Cost of Fossil Fuels Makes Renewables a Harder Sell?

Date: 8 Nov 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

This story on Sunday suggests that utilities are pulling back from investments in renewable energy over concerns about the cost

Invenergy…had a contract to sell [wind] power to a utility in Virginia, but state regulators rejected the deal, citing the recession and the lower prices of natural gas and other fossil fuels.

“The ratepayers of Virginia must be protected from costs for renewable energy that are unreasonably high,” the regulators said. Wind power would have increased the monthly bill of a typical residential customer by 0.2 percent.

Based on what price forecast?  The following chart illustrates the complexity of relying on fossil fuel prices when making decisions about renewable energy.  Note that wind and solar prices are relatively stable (i.e. zero).

The chart does a good job of showing the futility of predicting natural gas prices, but the timeline smooths out coal price changes, particularly by region.  Here’s a closer look at coal prices since 2007, courtesy of the federal EIA:

Utilities that are making shortsighted decisions about renewables based on current fossil fuel price trajectories are going to get burned, and so are their ratepayers. 

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Community Solar – Better on the Roof?

Date: 22 Oct 2010 | posted in: Energy, Energy Self Reliant States | 3 Facebooktwitterredditmail

When we released our report on community solar power last month, we expected a few comments on the grades we gave to the nine featured community solar projects. We also generated a really robust conversation about the location (on buildings or on the ground) of community solar PV projects and made a disheartening discovery about the cost of roof repairs when a solar PV array is present.

 

In the report, our criteria for solar PV location gave high marks for rooftop solar PV systems because of their use of existing infrastructure, lower marks for ground-mounted systems in brownfields, and the lowest grades for greenfield systems. In one particular case, we gave a ‘C’ grade to the Clean Energy Collective’s project because while it used otherwise unusable land near a sewage treatment plant, it was still ground-mounted.

The response to their ‘C’ grade made us re-evaluate our grading system. On reflection, there are three major considerations for the location of a community solar (or any distributed renewable energy) project.

Location Criteria for Community Solar

  1. Preservation of Open Space 
  2. Use of Existing Grid Infrastructure 
  3. Lifetime Cost for Participants 

 

Open Space

The open space issue cannot be ignored, as demonstrated by the opposition to centralized concentrating solar thermal power and solar PV power plants in the Mojave Desert and San Luis Valley in Colorado. Projects that use rooftops will rarely encounter resistance on environmental grounds (although there can be issues with historic districts). From the perspective of open space, there is still a higher value in a rooftop project than a ground-mounted one.

Existing Grid Infrastructure

The issue of existing grid infrastructure is not as clear cut. In general, distributed solar PV projects minimize the need for new grid infrastructure by plugging into the grid at low voltages and in a variety of places.

Rooftop solar would seem to have an advantage in this.  With few exceptions, a rooftop solar PV system can easily interconnect through the building’s grid connection. A rooftop solar PV system doesn’t change the capacity required by the local grid connection because net metering limits typically mean that no one installs a system that produces more than the building consumers.

But our error was to assume that ground-mounted systems would not take advantage of existing infrastructure, as well. In fact, the Clean Energy Collective solar project connects to existing infrastructure at an adjacent sewage treatment plant. Several other community solar projects in the report were constructed by utilities and presumably built next to existing substations where the new generation could easily be absorbed into the local grid. In other words, we should have graded this location criteria separately from the open space issue.

Lifetime Costs

The third issue – and one we’d never considered – is that rooftop PV systems may have to be removed and reinstalled if the roof needs replacement or repairs. While PV systems typically lose a small portion of their potential output (< 1%) each year, the systems can operate for decades, far longer than the typical residential or commercial roof (20-25 years in Minnesota). In other words, there’s likely to be one roof replacement during the life of a PV system.

Reinstalling a residential rooftop PV system could cost $6,250 or 25% of the installed cost of the system

In our investigation, we found that moving residential PV systems to accommodate a roof replacement could cost as much as 25% of the initial system cost (and over 35% of the net cost after the application of the 30% federal tax credit).  Moving systems on a commercial roof was less expensive, on the order of 15% of initial installed cost (around 25% of the system cost after the tax credit).   

The following chart illustrates the range of costs we found relative to an initial installed cost of $5.00 per Watt for commercial and residential PV systems.  

But this chart is somewhat disingenuous, because solar PV owners never pay the full installed cost.  Instead, there are a slew of tax credits and rebates that reduce this initial price.  The next chart shows these roof repair reinstallation costs relative to the net cost after the 30% federal tax credit.  

The cost issue is also complicated by various ownership arrangements. If the building owner also owns the array, the cost of moving the PV system is their responsibility. But what if they lease the solar array? Does the leasing company bear the cost of system safety when the roof is repaired or replaced or is it still the responsibility of the building owner? Will that cost be assessed when the roof is repaired or escrowed from the start of the project?

A CEC representative noted, “I guarantee you that a building owner (lessee) will never sign a long term lease that requires them to pay the costs of reinstalling a system after roof repairs, etc.” If CEC’s recently completed 77 kW community solar array had been built on a rooftop and required a move, the cost to its individual investors would likely be around $2,000, increasing the upfront cost for those individuals by nearly 30%. In addition, CEC couldn’t have offered the utility or its customers a 50-year service level agreement.

Conclusion: Location is Complicated

Obviously, there’s much more to the ground v. rooftop issue than meets the eye, from interconnections to roof repairs. Look for a transformation in our Community Solar Report in the next few weeks reflecting on this complex issue.

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Distributed solar less variable than centralized solar

Date: 21 Oct 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Traditionally, the reliability of small PV systems’ power output has been a concern for utilities, project developers and grid operators, since all it takes is a few clouds to disrupt the power flow of a small array. But the Berkeley Lab study suggests that when PV plant arrays are spread out over a geographic area, the variability in power output is largely eliminated.

This means that for utilities, the distributed generation of small PV arrays could mean increased efficiency, reduced costs and a quicker path to a cleaner energy portfolio.

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Will Solar PV Kill Concentrating Solar Thermal Power?

Date: 19 Oct 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

The boon of concentrating solar thermal power plants is their ability to deliver more consistent electricity, and to offer thermal storage (cheaper than batteries) to expand their daily coverage. 

But it might be in serious trouble. And this time the culprit is not cheap natural gas, the Koch Brothers, nor the desert tortoise advocates.

…The relentless price declines of PV panels allows developers to build PV plants at a lower cost than their [concentrating solar thermal] CST cousins. This issue is illustrated in the following Capital Cost per watt chart (an excerpt from the upcoming GTM Research “CSP Report”). In 2010, the price to build a CSP park run by Troughs, Power Towers or Dish-Engines will cost between $5.00 and $6.55 per watt (AC). On the other hand, utility-scale PV projects can limbo below $3.50 a watt (DC).

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Energy efficiency has economies of scale

Date: 19 Nov 2009 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

The report [Synapse Energy Economics Inc.: Costs and Benefits of Electric Utility Energy Efficiency in Massachusetts] is worth reading in full, but this paragraph is absolutely vital:

Synapse recently undertook an extensive review of numerous utility and third party EE programs from across the United States in order to explore the empirical relationship between the cost of saved energy (CSE) per kWh saved and program scale in terms of first year energy savings as a percentage of annual energy sales. In the analysis, we found that the CSE tends to decrease as energy savings increase relative to annual energy sales. This finding is contrary to the idea of an energy efficiency supply curve that is often constructed to estimate economic potential of energy efficiency measures. These supply curves generally indicate that the CSE increases as energy savings increase, much like a generation supply curve would. In English: Energy efficiency gets cheaper the more you spend on it. [emphasis original]

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