In this Nov. 20 interview with Baruch on his WKBM Paradigms program, we talked about: The coming decentralization of the electricity system The folly of a building inherently decentralized technology (wind and solar) in a centralized fashion The benefits for local ownership of a decentralized system How limited economies of scale for solar and wind power … Read More
In this short interview on KGNU’s science show – How on Earth– with Tom McKinnon, we talk about: the problems presented for local ownership of energy resources when federal incentives use the tax code, the trouble for clean energy when it’s reliant on Wall Street, how Boulder, CO, may accomplish something remarkable with its vote to … Read More
From a friend at the United Nations climate meeting in Durban, South Africa:
Todd Stern, the head of the climate change negotiating team for the US Government called for Feed-in Tariff policies as key to solve the problem. Stern gave the briefing on December 7th to nearly 300 environmental group leaders in Durban, South Africa at the UN Climate Change negotiations. One of his major points was that the US and countries worldwide need to utilize the Feed-in Tariff approach in order to transform the energy production sector of society. While there was at best, luke warm, reception to his overall presentation of the US negotiating position, the crowd was impressed with his recognition of the transformative power of the German style renewable energy (Feed-in) approach. By providing investor security these policies have proven to be the fastest way to get gigawatts of good energy on line the quickest. As they say, when the house is on fire speed matters. [emphasis added]
Since feed-in tariffs are responsible for nearly two-thirds of the world’s wind power and 90 percent of the world’s solar, it’s a policy that would make sense for the American energy market.
Germany is the unquestioned world leader in renewable energy. By mid-2011, the European nation generated over 20 percent of its electricity from wind and solar power alone, and had created over 400,000 jobs in the industry. The sweet German success is no accident, however, and the following pie chart illustrates the results of a carefully crafted … Read More
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
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
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
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:
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.
Property-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.
Dollar General, Dollar Tree, and similar chain dollar stores are targeting vulnerable communities across the US. Our new report details these companies’ rapid expansion, the growing resistance, and the pressing need for federal policy interventions.
Read the report, and find all of our resources and reporting on chain dollar stores here.
