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Article filed under Energy | Written by John Farrell | No Comments | Updated on May 27, 2011

Water Use May Decide Future of Centralized Solar Power

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/water-use-may-decide-future-centralized-solar-power/

Power plants use a stunning amount of water.  In 2005, thermoelectric power (e.g. coal, natural gas) accounted for half of all water use in the United States.  Across the country and particularly in the arid West, the water savings from renewable energy are as important as the pollution-free energy.

That makes the distinction in water use between centralized solar and decentralized solar a big deal, especially since centralized solar is only planned for the dry Southwest.

The following graphic illustrates water consumption for common types of power generation per MWh of electricity produced (additional reference here):

Traditional power generators are water hogs.  For example, a nuclear power plant consumes 720 gallons of water for each megawatt-hour of electricity produced.  Powering a single 75-watt incandescent light bulb for an two hours on nuclear-generated electricity would consume 14 ounces of water (more than a can of pop).  

While most of that water is returned to the environment, this report by the Alliance for Water Efficiency and ACEEE notes that it’s not undamaged:

Water is returned to its original source, even though its qualities have changed, especially temperature and pollutant levels. 

Nuclear and coal may be big offenders, but wet-cooled concentrating solar power uses even more water per MWh of electricity generated.  Dry-cooled CSP cuts water consumption significantly, but it’s still far more than solar power from photovoltaics (or wind power).  

If it were solely a question of cost, CSP and PV come out relatively close (see updated chart below) despite the former’s frequent need for transmission access. 

But if the tradeoff is significant water consumption versus none, then decentralized PV may make more sense everywhere, including the sunny Southwest.

Photo credit: Flickr user Shovelling Son

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Article filed under Energy | Written by John Farrell | No Comments | Updated on May 26, 2011

Distributed Generation Could Lower Electricity Rates

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

Some nice news from Connecticut, where the state’s commitment to increasing distributed generation is increasing on-site generation and helping hold rates down:

Distributed generation is becoming more popular in the state and throughout New England, especially among businesses foreseeing the financial and environmental benefits of decreasing their reliance on the electric utilities.

As a result, the regional grid will be comprised of fewer large commercial ratepayers and more small business and residential ratepayers. The long-term effect will dampen rates, said Phil Dukes, spokesman for the Connecticut Department of Public Utility Control.

A business generating its own power decreases the overall need for electricity on the New England power system. When the peak load drops, the regional system needs less electricity and eliminates its use of the most expensive power plants. These peaker plants tend to run inefficiently and burn less environmentally-friendly fuel, Dukes said.

“There is certainly more upside than downside to distributed generation,” Dukes said. “That is why the state has invested so heavily in it.” [emphasis added]

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Article filed under Energy | Written by John Farrell | No Comments | Updated on May 25, 2011

World Wind Energy Association (WWEA) Adopts Community Power Definition

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/world-wind-energy-association-wwea-adopts-community-power-definition/

In a press release earlier this week, WWEA released this definition of community power alongside a new study on the public acceptance of community-owned wind:

A project can be defined as Community Power if at least two of the following three criteria are fulfilled:

1. Local stakeholders own the majority or all of a project
A local individual or a group of local stakeholders, whether they are farmers, cooperatives, independent power producers, financial institutions, municipalities, schools, etc., own, immediately or eventually, the majority or all of a project.

2. Voting control rests with the community-based organization:
The community-based organization made up of local stakeholders has the majority of the voting rights concerning the decisions taken on the project.

 3. The majority of social and economic benefits are distributed locally:
The major part or all of the social and economic benefits are returned to the local community.

The press release also references this recent study of community ownership that we covered last week: Community Ownership Boosts Support for Renewables.

 

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Article filed under Energy | Written by John Farrell | No Comments | Updated on May 24, 2011

Nova Scotia Boosts Economic Development with Community-Owned Renewables

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/nova-scotia-boosts-economic-development-community-owned-renewables/

Yet another Canadian province is showing a serious commitment to the economic benefits of renewable energy development. Ontario’s “buy local” energy policy has the promise of 43,000 local jobs from 5,000 MW of new renewable energy. Now Nova Scotia is completing rulemaking for a provincial goal of 40% renewable power by 2020 that includes a 100 megawatt (MW) set-aside for community-owned distributed generation projects. The policy promises to increase the economic activity from its renewable energy goal by $50 to $240 million. Continue reading

Article filed under Energy | 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 | 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 | Written by John Farrell | 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

yellow flowers and morning dew
Article, ILSR Press Room filed under Energy | Written by John Farrell | 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 | 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 Energy | Written by John Farrell | No 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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