Democratizing the Electricity System: A Vote for Local Solar

Date: 22 Nov 2011 | posted in: Energy, Energy Self Reliant States | 1 Facebooktwitterredditmail

This is a presentation by John Farrell to the MDV-SEIA Solar Energy Focus conference in Washington, DC.  In it, I discuss the transformation in the electricity system being wrought by clean energy sources, the winning economies of local solar power, how the drawbacks of solar are technically surmountable, and how public policy must change to smooth … Read More

Think Walmart uses 100% clean energy? Try 2%

Date: 18 Nov 2011 | posted in: Retail | 0 Facebooktwitterredditmail

In 2005, Walmart announced that it was setting a goal of being “supplied by 100 percent renewable energy” — and has since received a steady stream of positive press for its commitment. But six years later, the giant retailer still derives less than 2 percent of its electricity from its solar projects and wind-power purchases. At its current pace of converting to renewables, it would take Walmart about 300 years to get to 100 percent clean power.… Read More

The 21st Century Electric Grid: Matching Production and Consumption

Date: 8 Nov 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

In the 20th century electric grid, adding a variable source of power generation like wind or solar upset the paradigm: big coal and nuclear plants run constantly, efficient natural gas plants meet intermediate demand, and fast gas, hydro or diesel peakers fill the peaks. But the 21st century grid is different and the best strategy for … Read More

Nuance on Krugman’s “Solar is now cost-effective”

Date: 7 Nov 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Nobel economist Paul Krugman made waves today when his column “Here Comes the Sun” noted that the rapidly falling cost of solar electricity – “prices adjusted for inflation falling around 7 percent a year” – meant that “solar is now cost-effective.”

It’s close. But it depends on what’s meant by “cost-effective.”

The first step is translating solar prices into electricity prices.  Installed costs for solar have dropped dramatically, from $8 to $10 per Watt just a few years ago to as low as $3.50 per Watt for utility-scale systems as just over $4 per Watt for residential systems.  But electricity isn’t sold in Watts, but in kilowatt-hours (kWh).  So, solar installed at $3.50 per Watt in Minneapolis, MN, will produce electricity for about 23 cents per kWh.  In sunny Los Angeles, the same solar PV array would produce power at 19 cents per kWh, because the more abundant and direct sunshine would make 20% more solar electricity over the same time period.

In either place, such prices don’t compare favorably to average residential retail electricity prices of 8 and 12 cents, respectively.  In fact, none of the top 40 metropolitan areas in the country have average prices for electricity as high as 19 cents.

But there are several caveats:

  1. Grid electricity prices are not fixed, but changing.  Over the past decade, electricity prices have risen, on average across the United States, 3 percent per year.  The solar electricity price is locked in once the panels are operating.
  2. Some utilities have time-of-use rates that charge more for electricity during peak times (hot, summer afternoons) that rise as high as 30 cents per kWh.  Solar competes favorably against these rates.
  3. There are federal, state and utility incentives for solar that reduce the cost.  The 30% federal tax credit, for example, is in statute until the end of 2016.

How much do these issues matter? 

Electricity Price Inflation Makes Solar Competitive Now

If electricity price inflation continues apace, by the time their solar PV systems are halfway to their expected life of 25 years, 45 million Americans (roughly 1 in 6) would have cheaper electricity from solar if they installed right now at $3.50 per Watt.

Time-of-Use Pricing Makes Solar Competitive Now

Time-of-use pricing lets utilities charge different prices for electricity at different times of day, based on the actual cost of delivering power at those times.  In many places, the higher prices coincide with hot, sunny summer afternoons and effectively increase the cost of electricity by 30% during the time a solar panel produces power.  Already 22 million Americans in Southern California can install solar at $3.50 per Watt and beat time-of-use pricing for grid electricity.

Incentives for Solar Accelerate Cost-Effectiveness

Solar power is crossing a cost-effectiveness threshold against grid prices that are rising and reflect the true cost of electricity.  But incentives that capture the environmental and economic benefits of solar help finance projects outside of the sunny Southwest.

While only 3 million Americans can beat grid prices with $3.50 per Watt solar and no incentives, 41 million Americans can beat grid prices using the 30% federal tax credit.  And the market expansion enabled by tax incentives is driving down the cost to install solar (labor and materials) as well as the cost of modules.

Time Makes Solar a Winner

As Krugman notes, the falling costs of solar make time its greatest ally.  The following chart illustrates the number of Americans in the top 40 metropolitan areas for whom solar (at $3.50 per Watt in 2011) beats grid electricity prices (average residential retail rates) over the next 10 years.  The base assumptions are that the price of solar declines by 7% per year and grid electricity prices rise by 3% per year.  The chart examines solar with no incentives and with the 30% tax credit, and with and without utility time-of-use pricing (expected to boost the retail rate during solar producing hours by 30%).  The no incentive and tax credit lines merge after the 2016 expiration of the 30% tax credit.

 

Even without the federal tax incentives or favorable time-of-use pricing, nearly 50 million Americans can beat their utility’s electricity price with solar by 2016.  With time-of-use prices, it’s over 90 million by 2016.  And with the tax credit factored in, it’s nearly half the country.  Of course, the chart will tend to underestimate over time, as the greatest population growth tends to be in the largest metropolitan areas (with the highest electricity prices).

Here comes the sun, indeed.

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Commercial PACE Surges Ahead With Financing for Efficiency and Local Renewables

Date: 4 Nov 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Energy efficient roofing materials installed at a building at NNSA's Pantex PlantProperty-assessed clean energy (PACE) financing launched three years ago with great promise.  The premise was simple: pay for building energy efficiency and on-site renewable energy with long-term property tax assessments, aligning payback periods and financing terms.  The residential program’s rapid expansion came to a screeching halt in mid-2010 when the Federal Housing Finance Agency told lenders that Fannie Mae and Freddie Mac would not buy mortgages with PACE assessments on them.

Commercial PACE was left alive, and programs for business and industry are finally getting scale. 

In September, the Carbon War Room announced a business consortium would provide $650 million in financing for commercial energy efficiency and renewable energy improvements for two regions: Sacramento, CA, and Miami, FL.  San Francisco announced a similar program in October, with $100 million in private funding.  For comparison, the largest operational PACE program to date in Sonoma County, CA, has completed $50 million in retrofits. 

An interesting difference in the new programs is that they inject private capital into PACE programs that were often envisioned as publicly financed (e.g. using municipal revenue bonds).  It’s a welcome development, however, since public sector programs had grown slowly – if at all – since the FHFA decision to curtail residential financing.

The opportunity in commercial PACE alone is enormous.  The Pacific Northwest National Laboratory estimates that building energy consumption could be cut by 15-20% in the United States with the right technologies and tools. Since buildings represent 40% of energy use, beefed up commercial PACE activity could be a big step in the right direction.

For more on the residential program and attempts to revive it, visit PACENOW.org.

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Citizens give “going Boulder” a new meaning: local energy self-reliance

Date: 2 Nov 2011 | posted in: Energy, Energy Self Reliant States | 5 Facebooktwitterredditmail

By a razor-thin margin, Boulder citizens gave the city a victory for energy self-reliance on Tuesday, approving two ballot measures to let the city form a municipal utility.  If the city moves ahead, it would capture nearly $100 million currently spent on electricity imports and instead create up to $350 million in local economic development by dramatically increasing local clean energy production.   

The stage was set over several years, as the city’s multiple pleas for more clean energy were given short shrift by the incumbent electric utility, Xcel Energy.  Instead of meeting local demands for more wind and solar power, Xcel instead financed a new coal power plant and told Boulder that it could have more wind power only if it paid extra, and paid when the wind didn’t blow.  In response, the city authorized two measures for the Nov. 1 ballot to allow the city to pursue municipal clean energy production.

The campaign was enormously lopsided.  Xcel dumped nearly $1 million into a vote ‘no’ campaign,  outspending local clean energy supporters by a 10-to-1 margin and spending nearly $77 for each no vote.  On the flip side, nearly every local business or newspaper endorsement (and nearly 1000 individual citizen endorsements) supported a ‘yes’ vote.  Despite the financial disadvantage, the local grassroots groups won, though their margin of victory was less than 3%.

The victory margin was small, but the clean energy and economic opportunity is enormous.  According to a citizen-led and peer reviewed study, the city could increase renewable energy production by 40 percent from multiple, local sources without increasing rates.  In contrast to the $100 million in revenue sent to Xcel under the current arrangement, the economic value of local energy production and ownership could multiply within the city’s economy to as much as $350 million a year, according to research by the National Renewable Energy Laboratory.   

If the city uses its new authority to become a utility, future generations may look back at 11/1/11 as the shot heard round the world – a shot fired for clean, local energy – and ask why more Americans didn’t “go Boulder” sooner. 

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Watch: Sun Power Minnesota

Date: 19 Oct 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

This is a presentation given to the Minnesota Renewable Energy Society in October 2011.  With costs dropping rapidly and value rising, solar can make enormous contributions to Minnesota’s electricity system and economy.  That’s the spirit of this presentation ILSR Senior Researcher John Farrell gave last week to the Minnesota Renewable Energy Society on the potential for … Read More

Utility Fights Dirty in City’s Battle for Clean Local Energy

Date: 12 Oct 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Banner from Boulder's Clean Local Power campaignIn just three weeks, citizens of Boulder, CO, will vote on whether to begin a big, formal process to unplug from Xcel Energy’s system and plug into local energy self-reliance.  The vote to form a municipal electric utility could set a precedent for communities across the United States to keep millions of dollars local instead of sending them to remote electric utilities each year. 

The vote on ballot measures 2B and 2C is the culmination of a multi-year struggle by the city of Boulder meet the Kyoto greenhouse gas emission targets by getting less coal power and more renewable energy from its investor-owned utility. 

At every turn, the utility has stalled local efforts.  

When the city first considered municipalization, Xcel offered to finance and build a local smart grid but has since been allowed by the state’s public utility commission to charge Coloradans for significant cost overruns.  When the city asked Xcel to bring in more clean energy, the utility offered to build a new wind plant and import its power from across the state only if Boulder citizens agreed to pay more when the wind blew and pay when it didn’t, too.  Despite the ill nature of the offer, the city offered to put it on the ballot along with a vote to municipalize, but Xcel refused, demanding that the city also offer citizens a separate “status quo” measure.

In contrast, a Boulder-owned utility offers enormous clean energy and economic opportunity without having to beg a big, private company.  The city could increase renewable energy production by 40% from multiple, local sources without increasing rates, according to a citizen-led peer reviewed study.  The economic value of local energy ownership would multiply within the city’s economy to as much as $350 million a year, according to research by the National Renewable Energy Laboratory.  

But with $100 million a year in revenues from Boulder ratepayers on the line, Xcel’s fight is getting as dirty as its nearby Cherokee coal plant.  Xcel has dumped over $450,000 into a vote no campaign, 10 times the expenditures of the grassroots groups supporting the municipalization ballot measure.  The utility’s front group has flogged a web advertisement that falsely asserts that electricity will be unreliable if the city has control, even though 1 in 7 Americans gets their (reliable) electricity from municipal utilities.   Xcel has posted job notices on light poles offering residents up to $12 an hour to work as “grassroots” utility flaks.  And in a purely spiteful move, Xcel also succeeded in banning Boulder resident Leslie Glustrom from participating at the Public Utilities Commission, where she had asked tough questions about Xcel’s new coal power plants and proposed rate increases.

Locals are fighting back.  Citizens for Boulder’s Clean Energy Future has organized a crack team of technical and financial experts to model the impact of the municipal utility and is pounding the pavement to counter Xcel’s campaign of misinformation.  The coalition has received endorsements from dozens of local elected officials and businesses, two local newspapers, and nearly one thousand residents.   Even President Obama’s former green jobs advisor Van Jones starred in a video endorsing Boulder’s effort for local energy self-reliance.

The battle for local control isn’t just in Boulder.  Recently a number of Massachusetts towns have pursued municipal electric plants when the private electric company took too long to restore power after Hurricane Irene.  And in nearby Longmont, CO, citizens may vote to use their existing fiber optic network to provide better internet broadband services (if citizens can overcome the $250,000 being spent by private providers CenturyLink and Comcast).

The stakes are high.  Buying electricity from Xcel sends $100 million out of the Boulder economy each year, and helps perpetuate a centrally-controlled grid reliant on coal-fired power (and often hostile to wind power).  Ratepayers across America may not have the chance to weigh in on Boulder’s vote this November, but they should watch intently (and donate if they like), because Boulder citizens may be firing the first “shot heard round the world” for local control of their clean energy future.

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What Renewable Energy Policy Works Best? Feed-in tariffs

Date: 5 Oct 2011 | posted in: Energy, Energy Self Reliant States | 1 Facebooktwitterredditmail

Feed-in tariffs are responsible for two-thirds of the world’s wind power (64 percent) and almost 90 percent of the world’s solar power.  With simplified grid connections, long term contracts and attractive prices for development, that’s policy that works. Click to see more of our feed-in tariff (also known as CLEAN Contracts in the U.S.) coverage on … Read More

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