The difference between clean energy policies with a democratizing influence and the bewildering U.S. system can be illustrated with a close look at the federal investment tax credit for solar power. The investment tax credit returns up to 30% of a solar PV system value to the developer, and the credit can be carried over… Continue reading
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Term for Energy
The title of the link won’t give it away, but I was interviewed on Stephen Lacey’s most recent REW podcast on superconducting technology for transmission. He generously provided me some time to contrast the lead topic (centralized renewable energy reliant on transmission) with the economics of distributed renewable energy sources. Continue reading
The California Public Utility Commission officially launched its Renewable Auction Mechanism (RAM)* last week, to spur more development in renewable energy projects smaller than 20 megawatts.
The good and bad news is summarized quite well by the FIT Coalition, with the good news being:
- A strong focus on the < 20 MW market segment, also known as Wholesale Distributed Generation if the project connects to the distribution grid.
- Recognizes value of “locational benefits,” rewarding projects that site close to load to avoid unnecessary transmission expenditures – “(massive capital expenditures, decade-long build-outs, and significant line and congestion loses)”
- Requires utilities to provide specific grid details to help developers select project sites before they commit.
Points 1 and 2 highlight an increasingly recognized issue: meeting the near-term benchmarks in state renewable energy standards may be impossible if states rely on centralized, transmission-dependent projects. Sub-20-megawatt projects can quickly sum to large quantities of renewable energy, capture most economies of scale, and come online much faster that large, centralized projects.
Point 3 is huge, as well, because it finally addresses a market failure where distributed energy project developers could not get information about grid “sweet spots” for plugging in smaller scale renewable energy without significant infrastructure upgrades. It’s an issue too rarely discussed, with a rare exception being our 2008 report on Minnesota’s potential to meet its state RPS without significant new high-voltage transmission lines (backed by two state-sponsored studies).
The bad news is that the CPUC missed several opportunities to maximize the potential for distributed generation:
- It allows participation by transmission-connected projects, which will not carry the same advantages as distribution-connected projects – “producing energy close to load and avoiding the significant costs, timeframes, and environmental issues associated with transmission.”
- It institutes a lop-sided playing field that will favor well-established companies and larger projects.
- It perpetuates the high failure rate of solicitation programs: “In general, California’s solicitation-based RPS programs result in more than 95% of the bid capacity to be rejected by the utilities or to be abandoned by developers in the end due to underbidding.” These rejections lead to enormous stranded development costs, as much as $100 million in one solicitation.
Despite the bad news, it’s a promising “pilot” program that will support 1 gigawatt of distributed renewable energy. Let’s hope it improves with time.
*And folks suggest feed-in tariff is a lousy policy name…Speaking of which, a number of media stories indicate that this is California’s take on a “feed-in tariff.” That’s like saying like soccer is Europe’s take on American football. One is an auction, the other is a standard contract with prices based on the cost of generation.
Photo credit: alforque on Flickr
There’s no better illustration of the value of distributed renewable energy than the U.S. military. In Iraq, the 50,000 U.S. troops (as of August 2010) use 600 million gallons of fuel per year at a cost of dozens of lives of U.S. soldiers who die protecting fuel convoys and financial cost of nearly $27 billion for fuel and security ($45 per gallon!). New distributed renewable energy systems can help combat brigades reduce fuel consumption, saving lives and money.
One Marine company – Company I, Third Battalion, Fifth Marines – field-tested the Ground Renewable Expeditionary ENergy System (GREENS) system in August 2010 and found that it saved 8 gallons of fuel per day for each of the company’s 150 men. Complemented with other renewable energy systems, the Marines powered their combat operations center without using the diesel generator for eight days.
The renewable technology that will power Company I costs about $50,000 to $70,000; a single diesel generator costs several thousand dollars. But when it costs hundreds of dollars to get each gallon of traditional fuel to base camps in Afghanistan, the investment is quickly defrayed.”
It takes approximately 200 GREENS (1,600 kilowatts of solar modules with battery storage for 300 Watts of continuous power) to replace a single 60 kilowatt diesel generator, but it saved the Marine company 1,200 gallons of fuel per day. In Iraq, that fuel would have cost $45 per gallon, including transportation and security costs. That’s a savings of $54,000 in a single day. If priced at $70,000 each, the 200 GREENS will pay back in 260 days, less than 9 months.
If every U.S. company serving in Iraq made use of GREENS, it would reduce fuel consumption by U.S. troops by 25%, saving 146 million gallons of fuel and $6.5 billion per year.
There are benefits besides saved fuel and money. Marines appreciated that the solar-powered base systems are quiet, and also don’t require constant refueling. The no-fuel requirement also benefits security, as 72 U.S. soldiers died protecting convoys in Iraq in 2009.
The military provides a great illustration of the utility and cost-effectiveness of distributed generation, and one that should inform state-side strategies for energy deployment.
Last week was a tough one for distributed solar markets in several states, as a remarkable number of renewable energy incentive programs hit their budget or capacity caps, or are shrinking in scope: San Diego Gas & Electric’s allocation of non-residential solar incentives under the California Solar Initiative ran out. The Los Angeles municipal utility… Continue reading
Update: It’s important to note that this refers to the net installed cost. In other words, the installed cost dropped because residential solar customers were now getting an uncapped federal tax credit. We wrote in this 2009 report about the perverse problems created by the $2,000 cap on the federal residential solar tax credit. The… Continue reading
Yesterday Michigan governor Jennifer Granholm signed the state’s Property Assessed Clean Energy (PACE) law, making Michigan the 24th state to enable cities and counties to provide financing for on-site renewable energy and energy efficiency improvements via the property tax system. But it’s unclear how many municipalities will move ahead given the roadblocks facing residential PACE… Continue reading
Yesterday we discussed the spread of solar carports in California, highlighting the Milpitas School District’s 14 distributed solar PV arrays. According to a news story, the district anticipates savings of $12 million over 25 years from the projects, which were financed by a power purchase agreement with Chevron Energy Solutions. But would the district have… Continue reading
With environmental (e.g. desert tortoise) and political (NIMBY) questions raised about centralized renewable energy generation, it’s worth noting that we can generate a lot of power by covering already developed spaces. See California, where solar PV arrays cover parking lots, providing peak power and soothing shade for the shielded vehicles underneath. Not only are these… Continue reading
We’ve talked previously about the perversity of using tax credits to incentivize renewable energy production, increasing transaction costs and reducing participation in renewable energy development. But there are other perversities in U.S. state and utility renewable energy policies, especially with upfront rebates and net metering. Let’s start with rebates. Many states and utilities offer upfront… Continue reading