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Article filed under Energy, Energy Self-Reliant States | Written by John Farrell | No Comments | Updated on May 23, 2011

The Connection Simplicity of Distributed Generation

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/connection-simplicity-distributed-generation/

“They do cost more,” he said of purchases from small producers. “But on the other hand you don’t have to build a lot of transmission to get the power to the grid.”

Luke Busby, Lobbyist for Nevada feed-in tariff (SB 184 in 2011)

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Article filed under Energy, Energy Self-Reliant States | Written by John Farrell | 7 Comments | Updated on May 19, 2011

Change in Federal Incentive Enables Cooperative to Own Wind Project

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/change-federal-incentive-enables-cooperative-own-wind-project/

The use of tax credits as the primary federal incentive for renewable energy has often stymied cities, counties, and cooperatives from constructing and owning their own wind farm.  But the temporary cash grant in lieu of the tax credit (expiring this December) has opened the door for one South Dakota cooperative and over 600 local investors:

The Crow Lake Wind Project, built by electric cooperative Basin Electric subsidiary PrairieWinds SD 1, Inc., is located just east of Chamberlain, S.D. With 150 MW of the project’s 162 MW owned by Basin Electric subsidiary PrairieWinds SD1, Inc., the facility has taken over the title of being the largest wind project in the U.S. owned solely by a cooperative, according to Basin Electric. [emphasis added]

The project is also distinguished for having local investors in addition to ownership by the local cooperative:

The entire project consists of 108 GE 1.5-MW turbines, 100 of which are owned and operated by PrairieWinds. A group of local community investors called the South Dakota Wind Partners owns seven of the turbines, and one turbine has been sold to the Mitchell Technical Institute (MTI), to be used as part of the school’s wind turbine technology program, which launched in 2009. PrairieWinds, which constructed the seven turbines now owned by the South Dakota Wind Partners, will also operate them. [emphasis added]

The key to success was the limited-time opportunity for the cooperative to access the federal incentive for wind power:

The opportunity became viable following passage of 2009’s American Recovery and Reinvestment Act, which created a tax grant option allowing small investors to access government incentives and tax benefits, making public wind ownership possible. Creating the Wind Partners for that purpose were Basin Electric member East River Electric Power Cooperative, the South Dakota Farm Bureau Federation, the South Dakota Farmers Union and the South Dakota Corn Utilization Council…

“This development model created opportunity for small local investors to have direct local ownership in wind energy and access the tax benefits previously reserved for large equity investors,” said Jeff Nelson, general manager at East River Electric. “It offers a model for others to participate in community-based wind projects.”

The South Dakota Wind Partners consist of over 600 South Dakota investors, some who host the project’s 7 turbines and many who do not.  Investors bought shares in increments of $15,000 (combinations of debt and equity).  Brian Minish, who manages the project for the South Dakota Wind Partners, hopes to see future opportunities for this kind of development.  “There’s a lot of political benefit in letting local people become investors in the project,” Minish said in an interview this afternoon, “local ownership can help reduce opposition to wind power projects.”

Photo credit: Flickr user tinney

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John Farrell, ILSR Senior Researcher
Article, ILSR Press Room filed under Energy, Energy Self-Reliant States | Written by admin | No Comments | Updated on May 18, 2011

John Farrell in a Public Incentives Roundtable for Renewable Energy World

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/john-farrell-public-incentives-roundtable-renewable-energy-world/

I participated in a roundtable discussion about the status and future of public (federal) incentives for renewable energy with Greg Jenner and Matt Rogers, moderated by David Wagman.  We had a great conversation, which you can read below or click through to read at Renewable Energy World: The recession is ending and so will the… Continue reading

public or private signpost better
Featured Article filed under The Public Good, The Public Good News | Written by David Morris | 3 Comments | Updated on May 18, 2011

And the Winner is….The Public Sector

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/and-the-winner-is-the-public-sector/

“Unlike the public sector, the private sector is bred for efficiency. Left to its own devices, it will always find the means to provide services faster, cheaper, and more effectively than will governments,” said James Jay Carafano. I suspect the vast majority of Americans would agree with Mr. Carafano. They probably consider the statement self-evident. The facts, however, lead to the opposite conclusion. When not handicapped by regulations designed to subsidize the private sector, the public sector often provides services faster, cheaper and more effectively. Continue reading

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Article, ILSR Press Room filed under Energy, Energy Self-Reliant States | Written by admin | No Comments | Updated on May 17, 2011

John Farrell Interviewed About “Grassroots Solar”

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/john-farrell-interviewed-about-grassroots-solar/

Last week, Brian Foley of the Sierra Club published an interview with John Farrell on “grassroots solar” on the Sierra Club blog, Compass.  Read the interview below, or click through to the Compass. Interview: Grassroots Solar You hear about gigantic solar and wind farms that require vast amounts of land. But what about the decentralized… Continue reading

Article filed under Energy, Energy Self-Reliant States | Written by John Farrell | No Comments | Updated on May 16, 2011

Community Ownership Boosts Support for Renewables

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/community-ownership-boosts-support-renewables/

A new article in the journal Energy Policy supports the notion that local ownership is key to overcoming local resistance to renewable energy.  The article summarizes a survey conducted of two towns in Germany, both with local wind projects, but only one that was locally owned.  The results are summarized in this chart:

Guess which town has the locally owned project? 

If you guessed Zschadraß, you win.  With local ownership of the wind project, 45% of residents had a positive view toward more wind energy.  In the town with an absentee-owned project (Nossen), only 16% of residents had a positive view of expanding wind power; a majority had a negative view.

Ownership matters, and U.S. renewable energy policy typically makes local ownership more difficult.

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Article filed under Broadband | Written by admin | No Comments | Updated on May 13, 2011

Ammon Idaho Fiber Optic Network

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/new-rule-added-ammon-idaho-fiber-optic-network/

Ammon, Idaho, is a community of approximately 15,000 outside Idaho Falls in eastern Idaho. Ammon has struggled to boost economic development in part because providers in Ammon offer slower, more expensive services than are available in Idaho Falls. For years, Ammon has sought to expand access to next generation networks, including an application to the broadband stimulus program in 2010. Continue reading

Article filed under Energy, Energy Self-Reliant States | Written by John Farrell | 2 Comments | Updated on May 13, 2011

Big Banks Inflate Solar Project Value to Boost Tax Credits

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/big-banks-inflate-solar-project-value-boost-tax-credits/

Solar leasing has offered thousands of homeowners a “no money down” route to go solar, broadening participation in the distributed generation revolution.  Unfortunately, this revolution has been co-opted by high finance.  Big banks have been able to write off millions in taxes by over-reporting the cost of financed solar PV projects in what may be the country’s next banking scandal.

In a phone conversation last month, Jigar Shah of Carbon War Room (formerly chief of solar-as-a-service company SunEdison) disclosed that while solar leasing companies can install residential solar for between $4.00 and $5.00 per Watt, they routinely claim federal tax credits on the “fair market value,” a price nearly twice as high.  A solar tax lawyer confirmed this practice and that it also applies to the program providing cash grants in lieu of the federal Investment Tax Credit.  “The equipment may be financed in a way that allows the solar company to calculate Treasury cash grants on the fair market value of the systems rather than their cost,” he wrote to me this week.

The practice boost banks’ bottom line at the expense of federal taxpayers and unnecessarily increases the cost of public subsidies for renewable energy. 

In California, for example, 15 percent of small-scale PV projects completed in 2010 were “third party owned” – code words for a solar leasing arrangement.  If banks used “fair market value” rather than the actual system cost for the tax credits on those systems, the inflated tax credits could have totaled as much as $30 million instead of the $18 million justified by the actual project costs. 

That’s just the tip of the iceberg.  This $12 million difference only reflects about one-third of the U.S. residential solar PV market.  In other words, the over-payment to banks financing solar leasing could be as much as $36 million in 2010 alone.  It’s no wonder U.S. Bank just announced a new commitment to finance $200 million of residential solar PV.

The problem isn’t unknown to the federal government.  The solar tax lawyer I spoke to noted that “Treasury has been pushing back on some fair market value claims as too high.” 

Treasury should push a little harder.  Why should big banks get a bigger tax credit for the same size solar PV array than a homeowner?  

The lone bright spot is that the growth in solar leasing has slowed somewhat in the past two years.  Previously, solar leasing may have been the only way for some individuals to capture the federal solar tax credits, if they didn’t have enough tax liability.  As an alternative, big banks would provide up-front financing in exchange for the tax credits (and the opportunity to inflate their value).  We’ve previously discussed why tax credits make for lousy renewable energy policy.  In 2009 and 2010, however, changes to the federal tax credits allowed people to take a cash grant instead, reducing the need for third party ownership.  That ends in December. 

Long before that, Treasury should shut down the practice of over-estimating project costs with “fair market value.”  Solar energy incentives have built the American solar market and helped drive down the cost of solar.  Banks shouldn’t be allowed to subvert these public incentives.

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Article filed under Energy, Energy Self-Reliant States | Written by John Farrell | No Comments | Updated on May 12, 2011

Doing Both Centralized and Decentralized Energy is Economically Nonsensical

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/doing-both-centralized-and-decentralized-energy-economically-nonsensical/

From Dr. Norbert Rottgen, German Federal Minister for the Environment, in a discussion of baseload fossil fuels versus decentralized renewable energy:

It is economically nonsensical to pursue two strategies at the same time, for both a centralized and a decentralized energy supply system, since both strategies would involve enormous investment requirements. I am convinced that the investment in renewable energies is the economically more promising project. But we will have to make up our minds. We can’t go down both paths at the same time.

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Article filed under Energy, Energy Self-Reliant States | Written by John Farrell | No Comments | Updated on May 12, 2011

Marin Clean Energy Illustrates the Benefits of Local Energy Self-Reliance

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/marin-clean-energy-illustrates-benefits-local-energy-self-reliance/

After 10 years of battling incumbent utilities, Marin Clean Energy became California’s first operational community choice aggregation authority in 2010.  Already, local ratepayers can opt to get 100 percent of their electricity from renewable resources. 

Community choice aggregation (CCA) offers an option for cities, counties, and collaborations to opt out of the traditional role of energy consumers.  Instead, they can become the local retail utility, buying electricity in bulk and selecting their power providers on behalf of their citizens in order to find lower prices or cleaner energy (or even reduce energy demand).  Marin Clean Energy started operations last year:

“When it launched last fall, Marin Energy Authority’s goal was to offer 20% renewable energy to its customers,” said Ms.Weisz. “We were able to offer 27.5% compared to the state-mandated 20%.”  The state recently increased the mandate to one third.  PG&E has about 17% under contract, according to Ms. Weisz.

Customers can also opt for the “deep green,” 100% renewable service for a 10 percent premium. 

Marin Clean Energy not only contracts for a higher portion of renewable energy than PG&E, it’s trying to increase its share of local, distributed generation. 

“We are filling a niche market for mid-sized renewable energy generation in the 20 to 60 MW range,” said Dawn Weisz, interim director…  “When we went out to solicit renewable power offers, Pacific Gas & Electric told us we would not get any bids. We were looking for 40 MW. We were offered over 600.  Almost all was solar.” 

The local “utility” is also trying to maximize energy efficiency.  Currently, a public benefits fund pools ratepayer dollars for energy efficiency programs run by PG&E.  However, such programs tend to work against the bottom line of the utility, but not against Marin’s CCA. 

Marin Clean Energy thinks it can do a better job and create more local jobs with the money.

It’s a promising start for California’s first community choice authority.

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