Are Ethanol Mandates a Good Idea?

We received a question on whether or not the state of Montana should enact a requirement for a 10 percent ethanol blend in its gasoline supplies. Dr. Dave responded, noting that Montana is one of six states that has in place or is currently debating, an ethanol mandate.

Click Here for the complete Question and Answer from Dr. Dave.

New Ethanol Plant Will Use Waste Heat From Existing Power Plant

In a unique collaboration, a Minnesota electric cooperative will supply the thermal energy requirements for an ethanol plant proposed in North Dakota.

Great River Energy, the Minnesota-based transmission and distribution electric cooperative, has signed a memorandum of understanding with Headwaters Inc. to become co-owner of a 50 million gallon, $65 million ethanol plant on land next to the Coal Creek Station power plant near Underwood, N.D. Representatives at the Coal Creek station have reported that construction costs at the ethanol plant will be about $15 million less by using heat from the existing power plant instead of building their own boiler system. Construction is planned to begin in the fall and the ethanol plant would begin operation the fall of 2006.

North Dakota enacted an ethanol production incentive program in 2003 to help attract new plants (ND Laws 2003, Chapter 57). Their "counter-cyclical" production incentive ties a very generous $0.40 per gallon production incentive to the average North Dakota price per bushel of corn (baseline of $1.80/bushel) and the average North Dakota rack price per gallon of ethanol (baseline of $1.30/gallon). While the incentives on a per gallon basis are large, annual distribution of ethanol incentives cannot exceed $1.6 million and that limits payments to around 4 million gallons per year. Each ethanol facility is limited to a cumulative total of $10 million in state incentive payments.

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Aggregating Communities to Advance Energy Self Reliance

Under a law enacted in 2002, communities in California were alllowed to aggregate electric utility customers and take control over their electric system. Three years later, implementation plans are being developed or under consideration by about two dozen California cities.

A "community aggregator" (also known as the default supplier) is allowed to take over the responsibility of negotiating electric services and rates on behalf of a block of ratepayers. Individual ratepayers are able to "opt out" of the program if they wish. The aggregator was also granted the authority to administer cost-effective energy efficiency and conservation programs using funds that are being collected from ratepayers in California.

In May 2004, San Francisco adopted an Energy Independence Ordinance using California's Community Choice Aggregation law (Laws of California 2002 Chapter 838) as a purchasing and ratesetting authority, and will issue revenue bonds, called H Bonds, to finance a 360 MW public works project. The energy projects would be equivalent to more than a third of the city's electrical capacity needs and on average would supply about 14 percent of the city's electric consumption (MWhs) without a rate increase. The new energy projects are expected to be a combination of energy efficiency, solar photovoltaics, wind energy and other distributed generation technogies.

Oakland-based Local Power, which has worked with the San Francisco Board of Supervisors since 1998, is now preparing an implementation plan in parallel with city agencies. The plan is expected to be submitted to the CA Public Utilities Commission in May 2005 with competitive bidding for the demand-side and supply-side resources to follow later in the summer of 2005.

According to Paul Fenn, author of the Energy Independence ordinance and the community aggregation state law, there are another 22 California cities and counties that have agreed to similar goals to develop a 40 percent renewable power portfolio, double the levels required by California's Renewable Portfolio Standard law, a 28% increase over current statewide levels of renewable energy as opposed to a required 8% increase.

Local Power is providing assistance and encouraging the California cities to complete their community aggregation and self-generation implementation plans in time to ward off a massive push for power plant construction by California's bailed out electric utilities, PG&E, Southern California Edison and Sempra (San Diego Gas & Electric). Local Power is also suggesting that the cities move quickly so that they can lock-in the current exit fee levels for any departing loads - set at around 2.5 cents per kilowatt-hour.

On March 15, 2005, the Berkeley California city council voted to spend $100,000 to prepare and file their Community Choice Implementation Plan with the CA PUC. The plan will propose that Berkeley aggregate their ratepayers and seek to acquire 40 percent of their electricity from renewable resources.

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Hybrid Vehicles and HOV Lanes

We received a question on whether or not hybrid electric/gas vehicles should be allowed to use high occupancy vehicle (HOV) lanes. Dr. Dave responded, calling hybrid cars an essential component of a sustainable transportation strategy but policies to let them use HOV lanes would be unnecessary and counterproductive.

Click Here for the complete Question and Answer from Dr. Dave.

Report: Oregon Looks At Knocking Down Barriers to Expand Distributed Generation

The Oregon Public Utility Commission [OPUC] issued a report, "Distributed Generation in Oregon: Overview, Regulatory Barriers and Recommendations. The report describes how customers and utilities are using DG technologies, their benefits, as well as current and projected costs. This report stands out since very few states have devoted resources to investigate policy options to increase distributed generation.

Currently the DG projects in place around Oregon, primarily at large industrial operations, represent around 500 megawatts (MW) of energy. In addition, several hundred small renewable energy systems serve Oregon homes and businesses.

The report concludes that 384 MW of additional, economical DG systems could be installed by 2025, without incentives or reduction in technology costs. In a scenario with incentives, reduced costs and other favorable conditions, the OPUC estimates 1,831 MW in additional DG systems could be installed in the next 20 years.

The OPUC finds the following regulatory barriers to DG in Oregon:

California Seeks A Million Solar Roofs by 2018

In late February, California Governor Schwarzenegger�s office released the details of the California Million Solar Roofs bills (SB 1 and SB 1017). The two bills together will create a ten-year incentive program to help Californians install one million solar electric rooftops on homes and businesses throughout the state by 2018.

In a previous story in Democratic Energy, we covered the study done for the Vote Solar Initiative that quantified the enormous value of on-peak solar power in California. The study found that solar installations in California have a value ranging from 23.1 to 35.2 cents per kilowatt hour.

The Governor�s Million Solar Roofs Initiative would do the following:

SB 1 - Full Text:
This bill would establish the Million Solar Roofs Initiative, administered by the Energy Commission, with the goals of placing 1,000,000 solar energy systems, as defined, on new and existing residential and commercial customer sites, or its generation capacity equivalent of 3,000 megawatts, and placing solar energy systems on 50 percent of new homes within 13 years. The bill would establish the Million Solar Roofs Initiative Trust Fund and would continuously appropriate moneys deposited into the fund to the Energy Commission for purposes of carrying out the Million Solar Roofs Initiative.

Other provisions:

Community Based Energy Development (C-BED) Legislation Considered in MN

Bills have been introduced in the Minnesota legislature that would act as an alternative to traditional renewable energy production payments and tax incentives as a way to support community based energy development (C-BED). The concept has been pushed by wind energy-developer Dan Juhl (DanMar & Associates) and longtime renewable energy activist George Crocker (North American Water Office).

The key idea is to establish a utility tarriff rate for electricity from community-based wind energy projects that is derived from a baseline net present value of the electricity. Crocker and Juhl estimate that net present value rates for community wind projects in Minnesota should be established giving a minimum of 2.7 cents/kWh (net present value) over 20 years.

House File 1332 would direct the Minnesota Public Utilities Commission (PUC) to establish a tariff designed to facilitate the development of community-based wind projects and optimize the economic development benefits flowing from them at the local, regional and state level. The new tariff would increase the cash flow to the wind project's owner during the initial years in order to accelerate the recovery of capital costs.

House File 1344 is the similar to the previous bill but also contains several transmission-related provisions.

The C-BED tariff's "front-end" arrangement would eliminate the need for Minnesota's 1.5 cent per kilowatt-hour production incentive for community wind energy projects. The current incentive program is oversubscribed and securing additional public money to fund more wind power incentives could be problematic. The C-BED tariff advocates see it as a longer-term and more stable solution for increasing wind energy production in Minnesota.

For example, today a 2 MW wind project in Minnesota would be able to negotiate a 20-year power purchase contract for around 3.3 cents per kWh (and be eligible for a 1.5 cents/kWh production payment for the first 10 years). The net present value of the current tariff structure is about 1.6 cents per kWh.

Under the C-BED proposal, a power purchase contract might provide payments of 4.8 cents per kWh or higher over the first 10 years and 3.3 cents per kWh for the remaining years of the contract.

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Report: DG Interconnections Improve Dramatically in California

California's Public Interest Energy (PIER) Program has received a final report that provides an analysis of the impacts, costs and timelines for distributed generation interconnection in California.

The new report, "Improving Interconnections in California", covers four areas.