John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More
We previously examined how some schools are going solar, with a particular focus on the federal tax incentives. Click here for our December 2010 analysis. Continue reading
Western grid operators have been making plans for large-scale renewable energy imports into the California electricity market, prompting the governor’s Senior Advisor for Renewable Energy Facilities to write a “self-reliance” response.
Here are a few highlights of his letter to the Western Electricity Coordinating Council (WECC):
California has plenty of in-state development: “The California Independent System Operator indicates that renewable projects totaling 70,000 MW of installed capacity [nearly enough to meet all of the state's peak summer demand] are seeking to connect to the CAISO-managed grid.”
Transmission costs are up, waaay up. In particular, “the developer of at least one significant line, TransWest Express, expects the project to cost about 70 percent more than WECC’s original assumptions…we thus appreciate the ongoing efforts of WECC staff to review these and other assumptions and to revise capital cost assumptions upward.”
Transmission line risks: “transmission lines proposed to stretch hundreds of miles over private and public lands face significant permitting and development risk – perhaps most so in the case of DC lines, which offer few electrical benefits to the states they cross.”
In summary, California has a robust in-state market for renewable energy and sufficient in-state renewable resources to serve its entire electricity needs, so Western states would do well to temper their export optimism.
Update 9/20/11: Graphics marked with an * have been updated since the report’s release This page contains all of the charts, maps, and graphics from the new report, Democratizing the Electricity System: A Vision for the 21st Century Electric Grid. The graphics are in order of appearance in the main body of the report. Charts… Continue reading
Installed costs for solar PV have dropped and economies of scale improved significantly in 2010, opening the door for much more cost-competitive distributed solar power.
The data comes from the 4th edition of the excellent report from the Lawrence Berkeley Labs’, Tracking the Sun (pdf) and shows the installed costs for behind-the-meter solar PV projects in 2010. The following merely copies Figure 11 from that report, showing the average installed cost of “behind-the-meter” solar projects in the U.S. in 2010, by project size.
This is useful and shows the significant economies of scale for solar PV in 2010, but the history is important. For context, the following chart shows the 2010 data along with the 2009 data from Lawrence Berkeley Labs, with the grey shaded area indicating the cost decreases. The 2010 installed cost data from the California Solar Initiative (red) is also shown, helping validate the LBNL data. The last data point from the CSI is an outlier likely due to having too few projects in that dataset.
Two things are clear from the new data. First, installed costs have dropped significantly, by $1 per Watt for residential-scale solar PV and by nearly $2 per Watt for megawatt-scale projects. We can also see more clearly how the economies of scale of solar have improved, as well.
The unit cost savings between the smallest and largest solar projects (1 MW and under) jumped from $2.80 to $4.60 per Watt, a change in relative savings from 30 percent to 47 percent. Economies of scale were also much greater for mid-size solar (30-100 kW), with the percentage savings over the smallest projects rising from 21 to 35 percent. The following chart illustrates the change in economies of scale, showing installed costs as a percentage of the cost of a 2 kW system.
Instead of having relatively little economies of scale for solar PV projects larger than 2 kW, the 2010 data confirms that the unit cost of solar does continue to fall significantly as solar projects grow up to 1 megwatt (MW) in size.
Unfortunately, LBNL did not have sufficient data to provide context for economies of scale for larger distributed solar projects (1 to 20 MW), with only about 20 datapoints. However, their finding was that these larger crystalline solar projects cost between $4 and $5 per Watt, showing small but significant scale economies.
The lesson is that solar economies of scale seem to be improving as the U.S. market matures, good news for distributed solar to compete with peak electricity prices on the grid.
[note: for more context, see the previous post on 2009 solar economies of scale]
This is a little taste of a project I’m doing comparing solar renewable energy credits (SRECs) with a state solar mandate to Clean Contracts (a.k.a. feed-in tariffs). One metric for comparison is the risk created by market uncertainty, and there’s no better illustration of the risk and uncertainty in SREC markets that this chart. In the past 9 months, SREC prices have tumbled in nearly every market in the U.S.
The cause is the same everywhere – the solar industry met the state mandate, cratering demand for SRECs. Prices won’t recover until the market slows down.
From an Econ 101 standpoint, SRECs beautifully price market demand and are a powerful indicator of when the state-created market is saturated. From an industry standpoint, however, they represent a real roller coaster. It’s hard to be a solar installer when your entire market dries up for 9 months waiting for next year’s quota to roll in (in NJ and PA, legislation is being considered to accelerate the state mandate to solve the problem).
Clean contracts (if uncapped) solve the problem, because the market doesn’t bust (of course, a solar mandate that can keep ahead of supply would also work).
But rather than pricing market demand (as SRECs do), Clean contracts attempt to price the cost of solar. It’s one reason why they tend to deliver lower cost solar to market than SREC markets or mandates. And as you can see in this chart from a previous post, even Germany’s Clean contract (feed-in tariff) program more closely approximates the cost of solar in New Jersey that New Jersey’s SREC price.
It’s a serious question for policy makers to consider when creating a market for solar. Is an SREC market that depends on a state solar mandate any more “market-based” than Clean contracts that simply provide a standard offer to solar developers? And if the latter means cheaper solar for ratepayers, then shouldn’t that trump considerations of “markets”?
New York Times 9/6/11 – Wind Industry Lobbies for Tax-Credit Extension The production tax credit program allows owners of wind projects that sell renewable energy to a utility to take a tax credit of 2.2 cents per kilowatt-hour for the first 10 years of a project’s operation. That program is set to expire at the… Continue reading
A short slide deck providing a “101″ on Property Assessed Clean Energy (PACE) financing, a status update on the legal challenges, and some of the policy design issues we explored in our report on Municipal Financing Lessons Learned.
This is the best video you will ever see supporting a state solar energy standard, submitted for a contest hosted by Environment Minnesota.
For more information on the solar energy standard for Minnesota, see Environment Minnesota’s website as well as Solar Works for MN.
With a ruling that the Federal Housing Finance Agency (FHFA) must do a formal rulemaking on its 2010 decision to torpedo the innovative local finance tool for energy efficiency and clean energy retrofits, a federal judge gave Property Assessed Clean Energy (PACE) financing new life.
Earlier this year, it looked as if prospects were bleak for PACE in 2011, with some progress on Commercial PACE and a new director at advocacy organization PACENOW, but agonizingly slow steps on federal legislation and litigation.
Today’s ruling means FHFA has to start over, but it does not overturn the agency’s 2010 advisory against PACE, leaving the program in limbo until the formal rulemaking is complete. Here’s hoping PACE finally wins through, a great tool for saving energy and creating jobs at the local level.
In August 2011, ILSR Senior Researcher John Farrell gave this presentation to a group of rural utilities and environmental organizations in Kentucky. The slides illustrate the enormous renewable energy potential in Kentucky and the cost-effectiveness of clean, local power in meeting the state’s electricity and economic needs. Clean Local Power for Kentucky View more presentations… Continue reading
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