FERC Affirms that CLEAN Contracts (Feed-in Tariffs) are Legal

Date: 27 Jan 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Overruling a utility challenge, the Federal Energy Regulatory Commission (FERC) affirmed today that states have the right to set prices for mandated renewable energy purchases and that these prices may vary by technology:

“[W]here a state requires a utility to procure energy from generators with certain characteristics,” the state may set the wholesale rate (known as ‘avoided cost’) for that specific type of energy.  Id. at para. 30. Therefore, a state can require utilities to purchase electricity generated from differentiated technologies (wind, solar, wave, etc.) and set the rate for purchases from each of these generators.


Photo credit: Flickr user KeithBurtis

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Turkey Adopts Feed-in Tariff with Buy Local Provision

Date: 18 Jan 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

The country of Turkey recently adopted a new feed-in tariff policy for several renewable energy technologies including wind and solar.  What’s notable is not the base rates (the prices are likely too low) but the bonus payments for “made in Turkey” projects.  For a solar PV project, for example, a fully local solar PV system could increase their payment per kilowatt-hour by over 50%.

The policy mimics the highly successful FIT Program in Ontario, where a buy local rule requires participating projects to source at least 60% of their content in the province.  The rule has meant that the 5,000 megawatts of projects in the pipeline have generated the promise of 43,000 jobs.  For more on Ontario’s program, see our recently released report: Maximizing Jobs From Clean Energy: Ontario’s ‘Buy Local’ Policy.

Turkey’s policy is noteworthy for using bonus payments, a strategy that is more likely to pass legal muster for U.S. states looking to emulate Ontario’s job creation success.

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Home Solar Cheaper Than Every Concentrating Solar Power Plant

Date: 13 Jan 2011 | posted in: Energy, Energy Self Reliant States | 3 Facebooktwitterredditmail

A residential rooftop solar PV system in Los Angeles, CA, has a cheaper cost per kilowatt-hour of electricity delivered than the most cost effective, utility-scale concentrating solar power plant. 

In 2010, a buying group called Open Neighborhoods openly advertised an opportunity to get a solar PV system installed for $4.78 per Watt (not including any tax credits, rebates, or grants), a system that would produce approximately 1,492 kilowatt-hours (kWh) per year (AC) for each kilowatt of capacity (DC). 

Based on the best available public information about the costs and performance of operational concentrating solar thermal power plants, the PS10 solar power tower – an 11 MW installation in Spain – has the lowest levelized cost of operation of any concentrating solar power plant that produces electricity.  PS10 had an installed cost of $4.15 per Watt and produces 2,127 kWh per kW of capacity. 

However, due to higher operations costs and a higher cost of capital (8% rather than 5%) for a concentrating solar power plant, the levelized cost of the residential rooftop system (17.3 cents per kWh) is less than that of the power tower (19.9 cents per kWh).

This analysis also does not include any transmission infrastructure or efficiency losses, either of which would increase the levelized cost of the concentrating solar power plant.  It also did not include the lower price point from Open Neighborhoods, which advertised a possibility of driving the price down to $4.22 per Watt (driving the levelized cost down to 15.3 cents per kWh).

The Southern California Edison project, also featured in the chart, is another example of low-cost distributed solar PV, with the 250 MW project spread across commercial rooftops in 1-2 MW increments but still achieving large scale. 

Ultimately, this data further confirms that distributed solar can be delivered less expensively than centralized solar power. 

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Discussion: Why Policy Matters for Distributed Generation and Why DG is More Than Electricity

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

I received an email this morning from a thoughtful fellow who had read some of the posts I’ve sent over to Renewable Energy World. His perspective is worth sharing because it highlights the all-too-common tunnel vision we can get about … Read More

Solar PV Costs – Does State Market Size Matter?

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

Before the holidays we posted a chart illustrating the average cost of solar by state, highlighting Minnesota’s claim to the most expensive solar PV in the nation.  The data came from the brilliant report, Tracking the Sun III: The Installed Cost of Photovoltaics in the U.S. from 1998-2009 (large pdf). 

But are solar costs high in some states simply because the market is small?  The answer seems to be no.

The following chart illustrates the average cost of solar PV by state, mapped against the total installed capacity (in megawatts) from 2007-09.  California is omitted because its 1600 MW of new capacity dwarfs other state markets; Colorado, Hawaii, and North Carolina were not included in the original dataset.  The markers for Oregon and Connecticut were shaded blue and red, respectively, to help distinguish them from surrounding states. 

What’s clear from the data is that there seems to be little relationship between market size and average installed costs.  Texas installed 16 MW at an average cost of $7.00 over the three years analyzed, whereas New York and Nevada had costs 25% higher in markets five times the size.  And five states with markets 10 MW and smaller had costs ranging from $7.60 (New Hampshire) to $9.10 per Watt (Minnesota).  The largest markets in New Jersey and California tie for 5th lowest cost, 10% more expensive than the least expensive market despite being (in California’s case) two orders of magnitude larger. 

The data leave a lot of questions.  Why don’t larger markets uniformly have lower prices?  Why is there such large variation in costs in smaller solar market states?  And how does state solar policy matter, when there is no correlation between the total value of state incentives and the before-incentive installed cost of solar?

Update 1/20/11: a cacophony of different permitting rules may be partially responsible.  The solar industry estimates that permitting costs add $2,500 to each solar installation.

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Britain to Abandon RPS & Move to Feed-in Tariffs

Date: 22 Dec 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

In a potentially precedent-setting move for the English-speaking world, Great Britain’s ruling coalition proposes abandoning its long-running experiment with so-called “market reforms” of the 1990s. Included in the proposal released by Chris Huhne, Energy and Climate Change Secretary December 16, 2010, is wholesale revision of the country’s Renewable Obligation, the British version of Renewable Portfolio Standards (RPS).

While the renewable targets will remain, the government proposes abandoning the mechanism for reaching the targets, the Renewables Obligation (RO). Instead the coalition government of the Conservative and Liberal parties proposes implementing a system of feed-in tariffs for “low carbon generation”.

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California Launches Compromise Small-Scale Renewable Auction

Date: 22 Dec 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

The California Public Utility Commission officially launched its Renewable Auction Mechanism (RAM)* last week, to spur more development in renewable energy projects smaller than 20 megawatts. 

The good and bad news is summarized quite well by the FIT Coalition, with the good news being:

  1. A strong focus on the < 20 MW market segment, also known as Wholesale Distributed Generation if the project connects to the distribution grid.
  2. Recognizes value of “locational benefits,” rewarding projects that site close to load to avoid unnecessary transmission expenditures – “(massive capital expenditures, decade-long build-outs, and significant line and congestion loses)”
  3. Requires utilities to provide specific grid details to help developers select project sites before they commit.

Points 1 and 2 highlight an increasingly recognized issue: meeting the near-term benchmarks in state renewable energy standards may be impossible if states rely on centralized, transmission-dependent projects.  Sub-20-megawatt projects can quickly sum to large quantities of renewable energy, capture most economies of scale, and come online much faster that large, centralized projects.

Point 3 is huge, as well, because it finally addresses a market failure where distributed energy project developers could not get information about grid “sweet spots” for plugging in smaller scale renewable energy without significant infrastructure upgrades.  It’s an issue too rarely discussed, with a rare exception being our 2008 report on Minnesota’s potential to meet its state RPS without significant new high-voltage transmission lines (backed by two state-sponsored studies).

The bad news is that the CPUC missed several opportunities to maximize the potential for distributed generation:

  1. It allows participation by transmission-connected projects, which will not carry the same advantages as distribution-connected projects – “producing energy close to load and avoiding the significant costs, timeframes, and environmental issues associated with transmission.”
  2. It institutes a lop-sided playing field that will favor well-established companies and larger projects.
  3. It perpetuates the high failure rate of solicitation programs: “In general, California’s solicitation-based RPS programs result in more than 95% of the bid capacity to be rejected by the utilities or to be abandoned by developers in the end due to underbidding.”  These rejections lead to enormous stranded development costs, as much as $100 million in one solicitation.

Despite the bad news, it’s a promising “pilot” program that will support 1 gigawatt of distributed renewable energy.   Let’s hope it improves with time.

*And folks suggest feed-in tariff is a lousy policy name…Speaking of which, a number of media stories indicate that this is California’s take on a “feed-in tariff.”  That’s like saying like soccer is Europe’s take on American football.  One is an auction, the other is a standard contract with prices based on the cost of generation. 

Photo credit: alforque on Flickr

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