Archive for the ‘Energy Policy’ Category

21% of Energy Production, 380,000 Jobs

1.5MW Audi roof   source: Gehrlicher Solar

1.5MW Audi roof source: Gehrlicher Solar

Gem of a video here showing the progress of PV solar energy proliferation in Germany. (runs fast, so freeze frame to digest statistics) Now 21% of the energy mix, renewable energy in Germany has provided 380,000 jobs and a road map for other countries to follow. Over the last 12 years of successful policy implementation, PV solar energy (near 10% of German energy) has eliminated the energy peak in Germany which is reducing costs and environmental degradation considerably while increasing energy security.

Germany is demonstrating that a large number of distributed renewable inputs from solar and wind can be integrated successfully into the grid infrastructure without stability or reliability issues. This is a common misconception about intermittent generation sources that, after 12 years of operation, the German market has proved otherwise.

Germany is also demonstrating that the distributed generation model works and is real threat to established utilities working in the standard centralized model used the world over. While its easy to be in the solar energy and say that we may

have the utilities on the run in the near future as distributed generation makes in roads, that one side “we win” mentality is a no win proposition. It would be prudent for utilities and the renewable industry and government to work together on policy and a road map that takes into account the enormous past and current investment of the utilities in existing infrastructure while following an economic and technological road map that leads to a smooth and profitable transition to a distributed generation model for all stakeholders.

Some interesting snippets from Energy Rebellion, the producer of the video:

. . . . . . . solar gold rush that lead to investments around the globe was mainly driven by demand in Germany up until recently. The first effects of this rush is prices for PV-solar systems have fallen by up to 70% and continue to decline.

PV solar energy

Large solar PV success with only moderate solar resource

. . . . . . . today industry experts claim that photovoltaic & multi-kWh energy storage will become the cheapest source of electricity even in OECD countries within the next 10 years. 
This will lead to a very fast structural change of the entire world economy.

. . . . . . . . large scale market development has just started, but with 24.5 GW of PV-Solar capacity installed on more than 1 million roofs in Germany, the first signs of this new industrial revolution can already be observed.
 For example even during the dark & windy winter month of January, PV-solar produced up to 7 GW or 10% of peak-load demand in Germany.
 When a deadly cold wave brought the fossil & nuclear dominated energy system of France close to collapse, German PV-solar kept many gas & oil fired power plants offline, which significantly lowered the spot-prices at the European Energy Exchange.

 

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A New Year Greeting

solar bankability

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Buy American Act Compliant PV Modules – How to Know?

The US PV industry as a whole is grappling with the solar import tariff petition by Solarworld which presents an interesting set of American made, American protectionist, and

Which Modules are BAA compliant for Government Procurement?

wider global trade issues. A great recap with citations of this complex situation which may result in substantial tariffs on solar PV modules that contain crystalline solar cells made in China can be found here.

Within the US federal agency PV market there is another set of complex American content regulations called the Buy American Act (BAA). (Not to be confused with the now expired and poorly written ARRA Buy American clause which governed rapid release of stimulus funds) The BAA requires that products purchased by the federal government must contain 50% or more US content, with finally assembly done in the US.  It sounds simple, but is highly complex to execute, with numerous contradictory requirements and a number “if this, but not this, then this” situations.

Solar PV modules that are sold to federal agencies fall under the BAA.  Fortunately, when it comes to crystalline PV modules, determining which modules are BAA compliant is slightly less complex.  The following is meant to clarify the basic situation but does not dive down into the many permutations and “what if” scenarios.

Example BAA Compliant Module BOM for Federal Agency Installations

To gauge whether a solar PV module is a fully BAA compliant product, the bill of materials (BOM)   needs to be examined. As the example industry average BOM to the left demonstrates, if the solar cell is not made in the US with final assembly in the US, the module cannot be BAA compliant. This is because the solar cell makes up at least 65+% of the completed module, depending on module design and provider.

While it’s fairly clear from this example which solar PV modules should be BAA compliant, the situation is confused by wording sometimes found in solicitations from US government agencies, such as: “ Products and materials employed to fulfill this project must be Buy American Act compliant but applied in a manner consistent with United States obligations under international trade agreements.” These trade agreements include World Trade Organization Government Procurement Agreement (WTOGPA), General Agreement on Tariffs and Trade (GATT) and other international trade agreements all of whose products are treated equally with American made goods provided certain requirements are met.  A good overview of the laws can found here which includes a list of countries with whom the US has signed agreements. Notably for the PV industry, China is not included.

As there is currently no guidance for which modules comply in which circumstances, it may be helpful to think of the situation in tiers, which prioritize the intent of the BAA act:

Tier 1 BAA Compliant PV Modules: Solar cells are made in the US with US final assembly

Tier 2 Trade Treaty Compliant PV Modules: Solar cells made in treaty country with final assembly in US

Tier 3 Trade Treaty Compliant PV Modules: Solar cells made in treaty country with final assembly in treaty country

This is admittedly a simplified explanation but puts the majority of module companies in easy to understand buckets.

Unfortunately there is no official BAA module list vetted independently under direction from a qualified agency. The US Department of Energy has provided a vetted list of lighting products which meet BAA and performance claims, so that government procurement and industry have a clear guideline on which lighting products are acceptable for a given procurement.  An agency such as DOE or DoD  energy should create a similar vetted list for PV modules, given the expansive planned use of PV in the next 10 years.

This topic is becoming increasingly important as PV systems are deployed in public private partnerships such as PPA, ESPC, UESC and other models where the government buys the energy from the system but not the system itself. This type of procurement puts the onus on the project awardees to self-certify BAA compliant modules with no guidance, oversight or penalties from the procuring agency.

And with many non- trade compliant PV module companies boldly claiming BAA compliance with modules made completely outside the US but with simple junction box installation in the US, now would be the time to put a vetted BAA qualified list in place before the problem escalates both programmatically and publicly.

 

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All the Best in New Year

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Labeled a Liberal Elitist!!

My wife and I have been working on making our daily lives more sustainable every year.  With the world in ecological overshoot and the effects of over-population

The Offending License Plate

and resource depletion showing up day–to-day (climate change-induced weather events, food price spikes, environmental pollution, energy cost hikes, etc.), we have been instituting lifestyle changes some of which include:

  • buying carbon offsets when traveling;
  • supporting companies that have true sustainability practices;
  • buying local food from sustainable agriculture;
  • increasing our home’s energy efficiency – new windows, insulation, lighting motion detectors, low flow shower heads, CFL light bulbs, a new high efficiency gas burner, cellulose attic insulation, purchasing a clean energy blend that is mostly wind from our local utility and many other efficiency upgrades (our home is in the woods otherwise we would have a PV system also);
  • and driving a hybrid.

The car is a 2006 Ford Escape Hybrid with a license plate that reads “CO2LESS” (we buy carbon offsets for the gas engine use).  Anyone that knows me knows that having vanity plates is not something I would normally do, but I feel strongly about the immediacy of sustainability issues we are facing as a global society, especially C02 emissions-induced climate change.

Imagine my dismay as I was approached recently in a Washington D.C. parking lot by a man who pointed at my license plate proclaiming, ‘You liberal elites are killing our country. There is no such thing as climate change and this is a strategy you people are using to corner wealth from the American taxpayer! “

I was too stunned to reply, and he wasn’t the least bit interested in a rebuttal.

According to Wikipedia the term Liberal Elite is a “political phrase to describe affluent, politically liberal-leaning people. It is commonly used with the pejorative implication that the people who claim to support the rights of the working class are themselves members of the upper class, or upper middle class, and are therefore out of touch with the real needs of the people they claim to support and protect . . . .  As a polemical term it has been used to refer to political positions as diverse as secularism, environmentalism, feminism, and other positions associated with the left.”

This definition is not at all a fit with my history in any sense.

Labels and discord like this do nothing to solve the very real climate change problem, which is a result of burning fossil fuel and making bad land use decisions (deforestation, biological decomposition, and over-farming) worldwide. The myriad effects of climate change on populations have no class distinctions. The resulting disruptions to farming, depletion of water resources, and reduction of quality of life is already exceeding expectations in many developing nations where poverty is the norm and coping with rapidly changing climate patterns is exacerbating survival living.  With the U.S. accounting for a large portion of cumulative atmospheric C02 over the last 100 years, we are clearly all “elites” in the minds of people in emerging nations as they struggle for basic survival in this new ecological overshoot era.

The Relationships of Fossil Fuel and Land Use and C02 Accumulation Source: Arctic Climate Impact Assessment

My work in the solar energy industry overlaps regularly with sustainability and climate change thought leaders, and as a result, I have a good understanding of the complex and often conflicting facts. These facts are often brushed aside and obfuscated with generalities by the minority of climate change and environmental deniers. Beyond the detailed knowledge I have attained over the last 15 years, I rely on a few simple premises:

  1. We use science every day to support our shared and safe human existence.
  2. For every action there is a reaction (equal and opposite).
  3. The C02 accumulation graph at left (click to enlarge) coincides with the discovery and burning of fossil fuels.
  4. Detailed science and research shows no prior warming in such a condensed period.

Climate change is happening right now. It can be viewed with fear and paralysis, or it can viewed as a great economic opportunity for all. We have the technologies, science and knowledge (if not the political and economic will power at the moment) to create sustainability solutions, and entirely new industries, as the global population continues to increase.

As many scientists around the globe have said, to do nothing is unacceptable, as the risk of being wrong is too great. If supporting the science and industry that can slow down and eventually reverse man made climate change makes me a Liberal Elitist in the minds of others then so be it!

Climate change resources:

The U.S. EPA Climate Change site presents an easily grasped, balanced presentation of the issue.

Information Visualization has a great “for and against” visualization of the climate change camps.

Carbon War Room is working on solving the problem industry by industry, by seizing on the economic opportunity: “Over 50% of the climate change challenge can be addressed today – and profitably – by existing technologies, under existing policy.”

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U.S. Solar – Growth with Declining State RPS Programs?

Numerous solar industry analyst forecasts and media articles herald the U.S. as the next big market opportunity for global PV solar energy suppliers. Many offshore PV industry

State RPS Program Driven or ITC Driven?

companies have been setting up distribution and facilities across the country to position themselves for this growth opportunity.

At a recent Wall Street alternative energy conference, progressive utility CEO David Crane , a strong solar energy supporter, gave his view about government support for renewable energy. The federal government is too paralyzed to produce any meaningful support policy via either climate change or energy legislation, says Crane, but the renewables business will move forward strongly on the strength of state level legislation.

While the state-by-state paradigm has been credited with slow but steady solar energy growth in the U.S., the mid-term elections of 2010 resulted in new legislators in various states who have been reversing support mechanisms for clean energy and climate change mitigation.

The most recent example is New Jersey Governor Christie’s recent reduction in the state renewable portfolio standard (RPS) target (30% by 2021 now 22.5%) and language that may remove enforcement teeth for meeting the threshold by making it voluntary for utilities.  (An RPS is a requirement for utilities to produce or buy and sell a certain percentage of renewable energy to their customers.) He also withdrew New Jersey from the highly successful Regional Greenhouse Gas Initiative, an alliance of nine North East and mid-Atlantic states.

Seven other states have quietly reduced their RPS mandate and diminished or eliminated penalties for non-compliance by the utilities in the last few months.

Governor Christie and other detractors of RPS mandates routinely cite escalating costs to ratepayers (utility customers) for their lack of support. Christie believes the RPS is an “unreasonable transference of wealth from ratepayers at large to solar developers.” But an extensive Lawrence Berkeley National Laboratory RPS report in 2010 and more recent studies show that the “cost is a fraction of a percent.” Tiny by anyone’s standard.

The trade off, producing more clean energy which reduces health care costs and environmental damage costs (compared to burning fossil fuel) while creating a high number of quality jobs (17 jobs per $1M spent vs. 5 jobs per $1M spent in oil & gas sector)  in a new economic ecosystem, for that small cost, would seem like excellent bang for the dollar spent. Am I missing something here?

Solar energy in 2035 by State RPS

Source: Lawrence Berkeley National Laboratory

The chart above shows the projected amount of installed capacity (in yellow at top) if current RPS programs are kept in place. Approximately 6 million tons of C02 would be displaced annually if achieved, along with elimination of large amounts of ground level particulate pollution.

With the rapid reduction in the installed cost of PV systems, declining RPS programs may become less important in regions where high utility cost and other factors line up to make winning project proposals that are close to retail cost grid parity (including only the federal ITC incentive) in the very near future.

Recent, high frequency, global extreme weather events are affecting crop yields and increasing negative feedback loops, not to mention causing significant loss of human life. I am deeply concerned about the near term, current generation effects of climate change. With C02 levels now approaching 400 parts per million (350 ppm is the generally agreed tipping point) these decisions and others like it are reckless and irresponsible in my opinion.

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Stalking Solar Retail Grid Parity: the PV Cost Calculator

Courtesy of the U.S. Department of Energy’s Solar America Cities program, the PV Cost Calculator is a system modeling tool, which computes and then provides various visualizations of solar PV’s trend toward retail grid parity in the next few years. The calculator is designed for residential (4kW size) and small commercial (20kW) installations. Retail grid parity is when the levelized cost of energy is same as retail priced energy from the utilities in a given region.

Modeling grid parity, whether in front of (retail) or behind (wholesale) the utility meter, is a notoriously difficult endeavor due to the large number of variables. The PV Cost Convergence Calculator models a complex set of variables that are highly dependent on local issues.  It takes into account long term federal and state incentives and provides a 20 year analysis period.

The screen shot below is for a 20kW commercial system using a moderate scenario – 4% increase in conventional utility energy cost and moderate decrease of the PV system price. With this scenario, the majority of Solar America Cities are at or below retail grid parity in 2012.

Solar Grid Parity

Dotted line - utility cost with 4% annual inflation

 

The PV Cost Calculator makes a number of assumptions to simplify the calculation set and is meant as an illustration for Solar America program cities.  Another DOE agency, The National Renewable Energy Laboratory provides a sophisticated, detailed PV system modeling tool called the Solar Advisor Model (SAM). SAM makes performance predictions and economic estimates for grid-connected solar systems. The SAM model calculates the cost of generating electricity based on information you provide about a project’s location, installation and operating costs, type of financing, applicable tax credits and incentives, and system specifications. The SAM model is an invaluable tool for feasibility modeling of a proposed project and for working with project financing entities. Its also an interesting tool which we use for targeting the sales process of PV system components.

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A Graphic Illustration for Why the United States Needs a Long Term Energy Plan

U.S. Energy Consumption and Waste

Click on graphic to enlarge or - - - Source:https://flowcharts.llnl.gov/energy.html

This is a fairly sobering graphic on our national energy situation. Of particular note:

1)   Rejected energy (thermal loss, energy inefficiencies, vehicles, spinning back up electric plants etc.) is more than ½ the total energy produced – 58%. Hard to fathom how we have come to this amount of energy waste.

2)   Transportation is the by far the largest problem – centered on our old friend oil – with over 40% of all energy on the chart consumed by moving big hulks of steel around on roads. Talk about inefficient, diving down into the detail reveals that transportation wastes 75% of the energy used – the highest of any sector on the chart.

3)   On a positive note, while renewable energy generation is tiny fraction of the electricity generation, the share of solar and wind is up from 0.09 to 0.11 quads and 0.51 to 0.70 quads, respectively and geothermal increased from 0.35 to 0.37 quads. (one quad = 36 million tonnes of coal generation.)

4)   Solar energy, wind, hydro and geothermal generation is about 60% of the total amount of nuclear generation.

5)   Energy use from 2008 – 2009 actually decreased a little over 1% due to the recession.

While the increase in renewable energy generation is a welcome development, this chart demonstrates that the enormous effort to displace oil and coal will require massive investment and brave leadership on Capitol Hill.

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DOE’s Solar Energy Sunshot Program – Right Focus?

DOE Solar Energy Program SunshotOn February 4th, U.S. Department of Energy’s (DOE) Dr. Steven Chu announced the Sunshot Program funding which has the goal of reaching $1/W installed cost for PV systems before 2020. The program goal is to reduce PV system installed costs by up to 75%. $1/W is a benchmark for some industry participants where utility scale systems compete with wholesale cost energy and loosely equates to $0.5kWh system output cost. Nine technology development companies received a portion of $27M Sunshot funding.

While any government funding support is good for the PV industry, $27M (part of a total solar program fund of $200M which supports President Obama’s broader “investment for the future” strategy) is a miniscule amount (compared to the billions in government support for renewable energy in China) and begs a number of questions.

First, why spend a relatively small amount, publicizing it widely, when the PV industry has made enormous progress in reducing installed system costs on our own over the last 5 years? The announcement does nothing but reinforce the erroneous mindset on Capitol Hill and elsewhere that solar is 10X more expensive than brown fuel energy and is a far cry from being competitive. It directly contradicts the impressive progress and the fact that solar energy is at retail grid parity in many markets, as the cost of fossil fuel generated energy is going ever higher.

Second, the nine Sunshot recipient companies are all technology developers. At some point, we need to recognize that solar energy technology is working now, and is improving every year, so it might be better to focus future funding on solving the real cost issues of streamlining permitting and interconnection in the project development cycle (among other downstream issues). These costs are as much as 25% of the total PV project development cost for small and large projects alike.

Third, DOE’s leadership must begin to see the big picture and the need for pushing a long-term energy policy that includes phasing out the enormous subsidies for fossil fuel.  It continues to frustrate me that the PV industry, with small and inconsistent government support, is continually asked to compete with embedded, highly subsidized fossil fuel generation which receives 12X more government support than renewables.

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California’s RAM – Better than a Fixed Price FIT for Solar?

Which Scheme Will Build These Faster?

California has been the largest PV market in the U.S., and the 4th largest in the world, until recently.  But as the state’s solar energy incentive programs have been following a planned reduction schedule, and large centralized systems to meet the state’s Renewable Portfolio Standard (33% by 2020) are not being built (due to transmission access, permitting challenges, etc.), growth in 2009 was less than 10%.  For 2010, growth will likely come in at 11%.  This is in a solar energy market that has been growing at a rate of over 20% for many years.

The new Renewable Auction Mechanism (RAM), which has been in development by the California Public Utilities Corporation for the past 2 years, focuses on the ever-popular idea of projects in the 5MW to 20MW size to stimulate activity and increase growth. Commonly referred to as distributed generation (DG), PV solar energy projects of this size are located closer to distribution lines, have fewer permitting challenges, and find financing to be less daunting.

RAM is a 2 year program that has a 1GW cap which is designed to speed up putting DG projects into operation while reduce costs on the front end process. The program functions like an auction where California’s 3 large investor-owned utilities (SCE, PG&E, SDG&E) are directed to put out request for proposals twice a year.

Differing from a fixed price feed in tarrif (FIT) where the price is set, the RAM is market-driven based on lowest

RAM - Putting People to Work

price.  RAM is well designed to avoid many of the problems of a lowest price auction as bid responders are required put a non-refundable $60/kW application fee, show that they have real estate site control, and indicate that a grid interconnection application has been entered with the utility. Key to solving a major problem in the past, RAM stipulates a standard contract format for utilities and developers, which will go a long way to reducing transaction costs and process complexity. A project developer submitting a bid must also show prior expertise with solar projects, and the awarded project must be in operation within 18 months of the award.

RAM is designed to reduce the problem of many solar energy projects being announced, but few actually being built. Not surprisingly, the large solar Independent Power Producers are cheering this program as it sets the qualification bar high and reduces competition.  Proponents of a pure FIT scheme believe it will not result in a rapid adoption of PV and see competitive issues as well. Given the size, many observers in the state don’t see this program contributing significantly to meet the RPS goals in 2020.

Designing renewable energy subsidy programs is still a relatively new art and the regulatory, economic and technological complexity is challenging.  Setting a lowest cost bid program without controls is fraught with potential problems. These include receiving bids so low that the system will never be built and the quality of an operational system is so poor that value is never delivered. A recent example is India’s Nehru Solar Mission program with a lowest price mechanism which accepts bids from any and all responders. This has lead to irrationally low bids from cobbled together groups with little or no experience in solar projects. It also led to experienced developers not submitting on the program as the accepted bids are below acceptable profit margin thresholds. The RAM seems to strike a balance on this issue but at the cost of competition. Hopefully this aspect can be addressed in further iterations of what is otherwise a strong new program.

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The “Clean Energy Standard” – Whatever it Takes

"Clean Coal" Included in a CES?

In his recent State of the Union address, President Obama outlined an energy plan that included a clean energy standard (CES).  His target – 80% of the nation’s electricity coming from clean energy sources by 2035.

The CES he envisioned includes the renewable generation types you would expect including solar, wind, hydro, geothermal, biomass and marine generation. But the CES also includes “clean coal” and nuclear.  This odd mixture of generation type under the banner of clean energy was developed and promoted by Sen. Lindsey Graham (R-S.C.) in 2010, after it became clear that a highly partisan congress was not going pass climate change legislation with a CO2 cap and clean energy support.

The new CES includes coal and nuclear so that the states that have coal (16) and nuclear interests will vote for new legislation that includes actual clean energy like solar and wind.  Compromise is how it gets done on

Capitol Compromise

Capitol Hill and this type of CES is truly legislative sausage making.

Transitioning to generation types of any flavor in this CES will initially result in temporary rate increases from the electric utilities to their customers.  Based on the cost numbers presented by the coal industry, rate increases from “clean coal” will be exorbitant if that technology ever achieves reality. And coal generation needs ongoing fuel extraction meaning more mountain top removal, supply chain pollution and other environmental and health externalities.

Pouring money into “clean coal” would seem dubious as a long-term strategy compared to mature solar energy which has no ongoing fuel costs, rapid energy return on energy investment metrics, rapidly declining kWh cost and minuscule supply chain pollution. Nuclear energy’s exceptionally high kWh costs (even with exorbitant government subsidies), waste disposal and decommissioning costs as well as catastrophic risk potential is also difficult to view as a step in the right direction.

But energy demand is forecast to grow at 2% – 6% annually for the next 20 years and the cost of traditional

Will the U.S. Plan for this Demand Trend?

fossil fuel generation is escalating at well over 4% per year in various regions as the global economy recovers. The U.S. needs a long term, well thought out clean energy transition plan that addresses current demand with existing brown fuel generation while preparing for future growth and cost escalation.  A legislation that utilizes coal, nuclear and natural gas as a near term bridge while we transition to a true, low cost clean energy economy would be one way to achieve this goal.

A great piece yesterday by chairman of the Senate Energy and Natural Resources Committee, Senator Bingaman (D-NM), offers hope that Capitol Hill finally understands the need for comprehensive, long-term clean energy legislation.  Driven by two of my favorite subjects, economic competition and energy security, the senator’s plan is a step in the right direction.

In the end, this type of CES legislation that includes a “clean coal” bridge may be what it takes to start a rapid transition to renewable energy.

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Planning for Large Solar Energy Inputs to the Utility Grid

Renewable energy can be added to the grid without negative effects on grid reliability. A long debated issue within the utility industry, a recent government study has provided clarity and answers.

Solar energy, transmission

RE Safely and Reliably on Utility Grids

Based on a 6 months study by the Federal Energy Regulatory Commission (FERC), the results show that the ability of the grid to respond to changes in system frequency is not affected by intermittent power source inputs. This includes not only renewable sources but also traditional fossil fuel sources, which are also intermittent base load generation.

From the report, “The purpose of the study is not to determine how much of any particular resource can be reliably integrated into an interconnection, but to develop an objective methodology to evaluate the reliability impacts of varying resource mixes including increased amounts of renewable resources. The study accomplishes this objective by developing and testing tools that can be used to assess and plan for the operational requirements of the grid.

The tools also can be used in operating and planning the transmission system and designing markets to fully integrate and reliably operate the mix of generation and transmission resources deployed in the future. Finally, the tools can be used to identify and deploy the appropriate use of new technologies, such as demand response and energy storage devices in concert with renewable generation resources, in achieving reliable operation of the bulk power system. “

The report provides the myriad of developing smart grid technology companies and the solar industry a more accurate blueprint for a higher functioning grid that can eventually receive large amounts of renewable energy in a safe and reliable manner.

FERC worked with the Department of Energy’s Lawrence Berkeley National Laboratory on the six-month study, which is available here.

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