Distributed Concentrating Solar Thermal Power? Yes.

Date: 30 Nov 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

When discussing centralized v. decentralized solar power, there’s an inevitable comparison between solar thermal electric power and solar photovoltaic (PV).  But the fact is that solar thermal power – or concentrating solar power (CSP) – can also be done in … Read More

Feed-in Tariffs: a Renewable Energy Solution in an Era of Tight Budgets

Date: 29 Nov 2010 | posted in: Energy | 0 Facebooktwitterredditmail

Most states had to cut spending to close budget gaps in the 2009 fiscal year, and many face additional shortfalls in 2010. These cuts often mean shorter library hours and larger class sizes, but tax credits for renewable energy frequently emerge unscathed.

The cuts in government services tend to fall hardest on the middle and working class, while the energy tax incentives tend to benefit wealthier members of the community. The good news is that it doesn’t have to be this way. Wind turbines and solar panels don’t have to compete with schools and hospitals.

The fix is before Congress and many state governments, and it’s called a renewable energy feed-in tariff. It’s a “plug and play” policy for renewable energy, guaranteeing a grid connection to anyone with a wind or solar project, a long-term contract with your utility, and a price for electricity generation sufficient to make a small profit. It means that many more can be clean energy producers rather than just consumers, spreading the economic benefits of renewable energy over the widest possible area. A good feed-in tariff policy says, “It’s not just for rich folks anymore.”

Here’s how it works. A homeowner buys a solar power system and has it installed on her roof. The local utility connects it to the grid and signs a 20-year contract to buy her solar electricity. The price it provides will give her a small return on investment (say, 6 percent). If the homeowner’s electricity adds any cost to the system, the additional cost (amounting to pennies per month) is spread over all the utility’s ratepayers.

A feed-in tariff helped Germany get 16 percent of its electricity from wind and solar in 2010, with half its renewable energy systems locally owned, bringing economic benefits to every corner of the country. It did so at a lower price than other policy options, because having a guaranteed price lowered borrowing costs for renewable energy developers. And Germany didn’t have to argue for renewable energy tax incentives at the expense of health care, transportation or education.

A well-designed feed-in tariff can replace the maze of government rebates, grants and tax credits with the simple requirement that electric utilities pay producers for the full cost and value of renewable electricity. This strategy results in at least three significant benefits:

The policy can create a more democratic, decentralized electricity system because it removes most of the barriers to local energy generation. This dispersion of renewable electricity production will help maximize the use of the existing electrical grid (transmission and distribution). Locally owned projects return three times the economic benefits to communities that absentee-owned projects do.

The feed-in tariff also means transforming individuals from energy consumers to producers. Unlike traditional renewable energy incentives that target large-scale developments, the feed-in tariff lets anyone become a renewable energy producer. And when people make the shift from consumption to production, their energy use becomes a conscious effort to find equilibrium, rather than simply writing a check for the electric bill.

Finally, the feed-in tariff takes renewable energy incentives off the government balance sheet so that legislatures don’t have to choose between children and clean energy. It may even increase government revenues as hundreds of new renewable energy producers pay taxes on their electricity earnings. Furthermore, since these producers won’t be corporations with legal departments dedicated to reducing their tax payments, there will be more revenue per project.

State and federal budget problems recur regularly, but there’s no reason these shortfalls should pit energy independence and economic development against schools, libraries, or health care — especially when there’s a better solution for promoting renewable energy development.

This is an opinion piece I wrote this spring, published on Minnesota Public Radio’s website.

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Economic Development is more than Electricity Prices

Date: 29 Nov 2010 | posted in: Energy | 0 Facebooktwitterredditmail

The bottom line is that Frame and other critics of the plan seem to think that electricity policy alone is what determines the survival of Ontario industry. It’s an important component, but the price on a bill doesn’t reflect other programs and initiatives in place to help alleviate the economic strain. Sure, looked at in isolation it may seem scary, and it’s easy to criticize something in isolation of other facts, but it’s not constructive to the debate…

Historically there have always been U.S. states and Canadian provinces with lower — in some cases much lower — electricity rates. Have we seen a mass exodus of industry into Quebec, or Manitoba, or Wyoming? No, because electricity rates are one of many factors that are weighed by companies. Ontario is still very much competitive with many of the states that count, including Michigan and Pennsylvania, and we’re far cheaper than New York State, New Jersey and California. The claim that our industries are going to pick up and run is scaremongering.

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A Call for a Federal Feed-in Tariff

Date: 24 Nov 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

The CEO of a leading Indian solar energy firm issues a call for a U.S. federal feed-in tariff in yesterday’s New York Times:

Two things happened last month to give us pause to reflect on clean energy. First, Germany added the equivalent of nearly 1 percent of its electricity supply with solar energy between January and August. The first 1 percent took 10 years to achieve; the next 1 percent just 8 months. Second, the author of this revolution, Hermann Scheer, died.

The United States is one of the two top energy consumers in the world (along with China), so the world cares how fast America becomes convinced that there is a viable replacement to fossil fuels. The domestic American market should reach 1,000 megawatts next year. But to put that in perspective, Germany next year could add 1,000 megawatts in just 1.5 months.

To catch up, President Barack Obama needs to push for a federal feed-in tariff, or a mandate for states to have one, and fund it with a surcharge on conventional power — small enough to pass, but big enough to move solar away from cumbersome grants and tax incentives that come and go with the annual budget circus.

I recently wrote about the legacy of Hermann Scheer, and you can also read our comprehensive explanation of a feed-in tariff.

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Increasing On-Site Consumption of Distributed Solar

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

It’s rarely mentioned that a home with a solar array still gets most of its electricity from the grid.  In fact, without storage, a typical home solar array might only serve one-third of a home’s electricity use, even if the … Read More

(Almost) Best Practices for Community Solar and Wind Generation Projects

Date: 18 Nov 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Yesterday, the Interstate Renewable Energy Council (IREC) released their model program rules for community renewable energy projects [pdf]. IREC’s new model rules consider many of the basic issues facing community renewables programs.  These include: renewable system size, interconnection, eligibility for … Read More

Community Solar Should Save Money, Not Just Trees

Date: 18 Nov 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

IN this environmentally conscious college town, thousands of bicyclists commute each day through a carefully cultivated urban forest whose canopy shields riders and their homes from the harsh sun of this state’s Central Valley.

The intensity of that sunshine also makes Davis an attractive place to generate clean green energy from rooftop solar panels. And therein lies a conundrum. Tapping the power of the sun can also mean cutting down some of those trees.

Enter community solar.  Individuals can invest in a nearby, common solar PV installation, saving kilowatt-hours and trees.

But the article provides some poor examples: the Sacremento Municipal Utility District’s Solar Shares and SunSmart in St. George, UT.  In the case of the former, participants pay extra for their solar power.  In the case of the latter, participants pay extra for solar and – worse – pay up front for 20 years of more expensive power. 

In our recent report – Community Solar Power: Obstacles and Opportunities – we provide a case study of nine operational community solar projects – five of them provide a payback on investment rather than asking a premium price for clean power.

Community solar can save trees, but it can also save participants money.   

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Why tax credits make lousy renewable energy policy

Date: 17 Nov 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

For two years, solar and wind energy producers seeking federal incentives have been able to take cash grants in lieu of tax credits.  The stimulus act program helped keep the renewable energy industry afloat as the credit crunch and economic downturn dried up the market for reselling tax credits to banks and other investors with large tax bills.

The cash grant program is set to sunset at the end of this year, but solar and wind energy advocates are hoping it will be extended, for good reason:

In fact, the tax credits were always an awkward tool, some argue. Rhone Resch, the head of the Solar Energy Industries Association, said that many of the companies doing the installations were not making a profit either, so these tax credits were sold as “tax equity,” a secondary market, at a loss of 30 to 50 cents on the dollar to the seller. [emphasis added]

The tax credits were worth 30% of a project’s value, so the transaction costs of reselling the credits meant that renewable energy projects without sufficient internal tax liability were 13 to 21% more expensive than projects that could use the credits themselves.

This is dumb policy.  Ratepayers pay a higher price for renewable energy because incentives filter through the tax code instead of the general fund.

But the cash grant v. tax credit issue is just one symptom of a larger disease affecting American renewable energy policy.  Transaction costs are increasing the cost of renewable energy in nearly every state with a renewable portfolio standard (RPS).

Under most state RPS policies, utilities put out requests for proposal to acquire renewable energy to meet the state mandates.  These solicitations attract thousands of developers who all have to front their project development costs.  But in California, for example, 90% of projects don’t make the utilities’ shortlist for the solicitation, stranding over $100 million in development costs.

Some of those projects may eventually get online, but most of that money is flushed because the U.S. prefers to let utilities act as gatekeepers to clean energy rather than open the market to any potential producer. It’s not the only way.

There’s a renewable energy policy that’s responsible for 75% of the world’s solar and half its wind power.  It has the lowest transaction costs because there’s no fiddling with the tax code and no parasitic costs from auctions or solicitations.  Instead, utilities are required to interconnect and take the power from any developed renewable energy project, and to provide a price sufficient to provide a reasonable return on investment (just like the utilities enjoy in rate regulated states).

The policy is funded entirely through the electricity system, so renewable energy doesn’t have to compete with other budget priorities.

It’s called a feed-in tariff.

The U.S. can extend the cash grant program, but it merely treats a symptom of the disease.  A better policy awaits.

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