Twenty MW is also consistent with Commission decisions. We have established certain contract provisions for small sellers because we have found they are unable to bid into a utility request for proposal, and generally do not have the resources or expertise to negotiate and enter into a bilateral contract. We define the size of those small sellers as 20 MW and less.
Have U.S. wind projects hit a size sweet spot? While average project capacity continues to grow, it’s largely because of increasing turbine size rather than adding more turbines to a wind farm.
The following chart illustrates, showing how the capacity of the average American wind project has more than doubled in a decade (to nearly 90 MW in 2009), but that almost all that growth can be attributed to a more than doubling in the average turbine size (from 0.71 MW to 1.74 MW).
Although the American definition of distributed generation may differ, it may be that the U.S. isn’t so different from Germany, where the country’s 27,000 MW of wind power is spread over 3,300 wind projects with an average project size of 9 megawatts. It may be that smaller wind projects are encountering fewer political and transmission barriers than their larger neighbors.
Caveat. The linked post shows an average of all installed German wind projects, and it would be interesting to see how Germany’s size progression compares to the U.S.
Last week the Colorado PUC released draft rules for the Community Solar Gardens created under a 2010 state law. We discussed the legislation in detail in our 2010 Community Solar Power report, with this conclusion (unchanged by our review of the new rules):
It’s clear that the policy will help overcome barriers to community solar, in particular by providing a legal structure for community solar projects and defining the type of generation they qualify as. Community solar gardens should expand participation in distributed solar generation and perhaps expand ownership as well. Solar gardens should help make solar more affordable by allowing for economies of scale in construction and installation, by enabling access to federal tax incentives, and by (unfortunately) using open fields instead of existing structures. Hopefully the distributed nature of solar gardens will encourage projects to connect to existing grid infrastructure. Perhaps the greatest strength in the bill is creating an easily replicable model for community solar. While there will be variations as allowed by law, the creation of a defined “solar garden” in state law and a mandate for utilities to buy their electricity should encourage the development of many community solar gardens. [emphasis added]
For more detail, see the summary drawn from our report below. Italicized text indicates clarifications from the PUC’s recent rules release:
Definition of a Solar Garden
Owner
Subscribers
Utility
Concentrating solar typically fills people energy nerds with visions of large fields of mirrors focusing sunlight to make heat/steam/electricity, but concentration technology is also available for photovoltaics (PV). In fact, using lenses to focus sun onto PV cells – concentrated PV or CPV – may prove to be a more cost-effective (and compact) strategy of doing solar power than either concentrating solar thermal power or traditional solar PV.
For this analysis, we compared a real-life, 1 megawatt (MW) concentrated PV installation in Victorville, CA (just outside Los Angeles) to Southern California Edison’s 250 MW distributed PV installation (in 1-2 MW projects). Since SCE’s project likely involves fixed-tilt or flat PV panels, we also included a hypothetical ground-mounted single-axis tracking PV project for comparison.
The data suggests that CPV has a lower levelized cost of operation, even as both technologies have a levelized cost (with federal incentives) below the peak local retail electricity rate.
| CPV | PV Fixed Tilt | PV 1-axis tracking | |
|---|---|---|---|
| Installation size | 1 MW | ||
| Cost per Watt (AC) | $4.55 | $4.38 | $6.56 |
| Cost of capital | 5% | ||
| % debt financed | 80% | ||
| Debt term | 10 years | ||
| Project life | 25 years | ||
| Levelized Cost | |||
| Unsubsidized | $0.199 | $0.215 | $0.253 |
| With ITC/MACRS | $0.117 | $0.125 | $0.147 |
| Capacity factor | 24% | 17% | 22% |
The comparison is not just about lowest cost, because CPV offers other advantages. The concentrating lenses are less expensive that the actual solar cells, and thus CPV can potentially offer lower cost for the same kilowatt hour output. Additionally, a CPV can offer higher output per square foot of occupied space.
CPV appears to already be in a strong position to compete with traditional solar PV options, a promising position for a product just entering the commercial market.
Craig Morris has a thorough discussion of why feed-in tariffs (CLEAN Contracts) and other renewable energy policies are still necessary even when renewables get to grid parity. It’s a direct response to an earlier piece on Renewable Energy World claiming that the best strategy for solar is to get off incentives.
First, he notes that there’s a pervasive myth that feed-in tariffs have failed:
In fact, every gigawatt market in the world for PV was driven by feed-in tariffs. Mints is right that some of these markets have gone bust, but do the other markets (like Germany) that haven’t gone bust not show us how to do it right? I can’t say that of other PV policies (think of the US or pre-FIT Britain).
Can we agree that solar feed-in tariffs have not failed in “most” countries – and that no non-solar FIT market has undergone boom-and-bust anywhere? A more accurate description would be that feed-in tariffs are the only policy that has led to major success stories for solar, but that some incompetent governments threw in the towel when they saw the price tag.
Morris also notes that the price tag is another myth – feed-in tariffs are a less expensive policy tool than most others:
Mints writes, “Here’s the golden rule of incentives: they are expensive, and someone has to pay the bill.” Actually, it’s photovoltaics that’s expensive, not feed-in tariffs. Studies have repeatedly found that feed-in tariffs are the least expensive way to promote renewables.
The bigger issue is that getting to grid parity is not an end in itself:
FITs for wind and biomass have generally always been below the retail power rate, so why should anything change when solar is no longer the exception? As Mints herself points out, conventional energy sectors also continue to be subsidized. Why should the situation ever be any different for photovoltaics?
Morris goes on to describe how solar below the retail rate will create a massive rush to solar that will actually make electricity more expensive (as solar installers take a larger cut of the favorable economics and increased solar capacity scales down baseload fossil fuel power plants during peak hours). Instead:
But what we probably need over the long run are feed-in tariffs that pay for power production from intermittent sources (especially solar and wind) with a fluctuating premium based on power demand; when renewable power production approaches or exceeds demand too often, the premium will not be paid, and investments in such technologies will not pay for themselves as quickly. The floating cap will find itself, so to speak.
The Germans have already adopted such a policy, called “own generation“. And a few U.S. states – where solar is already cheaper than peak electricity prices – will need a similar policy innovation.
Photo credit: David Parsons (NREL PIX)
Currently, Minnesota’s public schools spend approximately $84 million per year on electricity costs, money diverted from the classroom. But a bill to make clean, local energy accessible now (CLEAN) could help the state’s public schools use solar to zero out their electricity bills and add $193 million per year to their operating budgets.
The proposed bill would create a CLEAN Contract for public entities in Minnesota, requiring local utilities to buy electricity from solar PV systems on public property on a long-term contract and at a price sufficient to offer a small return on investment. The program mimics the traditional model for utility power development, where the public utilities commission rewards utilities a fixed rate of return on investments in new power generation. If schools maximize their participation in the new program, and cover their available roofspace with solar PV, the 750 megawatts of power would provide $193 million per year for school budgets, create hundreds of local jobs, and make the schools electricity self-reliant.
The cost of the program would be negligible: adding less than two-tenths of a cent per kilowatt-hour to customer bills.
Minnesota’s CLEAN Contract proposal is one of several programs spreading across North America, from Ontario to Vermont to Gainesville, Florida, and one that has ushered in thousands of megawatts of solar across Europe. In Ontario, the full-scale program has contracted over 2,700 megawatts of renewable energy and is responsible for 43,000 new jobs. Minnesota’s program is restricted to solar PV on public property, but as this analysis shows, it could still have a significant impact on school budgets without a significant impact on ratepayers.
For more detail on CLEAN Contracts, read our 2009 report. For more on CLEAN Contracts in Minnesota, check out Solar Works for Minnesota.
The solution to the variability of solar power is more solar. It’s true that individual solar power plants can experience significant variation in power output, especially on days with mixed sun and clouds. “Output of multi-MW PV plants in the Southwest U.S., for example, are reported to change by more than 70% in five to ten … Read More
Yesterday I was on the Political Analysis program of the Progressive Radio Network from 5-6 PM (Central). Catch the interview with Sandy LeonVest at PRN’s website or click below to listen in:
February 9, 2011
Dear Members of Congress:
On behalf of the nation’s counties, cities and towns, we urge Congress to support legislation that clearly affirms the right of state and local governments to exercise liens or assess special taxes or other property obligations to protect and improve housing stock for the public good, including the installation of renewable energy and energy efficiency improvements, by directing federal regulators to enforce underwriting standards that are consistent with guidelines issued by the U.S. Department of Energy for Property Assessed Clean Energy (PACE).
As you know, the health and vitality of local economies are essential for reversing the national economic downturn. Despite sizable budget shortfalls, state and local governments, in partnership with the federal government, are working to maintain and improve efficiencies in federal programs that support the services that citizens expect governments to deliver. A further challenge, however, is that traditional mechanisms for local finance and revenue, such as sales and property taxes and bond financing, remain difficult to access. As a result, local governments are developing innovative financing programs, such as PACE, that will help neighborhoods realize community and economic development goals even in challenging fiscal periods.
PACE financing programs help property owners finance renewable energy and energy efficiency improvements – such as energy efficient boilers, upgraded insulation, new windows, and solar installations – to their homes and businesses. The PACE program removes many of the barriers of renewable energy and energy efficiency retrofits that otherwise exist for residential homeowners and businesses, particularly the high upfront cost of making such an investment and the long-term ability to reap the benefits of cost savings. Twenty four states plus the District of Columbia have already passed legislation enabling cities and counties to pursue PACE programs.
PACE is not a loan, but instead is built on traditional tax assessments, which local governments have managed for over 100 years. PACE was not designed to increase the risk of homeowners, business owners, lenders, or the financial system, and operates under stringent rules to ensure a net positive benefit to all parties. When fully implemented, PACE programs can achieve significant energy savings and provide positive benefits to the environment.
Unfortunately, rather than incent original solutions such as PACE, the Federal Housing Finance Agency’s (FHFA) determination that PACE energy retrofit lending programs present “significant safety and soundness concerns” effectively shuts the door on an important avenue for financing improvements that would deliver financial and environmental benefits long into the future. This determination is out of step with our nation’s economic recovery agenda and disregards the traditional authority of local governments to utilize the tax code in the best interest of its citizens.
In response to FHFA’s specific concern about the hypothetical risk to the secondary mortgage market involved with PACE homes, as local leaders responsible for investing hundreds of billions in public funds annually, we know well that risk is an inherent part of any investment. However, local governments constantly seek to minimize that risk; in our case, to the taxpayer. We believe that the standards and best practices called for in the Administration’s “Recovery Through Retrofit” report are sufficient to minimize any potential risk posed by the PACE program to both the public and private investments in a PACE home.
The PACE program is an achievement of the intergovernmental partnership to realize national policy goals, namely, reducing energy consumption, that will positively impact the fiscal conditions of every level of government. For these reasons, we encourage you to support legislation that will allow existing PACE programs to continue and encourage additional programs throughout the country. We look forward to working with you to ensure that local governments maintain the traditional authority to utilize the tax code for public benefit.
