Archive for the ‘Energy Policy’ Category

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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Five-Year Average Global Temperature Anomalies from 1881 to 2009

Impressive visualization from NASA which demonstrates Earth the warming trends. Each year, scientists at NASA Goddard Institute for Space Studies analyze global temperature data. The past year, 2009, tied as the second warmest year in the 130 years of global instrumental temperature records, in the surface temperature analysis of the NASA Goddard Institute for Space Studies (GISS).

The visualization below seems to line up with the discovery and burning of fossil fuels as described in the Last Hours of Ancient Sunlight. Also seems to show acceleration of feedback loops in the Arctic due to lower albedo in the last 10 years.

Original NASA file and archives can be found here.


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Green vs. Green – Can’t We All Get Along?

How Could This Be Objectionable?

On the heels of recent large solar project development approvals on Bureau of Land Management (BLM) land and other large land tracts, strong opposition has sprung up from local communities based on environmental concerns.  The renewable energy industry has experienced this green vs. green before—remember the high profile example of opposition to the offshore Cape Wind project by the otherwise pro-environment Kennedy clan on Cape Cod?  It seems that the scale of opposition to solar energy projects on these seemingly benign desert lands has been surprising to the solar industry.

An excellent piece distributed by Reuters gives the reader a good overview of the forces that opposing each other that should otherwise be on the same side of the table.  Local communities are concerned that desert vegetation and small animals will be disturbed, among other concerns. CSP and other solar thermal technologies create water use issues. Other issues include the distortion of the “viewshed” – large transmission towers blocking views and disrupting the natural landscape. Most solar project developers went in with good environmental intentions built into their project plans, including large property set-asides for nature preserves, land access for grazing right under the arrays, and other nods to minimal impact.

Sometimes the opposition has a strong case for protecting endangered species and vegetation but many times they are simply playing up fears.  A recent op-ed piece in San Diego makes the statement that when the desert floor is disturbed it releases more C02 than the solar array can ever save. A quick bit of research shows the audacity and absurdity of that argument.

solar energy, solar panels, photovoltaics

This Type of Energy Generation Land Use?

Unfortunately, these objections increase costs to solar project developers due to legal fees, time delays, and additional impact studies to name a few. At some point the project becomes uneconomical and the solar project development team either folds, or sells it to another developer.  This is the outcome the environmental opposition is looking to achieve.  At the end of the day, our society is going to have to learn to balance the consequences of different types of energy production.  I would make the argument that solar on desert lands, if done properly,

solar energy vs coal burning

Or This?

has a minimal environmental footprint compared to blowing off the tops of mountains in West Virginia to mine coal or fracking large swaths of subterranean deposits for natural gas which permanently fouls the ground water.

Among many people in the solar PV industry, there has been a persistent debate about whether PV should be deployed widely on roofs, over parking lots, or on brownfields in urban and suburban regions rather than in large utility scale deployments far away from the grid and the energy consumer.  This type of distributed solar generation is unique to modular PV and enables placement of generation close to the point of use with minimal transmission loss.  But while both utility scale and distributed PV deployment types have significant and high-value applications, both have tradeoffs in cost and economics. More on these tradeoffs in a subsequent post.

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They Paved Paradise . . . . and We Created Eaarth

The 1960’s through mid 1970’s was a time of extraordinary environmental awareness. Denis Hayes led the Earth Day movement, and proved that the electorate would remove politicians who were oblivious to environmental degradation from industry. Paul Erhlich wrote his prescient book, “The Population Bomb” which predicted population expansion overwhelming civilization supporting systems. A group of system analysts from MIT researched and wrote, “Limits To Growth” which accurately modeled a rapidly rising global population against earths finite resources.  The Vietnam peace movement embraced the environmental movement and the impact on popular culture was immediate. While Joni Mitchell was singing about our ravaging of the environment, technology solutions were able to delay serious earth sustainability issues masking the reality of the problems to come.

The delay was approximately 40 years. In 2009, the 6.8 billion human inhabitants of Earth went into “ecological overshoot.” This means that the human species consumed natural resources faster than they could be replenished. In that year, we devoured the resources on the order of 1.4 Earths.

They took all the trees and put them in a tree museum

Red line = population/economy - Blue Line = resource carrying capacity

The impact of our over-consumption of renewable and non-renewable resources affects all aspects of Earth sustainability including climate change, pollution throughout the ground level ecosystem (air, land, water, oceans), forest and vegetation loss, mineral depletion of farmland soil, water shortages and hyper-accelerated biodiversity decline, to name a few.  The more we continue to grow the population using old world infrastructure and methodologies, the less sustainable Earth becomes. At a forecasted population of 9.2B inhabitants by 2075, earth sustainability becomes dire.

While we are all busy living our day to day lives, it’s not easy to recognize these problems in their totality. When we do, we believe it’s happening slowly and some new technology will fix it.  Even though I live in the renewable energy world day in day out and read about various instances and consequences of climate change, raw material shortages and other issues each in isolation, I was still not able to see the big picture all tied together.

An important new book out by Bill McKibben called “Eaarth, Making a Life on a Tough New Planet” puts it all together. Anyone who reads this book will come away with a sense of urgency to plan for the immediate future on an “Eaarth” that is more difficult, costly and is deteriorating further, than the Earth we knew. Eaarth is Mr. McKibben’s name for a new global environment in ecological overshoot while climate change is accelerating with severe consequences for the global standard of living. Eaarth is a result of human activity that has irrevocably changed the natural cycles which have supported our civilizations for thousands of years.

Hey, farmer, farmer, put away that D.D.T., now

Some main points from Eaarth:

  • The U.S. and most of developed world’s economies are based on hyper-growth year in and year out which creates ecological overshoot. A new economic model based on sustainability is required.
  • Our entire economy is based on fossil fuel, which is now scarce and expensive both in cost and environmental degradation
  • Scientists believed that climate change issues would be problematic by the end of this century but the disruptions of the natural cycles are here now (erratic weather and major flood events, acidification of the oceans, desertification etc.).
  • Negative feedback loops, both environmental and economic, are accelerating with no new scientific basis for forecasting their impact or extent. We are participating in a grand experiment and have no idea of the outcomes.
  • Technology will not be able to fix the problem but can help with a soft landing by using technologies such as solar.
  • The costs to repair, rebuild and prepare is way beyond the global economy’s capabilities or resources.
  • Basic needs such as food, water and shelter are and will become increasingly difficult to  procure.
  • Poorer countries are suffering now from climate change and will suffer more in the near future.
  • Abundant low cost fossil fuel allowed for complexity in life and separation from community.  Life will have to become simpler, with more community cooperation and return to localized economies for agriculture, energy production, goods production, transportation etc.
  • We missed the opportunity to head this Eaarth off 40 – 50 years ago; now we must prepare and plan for a “soft landing” (vs. mayhem) to minimize the pain and suffering for a global population that will approach 9B in this century.

As I write this, it feels over the top and surreal. But this is the reality of our collective lack of recognition of the Earth’s capabilities to support the population at sustainable levels. The system is well beyond its limit, as predicted in “Limits to Growth”.  And the global reaction to our tough new life on the new planet Eaarth is already underway:

  • As average sea levels have already risen about average 6” globally, low lying island nations are negotiating for homelands in other countries to move their populations.
  • Rapidly melting glaciers are creating near term flooding and long term, permanent water shortages in the Andean and Himalayan regions. Less snow and rapid snow melt is immediate problem in Colorado now.
  • Tribal communities who depend on small local farms can no longer predict weather for planting cycles, and starvation is being held off only by the import of food by relief agencies.
  • India is building a fence between its eastern border and low-lying Bangladesh to keep terrorists, smugglers and “infiltrators” like climate change refugees out.

Don’t it always seem to go that we don’t know what we’ve got ‘til its gone

It’s difficult to see how the current political environment on Capitol Hill will lead the world in the right direction toward a more sustainable society anytime soon. And Mr. McKibben’s assertion that we will have to be more localized in our governing and community is already happening: States are enacting climate change legislation and supporting local distributed clean energy generation. Small & local farming is storming back, and local coop growth is exploding.  As Arianna Huffington recently wrote, elections are won by candidates who put a finger up to see which way the wind is blowing (see: John McCain in the last election). We as an electorate need to change the direction of the wind now, so that we elect officials at all levels of government who recognize the need for preparation to achieve a soft landing in the coming decades. And do it with urgency.

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Happy New Solar Year

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Beware of the military clean energy industrial complex . . .

In President Eisenhower’s landmark speech, he warned about the unchecked power of the military-industrial complex.

Nellis Air Force Base 14MW PV Installation

But the U.S. military along with the clean energy industry is providing the type of leadership that is sorely lacking from our civilian national leaders – a complete and urgent

recognition that a long term clean energy plan is the only path to pursue to achieve security, lower cost and less vulnerability to climate change.

While the fossil fuel industry has large monetary profit motives, the military has a more pressing motive: kill or be killed. Less dependance on foreign oil, less harmful emissions and less energy supply vulnerability are the drivers for their motive.

A good summary from a speech by DoD given to the Senate Homeland Security and Governmental Affairs Committee provides a quick read on their clean energy efforts.

A great piece out Sunday by Tom Friedman titled, “The S.S. Prius” talks about the Navy’s efforts in bio-fuels. A short piece on solar and micro grid initiatives by the U.S. Army can be found here. A review of U.S. federal government and military agency mandates found here.

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China Announces Enlargement of Domestic Solar Program

China Makes Solar News at Climate Talks

Right after I posted the preceding blog about the difficulties in forecasting the global PV industry, China announced a large solar deployment plan at the COP 16 climate talks in Cancun, Mexico. While not on the scale of Germany over the last five years, this latest announcement from China will clearly have a positive impact on the supply demand situation if in fact Beijing follows though and is not just hand waving.

The December 3rd announcement outlines China’s plan to install a minimum of 1,000 megawatts (MW) of solar energy capacity per year starting in 2013.  For comparison, one average coal burning plant has about 500MW capacity.

The announcement went on to describe 13 industry zones and that Beijing will pay up to half the price of equipment for solar PV projects. In addition, a subsidy of 4 to 6 yuan (60 to 90 U.S. cents) per watt of generating capacity will be rewarded to project owners.

As I noted in my 10/15/10 blog piece, this will almost certainly increase WTO violation allegations from the U.S. government and others.  But it will be a very long time before a WTO court can rule on these assertions.  Meanwhile, our U.S. government continues to dither on long-term PV manufacturing and project support while we concede further clean tech competitiveness and leadership.

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