A serialized version of our new report, Democratizing the Electricity System, Part 1 of 5 The 20th century of electricity generation was characterized by ever larger and more distant central power plants. But a 21st century technological dynamic offers the possibility of a dramatically different electricity future: millions of widely dispersed renewable energy plants and… Continue reading
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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]
A bill in Minnesota’s state legislature would require utilities to offer a green pricing program for local, distributed wind power. The largest investor-owned utility in the state already offers Windsource, a program to buy blocks of wind power at a premium price. The law would essentially require Xcel to offer a “Local Windsource” option for ratepayers.
Under the proposed law, projects supported by “Local Windsource” would have to be 25 megawatts or smaller, located in Minnesota, and owned by Minnesota residents. Only ratepayers that opt in would financially support the program:
2.7 Subd. 2a. Local wind energy rate option. (a) Each utility shall offer its customers
2.8 one or more options allowing a customer to determine that a certain amount of electricity
2.9 generated or purchased on the customer’s behalf is from wind energy conversion systems
2.10 that meet the following criteria:
2.11 (1) have a nameplate capacity of 25 megawatts or less, as determined by the
2.12 commissioner of commerce;
2.13 (2) are owned by Minnesota residents individually or as members of a Minnesota
2.14 limited liability company organized under chapter 322B and formed for the purpose of
2.15 developing the wind energy conversion system project;
2.16 (3) the term of a power purchase agreement extends at least 20 years; and
2.17 (4) the wind energy conversion system is located entirely within Minnesota.
2.18 (b) Each utility shall file a plan with the commission by October 1, 2011, to
2.19 implement paragraph (a).
2.20 (c) Each utility offering a rate under this subdivision shall advertise the offer with
2.21 each billing to customers.
2.22 (d) Rates charged to customers for energy acquired under this subdivision must be
2.23 calculated using the utility’s cost of acquiring the energy for the customer and must be
2.24 distributed on a per-kilowatt hour basis among all customers who choose to participate
2.25 in the program.
The bill hasn’t even had a hearing, but it’s an interesting proposal for increasing the generation of local, distributed wind and its attendant economic benefits.
Photo credit: Flickr user scelis
The following map was the headline graphic to our 2009 report, Energy Self-Reliant States, the report that inspired this blog. I re-created the map for web viewing, so it’s now even easier to share how each state can meet its electricity consumption with in-state renewable energy resources.
The renewable resources considered include on- and off-shore wind, rooftop solar PV, hydro, combined heat and power, and high-temperature geothermal. Read the Energy Self-Reliant States report for more details.
When is it time to break up with your utility? Perhaps it’s when they come to ratepayers for $30 million in cost overruns on a “free” smart grid project. Or when they fail to meet deadlines to propose a new franchise agreement. Or when they cite national security in an effort to avoid sharing load information. Or when they crash your office with 9 employees to present their delayed franchise plan. Or perhaps when the propose raising rates again to keep up with rising fossil fuel prices.
The citizens of Boulder, CO, have put up with a lot from Xcel Energy, the investor-owned utility that spans several states and currently provides the city’s mostly-coal-powered electricity. So it was energizing to be invited to Boulder by Clean Energy Action last week to share how the city could move forward. (my presentation below)
The city’s saga began in 2003, when it first began studying the option of municipalizing their electricity system, to have more control over the grid and increase clean energy production. The city dropped the plan in 2007 when Xcel offered to build a free smart grid network, called SmartGridCity, a program that deployed advanced meters and fiber optic cables to improve information flow on the local electricity grid. However, with a dubious cost-benefit ratio from the Xcel program and a desire for more clean energy, the city leaders are once again considering their options.
In 2010, the city of Boulder chose not to renew its franchise agreement with Xcel, essentially a monopoly charter that gives Xcel the exclusive right to serve Boulder’s customers for an annual fee. The citizens of Boulder voted to tax themselves to replace those funds for five years, giving the city time to evaluate alternatives. They’re taking it seriously.
For one, their current electricity costs keep going up, according to Anne Butterfield of the Boulder Daily Camera:
In Colorado, plunging costs for renewables are furled against the steady upward march of fossil fuels. In March, Xcel filed for an 18 percent increase in the “electric commodity adjustment” (the ECA on your bill) which allows fuel costs to get passed through to customers. This hike would increase a typical monthly bill by about $3 — with a resultant boost to the RESA of only six pennies. Every buck paid to fossils on Xcel’s system leads to two pennies sent to cost-saving renewables.
For another, they’ve already learned about options to dramatically increase the portion of electricity from renewables. At a Clean Energy Slam, one company proposed providing 50% of Boulder’s energy from renewables by 2014, up to 80% by 2025. Their planning process has also revealed new ways of thinking about the grid. Freed from the paradigm of big, centralized baseload coal power plants, they’re looking at electricity from the “top down.” They start with a load curve, throw in renewables and storage, and then see what gaps need filling, a process that prioritizes renewable energy instead of trying to shoehorn wind and solar into the gaps where fossil fuels fall short.
City officials aren’t just interested in clean, reliable electricity. They also want to learn more about the potential for generating electricity locally. While any new energy generator can add jobs and grow the economy, locally owned renewable energy creates job and economic multipliers.
Local activists are also strongly committed to changing the status quo. They’re not only looking for ways to green the local electric grid, but for ways for citizens and businesses to finance significant energy efficiency improvements as well as distributed renewable energy generation.
Boulder may end up joining the 2,000 existing municipal utilities in the United States and chart their own energy future or perhaps Xcel will finally bring them an attractive offer. But by taking the issue into their own hands, Boulder will definitely do better than before.
Even as distributed generation shows economical and political advantages over centralized renewable energy, the Federal Energy Regulatory Commission (FERC) is running a high voltage gravy train in support of expanded transmission. FERC’s lavish program is expanding large transmission infrastructure at the expense of ratepayers and more economical alternatives. Since 2007, FERC has had 45 requests… Continue reading
A great story of a city looking to – literally – take ownership of its energy future:
The Colorado Renewable Energy Standard, as amended last year by the state Legislature, requires Xcel Energy to get 30 percent of its electricity from renewable sources by 2020.
…Boulder leaders — who let the city’s 20-year franchise agreement with Xcel Energy lapse at the end of 2010 — are now considering whether they can get an energy mix for their residents with a larger percentage of renewable energy than what Xcel is offering.
…At the “Clean Energy Slam” event in February, which gave participants two minutes to pitch a vision for Boulder’s energy future, a representative of Southwest Generation told the crowd that he believed his company could provide Boulder with an energy mix of 50 percent renewables and 50 percent natural gas by 2014. And by 2025, the company could provide up to 80 percent renewable energy to the city, the representative, David Rhodes, said.
…Jonathan Koehn, the city’s regional sustainability coordinator, said adding more renewables is only part of the equation.
“We’ve heard a lot of concern that, perhaps, more clean energy is driving this analysis,” he said. “But this is about long-term economic stability. When we talk about what our portfolio might look like in the future, we don’t have a predetermined notion of a certain percentage of renewables. What we want is to be able to analyze how we can have long-term stable rates.”
It’s not just about clean energy and stable rates, however. The decision to eschew a utility franchise was also about localization, described on a city website as “taking more control in determining:
- Where the energy supply comes from – Locally produced
- What types of energy are provided – Renewables over fossil fuels
- How much we pay for it – Rate control
Local generation of renewable energy will add more to Boulder’s economy than importing clean electrons, and if those projects can also be locally owned (perhaps via a community solar project like the Clean Energy Collective is doing in Carbondale, CO) then the economic benefits multiply significantly.
Photo credit: Flickr user respres (photo is of Denver, not Boulder, but I wanted a sunrise…)
From the ability to reduce peak demand on the transmission and distribution system, hedge against fuel price increases, or enhance grid and environmental security, solar power has a monetary value as much as ten times higher than its energy value. The cost of residential-scale distributed solar PV is around 23 cents per kilowatt-hour (kWh) in… Continue reading
A new study released in February adds evidence that utility grids can handle high levels of renewable energy penetration. The latest study examined adding 500 MW of wind to the electric grid on the Hawaiian island of Oahu (home to Honolulu). The result would be a grid with 25% of the energy coming from wind and solar power.
Results of this study suggest that 400 MW of off-island wind energy and 100 MW of on-island wind energy can be integrated into the Oahu electrical system while maintaining system reliability. Integrating this wind energy, along with 100 MW of solar PV, will eliminate the need to burn approximately 2.8 million barrels of low sulfur fuel oil and 132,000 tons of coal each year. The combined supply from the wind and solar PV plants will comprise just over 25% of Oahu’s projected electricity demand. [emphasis added]
By its nature, the wind and solar power will be largely distributed generation, although much of the wind power reaching Oahu would arrive via undersea transmission. Regardless, it’s a promising opportunity for Hawaiian energy self-reliance.
A proposed revision to the United Kingdom’s feed-in tariff program may have created an uproar, but it may also help spread the economic benefits of solar more widely.
The proposed changes, announced last week, would reduce solar payments for large solar projects (50 kilowatts and larger) by 50 percent or more, but leave payments for smaller projects largely intact. The following tables illustrate:
The new tariffs will help redistribute more of the feed-in tariff (FIT) program revenue to smaller projects. The most likely manner is simply by giving less money per kilowatt-hour (kWh) to the large projects, leaving more for the small projects. The following charts will illustrate.
Let’s assume that under the old FIT scheme, each project size tranche provided 25% of the solar PV projects under the program (see pie chart).
However, since a 2 MW project produces many more kWh than a 3 kW project, the revenues will skew heavily toward the larger projects. For the sake of simplicity, I assumed that the midpoint of each size tranche was a representative project and that they all produced the same kWh per kilowatt of capacity.
The revenue distribution can be seen in the second pie chart:
Essentially, all the FIT Program revenue was going to the largest projects. Even if three-quarters of projects were under 4 kW, they would still only represent 3 percent of program revenue, with 93 percent accruing to the projects over 100 kW.
Under the new FIT scheme, the prices paid to larger solar PV projects are sharply reduced. With projects evenly distributed between the now six size tranches, much less of the program revenue goes to large projects.
The projects under 100 kW have roughly tripled their share, from 3 percent to 10 percent of revenues.
Of course, the lower prices for large solar projects could have another impact: killing large solar projects completely. Let’s assume that the new prices for projects over 50 kW (that experienced the steepest revenue decline) are simply too low and that all development ceases.
The first pie chart shows the project allocation in the FIT program without any projects over 50 kW. As described, we have an even distribution (# of projects) between the smallest three size categories, and no projects 50 kW or above.
The next chart shows the revenue allocation of the FIT program under this assumption. Now, nearly 30 percent of program revenue accrues to projects 10 kW and smaller.
If we assume that instead of an even allocation of projects, we have an even allocation of capacity between the size tranches (e.g. 30 MW, 30 MW, 30 MW), then the revenues would be split evenly between the remaining size categories and two-thirds of the solar FIT program would be flowing to solar projects 10 kW and smaller.
While it’s unlikely that the government plans to eliminate the large solar PV market with its price revisions, the overall effect is likely to be a transfer of program revenues to smaller projects. The advantage in this strategy is that these revenues will be spread over a much larger number of projects and project owners, creating a larger constituency for supporting solar power and solar power policies.