aspect of this initiative is that it's actually focused on revitalizing the transportation sector. Now, transportation is currently the largest source of direct greenhouse gas emissions in the US, at approximately 29%, having actually surpassed electricity sector in 2016.
SAL GILL: Wow.
JOE NYANGON: Now, as a result, this kind of initiative is actually very comprehensive in terms of the various areas that it identifies, which are primed for greenhouse gas reductions-- key among these being, for instance, reducing emissions from buses, rail, as well as shipping, and even aviation. But the most notable one is how the administration is going to expand access to electric vehicle charging stations, as well as making sure that these emissions have got really significant deep emission reductions, as well as targeting job creations and also creating healthier cities. So there's actually a lot that's actually covered.
SAL GILL: Yeah, so Joe, there's a lot to unpack here, right? And it certainly-- it touches not just the power industry, but like you're saying, it touches the transportation industry. And then within the transportation industry, there's such an ecosystem of players that the equation gets even larger.
Now, targets are great. And I know you've been doing this for a long time. Tell us about what needs to happen in terms of utilities for utilities to get to anywhere close to these targets. And I want to understand better from the perspective of utilities already have conventional generation assets, as an example. They may not be the most environmentally friendly in today's terms. So how do they manage the risk even that comes with-- what do they end up doing with those types of assets in such an environment where there are such aggressive goals? So give us some picture into how do utilities actually make this happen.
JOE NYANGON: That's a great question, Sal. And just some highlights which are related to that is that first is that cutting the nation's greenhouse gas emissions at least 50% below the 2005 levels, like the way the administration has actually pledged, is really a major task, because the reality is that we are going to be required to put in significant measures to achieve this goal. Now, to put it into context, the US current emissions were about 17% below 2005 levels in 2020.
SAL GILL: Now, is that because of the pandemic?
JOE NYANGON: No, that actually it doesn't even take into consideration pandemic, because I think--
SAL GILL: Interesting.
JOE NYANGON: Yeah, pandemic is not a good indicator, or rather a baseline, to use, since it's not reflective of the overall emissions trend.
SAL GILL: Interesting.
JOE NYANGON: Now, in the documents that the administration actually filed with the United Nations to illustrate its commitment, its new commitments, regarding this pledge, these emissions will be cut to about 27% by the year 2025. Now, that means reducing 10% of the current emissions in four years. Now, to understand what's ahead, it took us almost 15 years, from 2005 to 2020, to achieve the 17% reduction in energy-related carbon emissions. That means that, to achieve the 50% reduction in carbon emissions from 2005 to 2030, we actually need to reduce emissions three times faster.
SAL GILL: You mean 2021 to 2030, right?
JOE NYANGON: Yes. No, it would be actually-- no, now, if you take it back to 2005 to 2030, it would actually be three times, actually, faster--
SAL GILL: Got it,
JOE NYANGON: --than it has actually taken us to achieve this before. Now, granted, technology, economics, as well as policy environment has actually changed over the past decade. Now also, the good news we have is that the United States has a head start in this, in the sense that there has been significant changes from a levelized cost of energy perspective. If you look at what has happened, especially with solar, solar has achieved a levelized cost reduction of nearly 90%, wind nearly 70%, and even battery storage reduced its cost by nearly 85%.
Now, this has actually made these technologies incredibly competitive, to the point where, actually, the unsubsidized levelized cost for new wind as well as solar power plants are competitive with or less expensive than the marginal operating and maintenance cost of existing coal as well as nuclear. But for electricity, for the electric utilities, cutting emissions by half within a decade implies transforming the entire electricity system as well as interrelated sectors, including transportation, industry, as well as agriculture, because the energy system impacts so many aspects of our society.
So a transition to net zero would have profound implications well beyond climate and energy, including economic competitiveness, employment creation, as well as improvement in health sector.
SAL GILL: So Joe, coming back to that piece of the assets becoming-- or the new assets becoming cheaper, what happens to the existing assets? Basically, where do they go? Do they have any play.
JOE NYANGON: Yeah, so that's actually a good question, because the most important aspect of this transition that actually we need to focus on is getting it right, because if done right, transition means more or better jobs. It also means determining how best to address the considerable number of uneconomical assets through responsible asset retirement. Now that, for instance, entails what are we going to do with the natural gas infrastructure that we have? Can we use this infrastructure-- for instance, retool it for green hydrogen transportation?
Now, there's a lot of research which has to be done in this area which shows that it will need very little retooling in terms of cost to actually use the existing natural gas pipeline systems to transport green hydrogen, which has actually got from-- no, through two main processes, either electrolysis, as well as using solar and wind power generation facilities, to help in that process, and also gasification, where now we use gas. But I think the most important aspect is this is how can we use the existing infrastructure, retool it so that we make it economical in order to support some of the new clean energy generation facilities?
SAL GILL: And Joe, just to-- I promise this will be my last question on this point. But it sounds like there's also a lot of risk here, too, for people that have invested into these conventional sources of energy, right? How can that risk be addressed?
JOE NYANGON: Now, two main aspects can be gleaned from that. One is climate risk, which is what we are seeking to address. But the other aspect is the transmission risk, which actually emerges as a result of how we address the existing systems, which have been in existence for a very long period of time. Now, stranded assets is a major concern in the electric power sector. Although assets have traditionally become stranded, with the impacts of climate change as well as the transition from carbon-intensive generation facilities to more low-carbon-intensive energy sources, this process is actually hastening. And as a result, we are experiencing a number of changes in the sector.
Take an example of coal, coal power generation facility. In the past decade alone, nearly 550 coal-powered generation facilities have been retired, with accumulated capacity of 100 gigawatts.
SAL GILL: Wow.
JOE NYANGON: Now, that is significant. Now, the challenge, therefore, is what happens to the jobs that existed in this sector? Where have these jobs moved to? Now, the good news is that most of these jobs have been-- a number of jobs have been created as a result of the growth in solar, as well as wind power generation facilities. And some of the people who worked in these jobs have gotten retrained to occupy these new jobs. So that is actually a positive sign.
But generally, there's risk that we need to address. This risk can be looked at from a de-risking perspective, in terms of what are we going to do to address some of these issues. And we can put in, for instance-- consider a number of options, one being how can we use, for instance, analytics to address the risks that are being created as a result of the transition? How can we use policy innovations to address these risks? And then how can the market respond to this risk from a supply as well as demand aspect in order to address some of these challenges which are being created in the process? Because transitions are --
SAL GILL: So Joe, we're analytics fans here, right? So sorry to interrupt you, but you just got me excited. How can analytics play a role in perhaps minimizing this risk somewhat for the people or the stakeholders that are involved in this process?
JOE NYANGON: So analytics plays a very critical role. The most important is improving on decisioning processes. So we have a number of processes which are being reconfigured in the transition process. So how can we use analytics to better discover these processes, discover the inefficiencies in the system, and also be able to apply recommendations with respect to technologies which have been created elsewhere in order to address these risks? Now, that is very significant, because it's going to help us improve on decisioning much faster in order to identify these inefficiencies, but also to apply the right solutions in order to address these challenges.
SAL GILL: OK. OK, no, that makes a lot of sense. And thank you, Joe, for providing us and enlightening our listeners with that wonderful explanation of what this is all about. Now, let's visit another topic. You briefly in the beginning talked about electric vehicles. And clearly, there are major, major, major tectonic shifts happening just alone in that space from manufacturers committing to making fleets that are completely electric in a matter of a couple of years to the next five to seven years.
We have other companies that are coming in. We hear a lot about Tesla, but there's certainly another breed of new and entrepreneurial company entrepreneurial-type companies coming up in the EV space. And likewise, the conventional folks are wondering-- or the conventional car industry is wondering-- where does the future lie? And we're seeing commitments from GM, and I think I've seen now even from Honda recently that they're all making these targets. Walk us through how critical is it for the power industry to understand what these changes mean for them?
JOE NYANGON: Great question, Sal. Now, transportation, as I said, has got very significant direct emissions related to it. At nearly 29% emissions levels, that is going to be very significant. We really can't have any dent on the overall emissions unless we address what's happening on the transportation sector.
Now, the challenge with the transportation is that, in order to address the emissions in this sector, the solution is actually more electricity. So there's been a number of research papers written with respect to what is the role of electricity in all of this. And a number of researchers have come to the conclusion that electric sector is actually the linchpin in terms of how we are going to address emissions generally.
So what it means is that we have to come up with more innovative ways to generate cleaner energy sources in order to address the emissions levels in the transportation sector. That means, for instance, making sure that the bus fleets are all electrified, the rail systems move towards more electrified sources of energy. The challenge is, obviously, going to be in aviation. But in aviation sector, there's also a lot of research that is being done with, for instance, testing biofuels sources, how their role in terms of providing some of the fuel sources in that area.
But ultimately, it's going to be how, for instance, the role the states are going to play, the role that utilities are going to play, and how that will be aligned with the federal government role, because alignment, in terms of policy coherence, is going to be very important. At the city level, in terms of the role that utilities are going to play from Public Utility Commission, what kind of policy coherence is going to come from Public Utilities Commission?
SAL GILL: So it sounds like one of the most efficient paths here may be just the large-scale electrification of the transportation sector. And clearly at the heart of this electricity sector are utilities, right? So it sounds like there is going to be a renewed or continued interest in trying to understand how do they bring in these technologies.
I don't think it's as easy of a matter that we can just have the entire country or the world become electric without thinking about what the impact of all those vehicles or charging points connecting to the grid. It gets into sort of this load demand type equation. So please give us some words on how critical would it be to ensure the planning piece of this. And by planning, perhaps how do people forecast where these things are going to come up, and then maybe how analytics also fits into that, as well, perhaps?
JOE NYANGON: Yeah, absolutely. So analytics is going to play a critical role, from electric charging infrastructure and siting, because the challenge is that, for instance, solar as well as wind traditionally, where mapping which has been done across the country, the places where we find higher capacity for these energy sources are always far-flung places far removed from the traditional residential places. So what it means is that how can we come up with a more comprehensive planning approach that is more tailored towards matching where the sources for, for instance, clean energy is going to come from and where the consumption is going to be greatest.
Now, that is going to require, for instance, analytics in order to help us do that, and also coming up with strategies that can be able to align some of these in a number of initiatives which are being implemented, be they related to microgrids infrastructure, smart grid development, as well as addressing some of the transition constraints in the process, as well as areas to do with, for instance, transmission capacity expansion. As those took place, they all have to be aligned from a planning perspective in order to be more coherent.
And I think that is where the role of policy is going to be very critical in this. But related to that is how all of these policies are going to be sequenced. For instance, what kind of policy is going to be put in place followed by what? That sequencing is something that has always lacked, especially in policymaking, and is going to be critical in terms of what kind of approaches, how do we lay out these policies so that they all reinforce each other rather than being antagonistic?
SAL GILL: Very, very interesting insights. So Joe, tell us about why energy and this entire sector is so personal for you. What got you interested into this in the first place?
JOE NYANGON: Great question. So I was taking a class when I was a graduate student at Columbia University. And that was a class which was basically general sustainability management. It was looking at all the various sectors in sustainability management. And in that class, we analyzed, for instance, the transportation sector, the energy sector, manufacturing, the food, and agricultural sector, as well as you, the user of sustainability metrics, and the role of analytics in all of this.
And I was very intrigued in that class because the professor made it that the centrality of sustainability is actually energy. We can't actually address any issues to do with sustainability until we actually get to try it in the energy sector. That got me intrigued, because initially I thought that all these sectors were of equal weight with respect to sustainability assessment, as well as their role in this area.
And that actually got me into digging deeper in terms of understanding the role of the energy sector in addressing the issues to do with climate change, but also how can we align the engineering, the economics, as well as regulatory innovations in order to drive the changes that are actually needed with respect to decarbonization of the entire sector. And at the end of that class, I made a decision that I'm going to put in more effort [SAL LAUGHS] with respect to discovering more in this sector.
SAL GILL: Excellent. Excellent. Well, we're glad that you did so that you're here now. And we're glad to have you at SAS. And really looking forward to learning more from you about your insights. And the conversion of government and policy and technology-- it's all very, very fascinating. And it really, as you said, there needs to be a solid understanding of all these legs of the stool.
So Joe, thank you, again, for joining us. I there's a lot on your schedule, as well. So thank you for making the time. For our listeners, Joe has a pretty large following on Twitter already, so you can follow him @DrJoeNyangon. That's DrJoeNyangon. And Joe, one last curveball for you that we've been throwing to all our guests, and that is related to this Electrifying AI Spotify playlist that we're building. So we'd love to know if you have any recommendations for any songs that you'd like us to include in that playlist.
JOE NYANGON: Well, Sal, that's the most challenging question you've asked me in this interview.
But I think one comes to mind-- Ellie Goulding's "Power," from her new album, which she released last year, Brightest Blue. It has a very catchy line it says, "Mindless actions lead to destruction."
[LAUGHTER] And it is very relevant.
SAL GILL: That can be applied in many industries, too, and also our personal lives.
JOE NYANGON: Absolutely. I think it's very relevant to the bold and immediate actionable energy, as well as climate solutions which are required to implement this new pledge from the Biden administration.
SAL GILL: Excellent. Excellent. Well, great pick. And for our listeners, we would love to hear from you. If you have any recommendations, thank you for sending the recommendations that you have been. We're still looking for more. You can tweet them to me, @TheElectricSal. And we will be glad to also send you some cool Electrifying AI swag along the way to give our thanks to you.
So for now, this is all the time we have. Join us again with our next episode. In the meantime, be safe, take care of yourselves, and we'll be back soon. Thank you. Bye-bye.
JOE NYANGON: Thank you.