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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 15, 2010

Modest Wind Farms Play Better With Expiring Cash Grants and Credit Crunch

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/modest-wind-farms-play-better-expiring-cash-grants-and-credit-crunch/


Federal tax credits for wind energy projects are due to start expiring at the end of this year, which means developers face the prospect of dishing up proposals for wind farms that can’t be financed, said White, president of Project Resources Corp., a Minneapolis company that does ‘community wind’ development.

The answer, he and others in the community wind industry say, is to go smaller. Smaller projects, which are a hallmark of most community wind projects, are easier to finance and easier to connect to the power grid, they say.

Ironically, the smaller projects (5-20 megawatts) are also the least expensive per kilowatt of capacity. 

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 11, 2010

Renewable Energy Economies of Scale are “Bullshit”

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/renewable-energy-economies-scale-are-bullshit/

I had a conversation with a wind developer yesterday and was talking about the difference between putting together large projects (over 80 MW) compared to distributed generation wind projects (80 MW and under).  I mentioned that we have a deep interest in understanding the economies of scale of renewable energy projects and he replied, “economies of scale are bullshit.”  He noted that large wind projects require significant development costs that smaller projects don’t encounter (including many more landowner negotiations and permits) and that installation and maintenance services are sufficiently widespread for any sized project to find services. 

It’s not entirely true that bigger projects have no economies of scale, but these two charts illustrate the larger point: Most economies of scale in solar PV and wind power are captured at a relatively small size.

The first chart is from the California Solar Statistics website, and draws on data from over 70,000 solar PV installations in California since 2005. 

Clearly, solar PV installations of 10 kW have captured more of the economies of scale for solar PV.  Costs may fall slightly for much larger projects, but the smaller number of projects makes it hard to see trends (interesting note: there seem to be as many > 100 kW solar projects costing over $10 per Watt as there are under $8 per Watt).

The second chart comes from the 2009 Wind Technologies Market Report by Ryan Wiser and Mark Bolinger (which is a must-read). 

The wind data is even more striking, with the lowest average project cost found in the projects with just a handful of turbines (5-20 MW of capacity), with costs steadily rising for larger projects.  Certainly there’s an advantage to having more than one turbine, but less so for growing the project much larger than 10 turbines. 

This data should inform renewable energy policy.  If modest-scale, distributed renewable energy projects capture most (or all) economies of scale, then the opportunity to place these projects close to load may reduce the need for new, long-distance, high-voltage transmission lines.   It means more renewable energy can come online faster and with fewer political battles. 

These smaller-scale projects are also the appropriate size for local ownership (which provides twice the jobs and 1-3 times the economic impact of absentee ownership), allowing more the economic benefits of renewable energy development to accrue to the host community.

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 11, 2010

ILSR Launches Energy Self Reliant States Website

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/ilsr-launches-energy-self-reliant-states-website/

Building on the highly acclaimed 2009 report of the same name, the Institute for Local Self-Reliance has launched Energy Self-Reliant States, a new website to provide expert analysis and policy solutions for a decentralized renewable energy future. 

Senior Researcher John Farrell is leading the project and has already published a variety of posts showcasing his original research.  Visit EnergySelfReliantStates.org to learn more. 

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 10, 2010

Hawaii Feed-in Tariff Pays Less Than Net Metering for Solar PV (and that’s ok)

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/hawaii-feed-tariff-pays-less-net-metering-solar-pv-and-thats-ok/

On Monday we posted a news story about the launch of Hawaii’s feed-in tariff program, and in a review last night we found an interesting anomaly: the price paid for power for residential solar PV (projects smaller than 20 kW) is lower than the residential retail electricity price on most of the Hawaiian islands.  On the most populous island, Oahu, the price paid under the feed-in tariff is three-tenths of a cent per kilowatt-hour (kWh) higher than the retail electricity price, but it’s as much as 11 cents per kWh lower on other islands including Maui, Molokai, Lanai, and the Big Island.

Why pay less than the actual retail electricity price? 

First, Hawaii has a very strong solar resource.  A typical rooftop crystalline silicon PV array could produce nearly 1,600 kWh AC per year for each kW of DC capacity.  This is a capacity factor of over 18%.

Second, the state of Hawaii provides a personal tax credit for the lesser of 35% of the system cost or $5,000.  This is on top of the federal 30% tax credit.

So what does a Hawaiian solar producer need to make a reasonable return on their solar PV investment (8%)?  The following chart illustrates the prices needed for three different system costs.

While a typical individually contracted solar PV system will have a total cost of $8 per Watt or higher, group purchasing of solar PV systems (as discussed in this earlier post) has dropped installed costs down to as low as $4.78 per Watt in a group purchasing program in Los Angeles.  At that upfront price, Hawaiians that go solar would only need $0.15 per kWh to make an 8% return on investment!  Based on the actual FIT price of $0.21 per kWh, a Hawaiian group solar purchase could offer participants a 13% return on investment!

Note: You may wonder at the choice of installed costs for the chart.  These are based on Solarbuzz’s solar price index and our previous analysis of distributed solar PV prices.

Note 2: I’m awaiting confirmation that the Hawaii tax credit is taken off the system cost, rather than cost after the federal tax credit.  The FIT prices shown would rise by about 1.5 cents per kWh if the state tax credit is calculated on the system cost after the federal credit.  Update: the federal tax credit does not reduce the basis for the Hawaii state tax credit.

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 9, 2010

New Rooftop Solar Thermal System Focuses on Space Heating and Cooling

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/new-rooftop-solar-thermal-system-focuses-space-heating-and-cooling/

Solar thermal has generally been two distinct worlds, rooftop solar hot water systems and utility-scale concentrating solar power plants.

No more.

A new rooftop solar collector can provide thermal energy rather than producing hot water or electricity for space heating and cooling. With inexpensive fresnel reflectors to concentrate sunlight, the Chromasun could prove an interesting way to use distributed solar thermal energy for more than just hot water.

The unit produces temperatures up to 220 Celsius and promises to use less roofspace than comparable systems using solar PV. 

Now, what will it cost?

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 9, 2010

Community Solar Power report – revised grades for project location

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/community-solar-power-report-revised-grades-project-location/

The original edition of Community Solar Power received a lot of attention, for which we at the Institute for Local Self-Reliance are very grateful. The grading system we used for community solar projects was of particular interest, especially our offer of higher scores for projects placed on rooftops rather than on the ground.

In particular, the excellent folks at the Clean Energy Collective (whose project is featured in this report) engaged us on the criteria we used for rooftop and ground-mounted solar power. After several in-depth conversations, we offer this revision to Community Solar Power and to the grades we provided for solar project location. We think that our revised grading system better reflects the advantages of distributed renewable energy as well as the best efforts of community solar projects to provide their participants with the best value.

For a more thorough discussion of the location conversation, see our previous post on the issue: Community Solar: Better on the Roof?  And download the updated edition of the report.

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 8, 2010

Hawaii Rolls Out Feed-in Tariff for Distributed Renewables

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/hawaii-rolls-out-feed-tariff-distributed-renewables/

The Hawaii Public Utility Commission moved ahead with the state’s feed-in tariff for projects under 500 kW, overruling objections from the state’s largest utility:


The decision came despite requests from Hawaiian Electric Company (HECO) to postpone the program over concerns that added distributed generation resources could destabilize the islands’ power grids.

…However, none of HECO’s objections “appeared to be fatal flaws that warranted any further delay in the development and implementation of the FIT [feed-in tariff] program,” according to statement released by the PUC.

The prices for the feed-in tariff program are as follows, with 20-year contracts:

 

Tier Technology Eligible System Size Rate
Tier 1 Photovoltaics Less than or equal to 20 kW $0.218/kWh
Tier 1 Concentrating Solar Power Less than or equal to 20 kW $0.269/kWh
Tier 1 On-Shore Wind Less than or equal to 20 kW $0.161/kWh
Tier 1 In-line Hydro Less than or equal to 20 kW $0.213/kWh
Tier 2 Photovoltaics Greater than 20 kW, less than or equal to 500 kW $0.189/kWh
Tier 2 Concentrating Solar Power Greater than 20 kW, less than or equal to 500 kW $0.254/kWh
Tier 2 On-Shore Wind Greater than 20 kW, less than or equal to 100 kW $0.138/kWh
Tier 2 In-line Hydro Greater than 20 kW, less than or equal to 100 kW $0.189/kWh
Baseline FIT Other RPS-Eligible Renewable Energy Technologies** Maximum size limits for facilities $0.138/kWh

The prices assume that the producer will take the Hawaii renewable energy income tax credit (35%). 

The program is capped at 80 MW of production: 60 MW on Oahu, 10 MW on the Big Island, and 10 MW for Maui, Lanai, Molokai combined.

Utility helps developers find capacity

The largest utility on the islands, HECO, has also published Locational Value Maps (LVM) to help developers identify places of greatest capacity on the existing grid.

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 8, 2010

Cost of Fossil Fuels Makes Renewables a Harder Sell?

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/cost-fossil-fuels-makes-renewables-harder-sell/

This story on Sunday suggests that utilities are pulling back from investments in renewable energy over concerns about the cost. 

Invenergy…had a contract to sell [wind] power to a utility in Virginia, but state regulators rejected the deal, citing the recession and the lower prices of natural gas and other fossil fuels.

“The ratepayers of Virginia must be protected from costs for renewable energy that are unreasonably high,” the regulators said. Wind power would have increased the monthly bill of a typical residential customer by 0.2 percent.

Based on what price forecast?  The following chart illustrates the complexity of relying on fossil fuel prices when making decisions about renewable energy.  Note that wind and solar prices are relatively stable (i.e. zero).

The chart does a good job of showing the futility of predicting natural gas prices, but the timeline smooths out coal price changes, particularly by region.  Here’s a closer look at coal prices since 2007, courtesy of the federal EIA:

Utilities that are making shortsighted decisions about renewables based on current fossil fuel price trajectories are going to get burned, and so are their ratepayers. 

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 5, 2010

Provincial Feed-in Tariffs Spurring Community Power

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/provincial-feed-tariffs-spurring-community-power/

With its feed-in tariff, the Canadian province of Ontario is set to become the leading community renewable energy center in North America. 

In an Oct. 12, 2010 report, [Ontario Power Authority] said that it has signed contracts for 264 megawatts of community-owned projects, and another 120 megawatts of projects owned by Ontario’s aboriginal peoples. The contracts represent 16 percent of Ontario’s 2,500 megawatts of feed-in tariff contracts to date.

No other jurisdiction in North America has made such a concerted effort as Ontario has to guarantee that a portion of the new renewable generating capacity to be built will be owned by its own citizens and native peoples through the province’s innovative feed-in tariff program.

This is in addition to Ontario’s microFIT program (a small renewable energy project program under the umbrella of feed-in tariff programs), which assures connection for homeowners and farmers wanting to generate electricity with solar panels for sale to the grid. There are 20,000 applications for microFIT contracts.

It’s noteworthy that despite Ontario’s success, Europeans still have significant leads based on their longstanding feed-in tariff policies.

…One-half of all wind generation in Germany, or more than 12,000 megawatts, is owned by local investors. The percentage of local ownership is even higher in Denmark and the Netherlands.

But North Americans are learning.  Vermont recently adopted a feed-in tariff, and the several other U.S. states and the Canadian province of Nova Scotia are also considering it.

Nova Scotia begins hearings Nov. 8, 2010 on the province’s community feed-in tariff program. The Nova Scotia Utility and Review Board will determine feed-in tariffs for large and small wind, biomass, and tidal power that will go into effect on April 4, 2011. Projects in the 100 megawatt program are set aside for Nova Scotians.

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Nov 4, 2010

Public Utilities Finding Smart Grid Success

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/public-utilities-finding-smart-grid-success/

While there have been prominent news stories of smart grid cost overruns and customer dissatisfaction with programs run by investor-owned utilities, municipal utility smart grid programs are enjoying success.  Earlier this week, Public Power Daily featured three municipal utilities whose smart grid efforts are paying off. 

In two cases, city-owned fiber optic broadband networks are providing crucial information and revenue to support the smart grid.  In every case, customer satisfaction ranks much higher than rate of return on investment (although every investment will pay back).

EPB, the municipal utility serving the Chattanooga [Tennessee] area, is close to completing its rollout of a fiber optic system that will make the utility the first Internet service provider in the nation to offer 1-gigabit-per-second service (see the Sept. 16 Public Power Daily)…the utility is preparing to install new reclosers on its distribution system that will use its fiber optic network to measure current and voltages, locate faults and open and close switches…The IntelliRupter reclosers and software made by S&C Electric Co. “will play a critical role in helping us reach our goal of a 40% reduction in customer outage minutes,” Wade said. Based on an Energy Department study, outages cost Chattanooga an estimated $100 million a year, he said…The information gathered by the new reclosers should help with transformer load management, cutting down on transformer maintenance and allowing the utility to replace transformers with smaller ones, Wade said.

In 2008, with the help of a consultant, the [Leesburg, FL] utility put together a smart grid business plan that projected operational savings of $900,000 for the city’s electric system and an additional $400,000 for the water system, he said. Then, in 2009, Leesburg became one of 33 public power utilities to win smart grid grants from the Department of Energy under the American Recovery and Reinvestment Act. The utility received $9.75 million (which it must match) for its smart grid project, plus a $1.4 million energy efficiency and conservation block grant…With the grants, Leesburg is installing smart meters for all of its 23,000 customers, plus more than 4,000 energy management systems that will allow customers to program when they operate their electrical appliances such as air conditioners and water heaters. With the goal of reducing peak demand, the utility will look at a variety of incentive rate plans… Leesburg plans to give its customers a guarantee that those opting for an incentive rate will not pay more than the utility’s flat rate, he said. “The folks that want to participate, we want to reward,” he said.

Ponca City has 155 miles of fiber that connects eight towers, a wireless mesh system with 500 WiFi radios, and 28,000 electric and water meters, said Technology Services Director Craige Baird. That robust communications system provides a variety of benefits. After the utility replaced all of its meters, it found a lot of losses and recouped almost $500,000 in the first year in back sales, he said.

For more on the value of publicly-owned broadband networks, see Muninetworks.org, run by our ILSR colleague Christopher Mitchell.

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