A serialized version of our new report, Democratizing the Electricity System, Part 4 of 5. Click here for: Part 1 (The Electric System: Inflection Point) Part 2 (The Economics of Distributed Generation) Part 3 (The Political and Technical Advantages of Distributed Generation) Download the report. Regulatory Roadblocks / The Political System Despite technology’s march toward… Continue reading
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If Germany’s 16 federal states had each enacted their own renewable energy legislation, we’d have far less solar energy usage. I often tell people that Germany has 400 types of beer and one renewables law, while the situation in the United States is the other way around.
The Golden State has covered over 50,000 roofs with solar PV in the past decade, but could it also save 30% or more on its current solar costs? Renewable energy guru Paul Gipe wrote up a study last week that found that Californians pay much more per kilowatt-hour of solar power than Germans do (accounting for the difference in the solar resource). The following chart outlines the various ways Californians pay for solar, compared to the Germans (averaged over 20 years, per kilowatt-hour produced).
While the study doesn’t explore the rationale, here are a few possibilities:
- The inefficiency of federal tax credits artificially inflates the cost of U.S. solar.
- Big banks that offer financing for residential solar leasing routinely overstate the value of the systems, increasing taxpayer costs on otherwise cost-effective systems.
- The complexity and intricacy of the state and federal incentives (4 separate pots of money!) and the lack of guaranteed interconnection means higher risk and higher cost for U.S. solar projects.
- The inconsistency in local permitting standards that increases project overhead costs.
Ultimately, the combination of these market-dampening problems in the California market has hindered the cost savings that have hit the German market. California solar installations of 25 kilowatts (kW) and 100 kW have a quoted price of $4.36 and $3.84 per Watt, respectively, according to the Clean Coalition. This compares to $3.40 per Watt on average for already installed projects of 10-100 kW in Germany.
Given a solar cost disadvantage that is present both in the value of incentives AND in the actual installed cost, renewable energy advocates in California should seriously question whether the current policy framework makes sense. The mish-mash of federal tax credits and state/utility rebates has not led to the same economies of scale and market maturity as Germany has accomplished with their CLEAN contract (a.k.a. feed-in tariff).
Switching energy policies could save ratepayers billions.
A 24-cent CLEAN contract price for California solar (to match the German contract) would replace the entire slate of existing solar incentives with an overall average cost 30% lower than the current combined incentives. If 2011 is a banner year and the state sees 1 gigawatt (GW) of installed capacity, the savings to ratepayers of a CLEAN program (over 20 years) would be nearly $3 billion.
If the CLEAN price were adjusted down to assume that projects could use the federal tax credit, then California could set the contract price as low as 18.5 cents per kWh, 5 cents less than is currently paid by California ratepayers (although requiring projects to use tax credits has significant liabilities).
Several states and municipal utilities (Vermont; Gainesville, FL; San Antonio, TX) have already shifted to this simple, comprehensive policy, with promising early results. Californians should consider whether holding to an outdated and complicated energy policy is worth paying billions of dollars extra for solar power.
SolarTimes editor Sandy LeonVest in conversation with energy researcher John Farrell, of the Institute for Local Self Reliance. They discuss “energy democracy” and John Farrell’s recently published report, “Democratizing the Electricity System.” Continue reading
A serialized version of our new report, Democratizing the Electricity System, Part 3 of 5. Click here for: Part 1 (The Electric System: Inflection Point) Part 2 (The Economics of Distributed Generation) Download the report. The Political and Technical Advantages of Distributed Generation While technology has helped change the economics of electricity production (in favor… Continue reading
Update 8/11/11: While maximizing solar in DC shifts $267 million in electricity payments from the utility to local solar panels, the cumulative electricity cost savings over 25 years amounts to $1.6 billion for ratepayers by shifting to solar power.
For many years the citizens of Washington, DC, struggled for the basic right to elect their own leaders. In 2011, they should use their political home rule to maximize the economic benefits of local renewable energy with “electricity home rule.”
Currently, residents and businesses in Washington spend over $1.5 billion dollars a year on electricity. According to a study of DC’s energy dollars by the Institute for Local Self-Reliance, 90% of that amount (largely unchanged since the 1979 study) – $1.4 billion – leaves the city.
With rooftop solar power, DC residents could keep more of those electricity dollars at home.
In its recently published atlas of state renewable energy potential, the Institute for Local Self-Reliance (ILSR) found that the District of Columbia could generate 19% of its electricity from rooftop solar PV systems. That’s $267 million spent on electricity bills that could be kept locally.
But maximizing local electricity generation with rooftop solar has enormous additional economic benefits. To fill District roofs with solar panels, residents would need to install just over 1,800 megawatts (MW) of rooftop solar. The National Renewable Energy Laboratory estimates that every megawatt of solar generates $240,000 in additional economic activity, making the economic value of maximizing solar energy self-reliance close to $432 million.
It could go even higher.
A previous NREL study of the value of local ownership of renewable (wind) energy found that it multiplied the economic benefits from 1.5 to 3.4 times. If D.C. residents maximized local ownership of solar, it could have an economic value as high as $1.5 billion, equivalent to the District’s total electricity bill.
The 1,800 MW of solar would also generate jobs. With a rule of thumb of 8 jobs per MW, according to a University of California, Berkeley, study of the jobs created from renewable energy development, the District could get as many as 14,500 jobs from maximizing its solar energy self-reliance.
The cost of going solar is minimal. At current best prices for solar PV (around $3.50 per Watt installed) and with the benefit of the 30% federal Investment Tax Credit, solar PV can deliver electricity to the District for 16.1 cents per kilowatt-hour. After seven years at current electricity inflation rates (3% per year), solar PV – with zero fuel cost or inflation – would be less expensive than retail grid electricity (currently 13.3 cents per kWh). And unlike the $267 million currently sent out of the district for that electricity, all of it would be kept at home.
The solar power offers much more than just affordable electricity. Recent studies have suggested that the actual value of solar power to the grid and environment far exceeds the value of the sun-powered electricity. And ILSR’s recent report on Democratizing the Electricity System illustrates how solar power and other distributed renewable energy sources are the cornerstone of a transformation to a decentralized, more democratic energy system.
Citizens of DC should take the opportunity presented by their solar resource and pursue electricity home rule.
A serialized version of our new report, Democratizing the Electricity System, Part 2 of 5. Click here for Part 1 or here to download the report. The falling cost of distributed renewable generation has been one of the key drivers of the transformation of the U.S. electric grid. The following chart illustrates the cost of… Continue reading
Rural areas aren’t just for energy export.
The points in this great presentation are echoed in a recent Böll Foundation report called Harvesting Clean Energy on Ontario Farms, which notes that some farmers in northern Germany make $2.5 million in a good year growing wheat. They make $15 million harvesting the wind.
They should try 21 times. That’s how much more in-state economic benefit can be gained from developing local energy rather than trying to keep rates low with energy imports.
In 2008, voters approved – with 66% percent of the vote – a referendum establishing a 15% renewable energy standard. The law also required utilities to get the renewable energy within Missouri or surrounding states. In January, however, the state legislature stripped that part of the law, allowing Missouri utilities to import renewable energy from anywhere, even if that electricity never physically reaches Missouri ratepayers.
Renewable energy advocates even tried to reach a compromise with utility lobbyists, reducing the mandate by half but keeping the geographic restriction.
If the measure had passed, it would have guaranteed Missouri “a coal-sized plant of renewable energy over the next decade,” [Rep.] Holsman said. “That means a vast array of economic development, including sales, installation, service and manufacturing jobs for Missouri. It means not having to worry about EPA regulations or adjusted fuel costs for the investment.”
The measure failed, however, because consumer groups thought importing wind power from elsewhere would be cheaper and utilities wanted ratepayers to front the cost for permits for new nuclear power plants (despite the horrendous economics of such power plants).
The irony is that Missouri has strong, local renewable energy resources. According to a 2010 report by the National Renewable Energy Laboratory, Missouri could generate three times its electricity consumption from high-quality, in-state wind power. The cost for this wind power would be 6 to 7 cents per kilowatt-hour (kWh) without the federal tax credit, and less than 5 cents per kWh including the incentive. This compares to average residential retail rates of 8-9 cents. Even solar PV is fairly affordable, with a levelized cost (including the 30% federal tax credit) of just 15 cents per kWh (with an installed cost of $3.50 per Watt). Missouri has enough sun and roofspace to get 21% of its electricity from rooftop solar PV.
The cost savings from importing cheaper wind power pale in comparison to the economic benefits of building locally. The cheapest wind power in the U.S. would be – at best – about 1.5 cents per kWh less than wind power generated in Missouri. If it could (impossibly) be delivered to the state with zero transmission cost, the savings to ratepayers of getting 100% of their electricity from wind would be $1.3 billion.
However, the economic impact of in-state wind power is $1 million per megawatt (MW), according to the American Wind Energy Association. The state would need 28,000 MW of wind power to match its electricity consumption (with a 35% capacity factor), for an economic impact of $28 billion, 21 times the savings from importing out-of-state wind. Furthermore, if those turbines were also owned by Missourans, the economic impact would rise 1.5 to 3.4 times higher, from $42 to $95 billion.
The repeal of the geographic requirement in Missouri’s renewable energy law is penny-wise and (21 times) pound-foolish.
This is an archive of print and online news coverage of the CapX 2020 Transmission Lines. The archive was originally hosted on an ILSR.org website but will now be available on NewRules.org using the ‘CapX News’ keyword.
This post has media coverage prior to early 2011. Coverage after this time is listed in reverse chronological order using the ‘CapX News’ keyword.