Massive Energy Shift Taking Place

Speakers at the opening plenary of the IEEE’s Power and Energy Society international conference in Denver on Monday talked about big, sweeping changes now underway in how we produce, distribute, and consume electricity. Solar and wind soon will be competitive with fossil fuels without the need for subsidies. They’re being integrated into existing systems at volumes thought impossible a decade ago. They talked about game changers, return on investment, and the need for policies that Dan Arvizu, director of the National Renewable Energy Laboratory, says are needed to spur capital markets to invest in new technology and infrastructure. It’s clear, said Arvizu, that the resources are available to create electricity while severely reducing greenhouse gas emissions. But new business models are needed to make it happen. “We’re in the midst of a massive transformation, not just domestically but globally,” he said in opening the plenary. In 2013, he explained, the amount of new generating sources from alternative energy surpassed new generation from conventional fossil fuels. Within a decade, he predicted, three-quarters of all new energy coming on line will be from renewables, mostly wind and solar. In the United States, 13 percent of electricity comes from renewable sources, about half hydro and the other half wind, solar, and other renewables. Arvizu also predicted disruptive technologies on multiple fronts. Solar today has 200 gigawatts of capacity globally. About one-tenth of that is in the United States. “We’re now looking at power-purchase agreements globally that are less than 5 cents a kilowatt-hour,” he said. That’s competitive with and in some cases lower than electricity from coal and natural gas. Photovoltaic, he said, will not provide the technology for the big jump, however. “It is not the technology that will get us from gigawatt scale to terawatt scale.” Instead, he explained high-efficiency thin films that will boost commercial module efficiency to 16 percent. Tandem cells have the potential to improve efficiency from 10 percent to over 30 percent. “Very shortly, these technologies will be available in the marketplace without any subsidies (needed),” he said. Integrating renewables into the electrical system will require changes, but not necessarily giant infrastructure investment. He cited an NREL study that found the grid in the Western states can absorb up to 35 percent renewable energy. “This can be done, and it can be done now,” he said. “It requires we do some things differently. It requires that we do it in a different way. But it can be done.” Wind technologies, he went on to say, are now delivering electricity at 3 cents per kilowatt hour “and progress continues to be made.” More is coming, he added. “There are lots and lots of technology opportunities in this space.” Arvizu also talked about the energy systems integration in a new major laboratory at the NREL campus in Golden as well as 16 other national labs. The national programs are spending roughly $200 million in grid modernization. The labs seek to fundamentally redefine how renewables and demand-side management strategies are integrated into homes and businesses, a shift from the centralized power plants of the 20th century that sought to simply—and wastefully—always have power whenever anybody turned on a switch. At the NREL campus, for example, scientists are studying how electric cars provide home-based battery storage. Local storage is, in some ways, a game changer, in Arvizu’s view. And that was also the view Mark McGranaghan, the vice president of power delivery and utilization for the Electric Power Research Institute, the research and development arm of the utility industry. But he said utilities have to be in the middle of the storage. But like Arvizu, he also sees the maturing of solar technology such that subsidies are no longer needed. David Sun, senior fellow and chief scientist at Alstom Grid, emphasized the fundamental shift to engage consumers into choices. “I am no longer a passive consumer of kilowatt hours. I have many choices,” he said. “I am not speaking of a centralized market. I am talking about a free market place where we have choices.” Electrical providers going forward can’t just be suppliers but must find ways to provide “valued services,” he said. The next panel had representatives of Colorado’s two largest electrical providers. Xcel Energy delivers power to roughly 60 percent of Colorado customers through its subsidiary, Public Service Co. of Colorado, and it has gained a name for itself as the nation’s largest developer of wind energy, at least partly the result of voter and legislative mandates in Colorado beginning in 2004, as well as those in other states. A decade later, the results have been almost shocking. On Nov. 1 last year, at midnight, 61.1 percent of all electricity delivered by the Public Service Co. of Colorado came from wind power, reported Teresa Mogensen, senior vice president of transmission for Xcel. Admittedly, she added, it was a time of low demand. But forecasting is a large part of being able to add on substantial amounts of renewables, she said, “so we continue to grow in capability there.” Integration of renewables can be done, but “it just takes time.” But Mogensen also emphasized the need for cost recovery of investments. There is much misunderstanding and many misconceptions about what it takes to drive change, she said and described communication of that as a major challenge. The most skeptical speaker in talking about changes was Joel Bladow, senior vice president of transmission for Tri-State Generation & Transmission Association. Tri-State is the wholesale provider for 44 cooperatives in a four-state region. The service territory is as large as all of California, Bladow said, but with one-10th the load. That means Tri-State’s 1.5 million customers are widely dispersed, with just four meters per mile, on average, unlike the more densely and hence economically serviced cities and suburbs. While Tri-State has added substantial amounts of wind and solar generation to its portfolio in the last 10 years, Bladow struck a cautious and conservative tone. “At the end of the day, affordability and reliability is what we focus on,” he said. He also cautioned about studies with sweeping and optimistic results. A lot of times, you need to go to the appendixes to study the assumptions upon which those projections are based. And it comes down to money. “One thing I have learned over my career is that there were a lot of great ideas that are not economical.” Some great ideas of just 10 to 15 years ago have disappeared, he added. As for developing future renewables, Bladow talked about the difficulty of siting transmission lines. He used the example of Colorado’s San Luis Valley, where Tri-State and Xcel proposed to partner on development of the vast solar potential. To get it to consumers, the utilities proposed a high-voltage transmission line across the Sangre de Cristo Range, using a corridor over La Veta Pass and the ranch of billionaire hedge-fund manager Louis Bacon. Bacon successfully rebuffed the transmission line, and the defeat obviously still stings. “And the governor (Bill Ritter) did not issue one public statement in support of building that transmission,” he said. “Ultimately, it died.” In response to a question, Arvizu shifted the discussion from technology to policy. If it’s really 80 percent carbon education that we need, he said, then it’s not just a matter of technology. “It’s now understood that we have available resources that are abundant, and we can do a lot more.” But the right policies are needed to stimulate the private market to make changes, he added. He did not identify the policies he thinks are needed. He called the renewable portfolio stand and feed-in tariffs “blunt tools” that have been effective in creating markets, but are not the policy tools “that we need to get us to the objectives.… Ultimately, those policy tools will need to change.” “The capital markets must be the ones making the trillion dollar investments that are required for transformation over the next 20 years. The capital markets will need to be engaged.” Was Joel Bladow wrong in his caution and Dan Arvizu right in his optimism? We’ll know in another decade.

And the Cheapest Electricity in America Is … Solar

A Nevada utility and a solar developer have just struck a deal for solar electricity at a price that stands out compared not just to other solar deals, but also to just about any other option for new electricity. Here’s what it and other recent deals say about the future of solar. Costs for large-scale solar projects dropped by 7 percent last year, and are down by way more than half since 2009. Photo credit: John Rogers Costs for large-scale solar projects dropped by 7 percent last year, and are down by way more than half since 2009. Photo credit: John Rogers Bloomberg’s story on the Nevada deal opens with this (emphasis added): Warren Buffet’s Nevada utility has lined up what may be the cheapest electricity in the U.S., and it’s from a solar farm. “Cheapest” and “solar” aren’t words some folks might expect to see together in something coming out of a financial outfit like Bloomberg. But folks who have been paying attention to solar’s incredible recent price drops in recent years know that the times they are a-changin’. Best deal in town NV Energy, part of Buffet’s Berkshire Hathaway company, is buying output from a project being developed by solar photovoltaic (PV) manufacturer First Solar at a price of 3.87 cents per kilowatt-hour (kWh). That’s probably a lower price than you’d get from just about any other source out there, except for wind or energy efficiency. No doubt about it: this power purchase agreement (PPA) is a deal. A utility analyst at Bloomberg says it’s “probably the cheapest PPA I’ve ever seen in the U.S.” Note the lack of qualifiers: no “solar,” no “renewable energy.” Just “cheapest.” And it’s clear that this deal, for 100 megawatts (enough for more than 15,000 households’ worth of electricity), isn’t a one-off. It’s part of a suite of recent deals that testify to how far solar prices have dropped: Another 100-megawatt NV Energy agreement in the same utility proposal, involving a project developed by PV manufacturer SunPower, came in at 4.6 cents/kWh. Just a week earlier, Austin Energy signed a deal for solar at under 4 cents/kWh. On the solar resource issue, you can remind the naysayers that solar is actually much more widespread than they might think. Some might dismiss these deals by pointing to the sunniness of the states in question or the incentives (federal or state) that are buying down the cost. Don’t let ‘em. On incentives, you can invite them to do the math on what it would cost even without the federal tax credit, for example (still under 6 cents for the lowest-cost ones). And have them look to see what solar is achieving elsewhere—5.85 cents/kWh in Dubai, for example. Or just get them to do the math on what fossil fuels like coal really cost. Keep making it happen And, while the sun might not be getting brighter, the future of solar certainly is. Costs for large-scale solar projects dropped by 7 percent last year, and are down by way more than half since 2009. Even more importantly, maybe, is the fact that a big chunk of cost reductions depend not on dropping the costs of solar panels (which are way down already), but on building up local capacity to install (or approve) such systems. That build-up comes only with experience and installations. That price trajectory could lead some to think about waiting till prices come down even more, but that would be a mistake. Solar may keep getting better, but it’s a good deal now, and even more drops in costs aren’t guaranteed. (Neither is the future of the very successful federal tax credit.) We also need utility leaders to keep signing the contracts that keep getting us to ever-greater scales and ever-lower prices. These contracts are a driving force for the fierce competition in the solar industry. So go forth—sign, build, thrive. And then repeat, repeat, repeat.

FERC Removes Obstacles that Limit Distributed Renewable Energy in Colorado

In a July 1 ruling FERC (the Federal Energy Regulatory Commission) cleared the way for Colorado’s Delta-Montrose Electric Association (DMEA), along with other electric co-ops, to step outside the bounds of a 40-year power supply contract with Tri-State Generation & Transmission Association and tap into local renewable energy supplies. FERC's ruling, which was unanimous, clarifies what had been deemed unclear wording in PURPA (Public Utilities Regulatory Policies Act), as well as Tri-State's regulatory status. The contract DMEA and 43 other electric co-ops had signed with Tristate in 2001 required them to purchase 95 percent of their electricity from Tri-state. In short, FERC ruled that as per PURPA DMEA not only had the right but the obligation to purchase electricity directly from “Qualifying Facilities” (QFs) over and above the five percent cap it's limited to in its contract with Tri-State. With the ruling, FERC opened the door for DMEA and other Tri-State electric co-op members to tap into cost-competitive renewable energy resources right in their backyards. DMEA intends to move forward and contract for electricity from a small-scale hydropower facility to be built on a local irrigation canal proposed by Percheron, DMEA's Manager of Member Relations and Human Resources Virginia Harman said. Greater Use Of Local Renewable Power Enacted in 1978 as part of the National Energy Act, PURPA promotes development of cost-effective small-scale hydropower and other renewable energy resources, as well as energy conservation and energy efficiency, FERC explained on its website. Under PURPA, public utilities are obligated to purchase electricity generated by certified QF as long as they total no more 80-MW of electrical power capacity. PURPA QFs receive special rates and regulatory treatment. "Community support for DMEA was overwhelming," Harman pointed out. More than 70 individuals and organizations, including coal companies, as well as the NRDC (Natural Resources Defense Council) and the Aspen Skiing Company, supported DMEA's FERC petition. DMEA CEO Jasen Bronec said that FERC's ruling “is a victory not just for DMEA and its members, but for people and communities throughout Delta and Montrose counties. Purchasing local renewable power will further DMEA's long-term strategic goal of diversifying our power supply, which means more stable rates to our members and lesser impacts from any future power rate increases. He added that the ruling “could also mean serious local economic development, as renewable facilities locate to the area to take advantage of our abundant renewable resources in Delta and Montrose counties." Good News FERC's green light “is clearly good news for the renewable energy world,” University of Denver Sturm College of Law Professor K.K. DuVivier commented in an interview. While FERC came down in favor of DMEA's petition on two of three counts, it essentially sidestepped the issue of whether or not Tri-State should be regulated as a public utility and hence subject to direct oversight by FERC, which it is not at present, she pointed out. The decision gives DMEA and other Tri-State electric co-op members much more flexibility to adapt to changing conditions and meet consumer and community needs by purchasing more electricity from renewable power producers, DuVivier noted. Its broader impact will be limited as there are very few co-ops as large as Tri-State nationwide, however. Energy policy and regulatory oversight in the U.S. is moving renewable energy forward in some cases while holding it back in others, added Jack Jacobs, managing partner at Cleantech Law Partners. “It's certainly a big part of what's happening now with energy in the U.S.” The lack of a strong, persistent commitment promoting renewable energy by federal lawmakers in particular remains an obstacle to growth and development, Jacobs continued. Vacillating Congressional support for renewable energy incentives, such as the wind power production and solar power investment tax credits, have resulted in stop-and-go development binges and hampered what would could have been even more rapid renewable energy development and growth, Jacobs said. Nevertheless the DMEA FERC ruling is one step in the right direction.

A Push For Solar In Colorado's North Fork Valley

A crew of six is working to install mounts for solar panels on a residential rooftop in Delta County. This home sits atop a mesa that overlooks the North Fork Valley. And, it’s the first to get a sun-powered system through a local pro-solar campaign. "Solarize North Fork Valley is a program that was put together by SEI that looks at how we can boost the local solar economy in an effort to create jobs in the industry here," said Kristen O’Brien, an AmeriCorps VISTA with Solar Energy International. The Paonia-based educational nonprofit is spearheading the initiative. "I think the figure is in 2014, over 31,000 jobs were created in the solar industry nationally," said O’Brien. She said SEI hopes to bring some of that success to its local community, an area affected by the downturn in the coal industry. How It Works People who sign up get a free remote site assessment from SEI and an energy audit through the local electric cooperative. O’Brien said the audit tells people how much energy they are using and ways to reduce that consumption. "And, what the remote site assessment does is it looks at your electrical usage history, the space you have available on your roof and your budget for the project," she said. "And, we put that all together and are able to spit out a free estimate for you of how much solar you can fit on your roof, how much of your electrical usage it would offset, and around how much it would cost you." O'Brien said after that process the next step is passing on a person’s information to a solar installer. "Based on the amount of contracts that our installers are able to sign as a result of the leads that we provide them through the program they offer rebates to everyone who participates," she said. O’Brien said an average family in the U.S. would use a 4-6 kilowatt system. The goal for Solarize North Fork Valley is to get 100 kilowatts of solar sold. "That’s [about] 25 new solar systems and 25 new homes in the valley that would be powered by renewables," she said. Bill Bishop, Sarah Bishop Bill Bishop and Sarah Bishop were the first to sign up for Solarize North Fork Valley. Mrs. Bishop is on SEI's board. Credit Laura Palmisano / KVNF Bill Bishop and his wife Sarah, who’s on SEI’s board, were the first to sign up for the program and purchase a system. "We had already been thinking about it for 10 years," said Bishop. "And, so when the cost was shown to us at the SEI meeting we just said 'oh, we can do that'." The Bishops plan on taking advantage of a 30 percent federal tax credit for solar and the rebate offered through the program. "We will pay off the investment in about 12 years," he said. "About 70 percent of our electric will be taken care of by the solar system." Jeff Tobe is with Empowered Energy Systems, a locally-based solar installer. The company he works for got the contract for the Bishop’s house through the Solarize program. "It’s created a real boost in the interest for solar in the valley," said Tobe. "I mean that is very evident. I think it’s also increasing the amount of installations that we are going to do this year by quite a bit. I wouldn’t be surprised if we double the amount of installations." Empowered Energy also hired four workers to help with jobs it landed through the initiative. O’Brien said she’s inspired by another Solarize program that happened last year in La Plata County. "They were really successful," she said. "I think they contracted 100 new systems and that’s not 100 new kilowatts, which is our goal." O’Brien said they’re halfway to that target. The campaign lasts through the end of this month.

Colorado power cooperative looks again at rates after jump in solar customers

The Intermountain Rural Electric Association (IREA) is taking another look at raising its electricity rates — changes that could mean an additional charge of about $20 to $24 per month for new residential customers and existing residential customers who add solar power panels to their homes. If approved, the new rates would take effect December 30, 2015. It would affect new residential customers joining the cooperative after that date as well as residential customers who get a new meter after that date as part of a new solar array being installed on their roofs. IREA officials say they’re worried about the cooperative’s ability to cover its costs when more customers get their power from the sun and get credit off their monthly bills for excess power sold into the grid. IREA’s board is expected to take up the matter at its October meeting. Representatives of the solar power industry say they're still reviewing the proposal, but are concerned that IREA's proposal could put a damper on the appetite for adding solar arrays in the cooperative's territory. The cooperative has seen a big jump this year in the number of residential customers getting solar power systems on their rooftops. “It’s not a large problem at this point, but we’re trying to plan ahead and anticipate the growth of rooftop solar and saying let’s address this deficit and cost recovery before it becomes an issue,” IREA spokesman Josh Liss said Wednesday.

Guest commentary: In Colorado, more jobs, less carbon

Earlier this month, a new report titled "Winds of Change" highlighted the major positive impact Colorado's booming wind energy industry is having on our economy. The report, which was rolled out by the national nonpartisan business group Environmental Entrepreneurs (E2) at the Alliance Center in Denver, found that Colorado is home to nearly 10 percent of the entire nation's wind energy workforce, with more than 2,500 jobs announced in the state's wind sector the past three years alone. These are good jobs at 22 manufacturing plants and nearly 30 wind farms. They're jobs at wind turbine servicing companies like the Boulder-based business that I co-founded. They're jobs running financial analyses to maximize private-sector profits. Jobs like these have led to nearly $5 billion in investments in the state, and they help generate nearly $8 million in annual lease payments for Colorado farmers and ranchers who increasingly think of wind energy as a new cash crop. But the 6,000-plus wind jobs aren't here in Colorado by accident. They're here because we have some of the most sensible energy policies anywhere in the United States. Recently, for example, Gov. John Hickenlooper signed into law a bill giving "enterprise zone" tax credits for renewable energy. This bill is expected to increase clean energy investments and expand rural Colorado's tax base. And our pioneering Renewable Portfolio Standard (RPS) was one of the first such standards in the nation when it was enacted in 2004. The RPS has created jobs by ensuring Colorado's investor-owned utilities get 30 percent of their electricity from renewable sources like the wind and sun by 2020. We're on track to meet this standard, but it's scheduled to expire in five years. So it only makes sense to plan ahead by extending and expanding the RPS. The sooner we establish a firmer, long-term policy, the sooner our state's leaders can give clean energy job creators the market certainty they need to keep their investment capital flowing far into the future. Another policy poised to help grow our state's economy is the federal Clean Power Plan. By mid-summer, this plan will set the first-ever carbon pollution standards for power plants. Colorado is expected to be required to curb power-sector carbon emissions by 35 percent, helping drive an increase in the development of clean, renewable energy projects across our state while creating thousands of jobs along the way. The Clean Power Plan will also drive more investments in energy efficiency — which lowers our electric bills by cutting energy waste — and again, creates more jobs. Despite the obvious economic and environmental benefits of policies like the Clean Power Plan, a few powerful politicians want to hold Colorado and the rest of the country back from moving forward on clean energy. Last month, for instance, Senate Majority Leader Mitch McConnell urged governors across the country — including Gov. Hickenlooper — to ignore the Clean Power Plan. In a response letter to Sen. McConnell, Gov. Hickenlooper criticized the suggestion, saying it would be "irresponsible to ignore federal law." Since Gov. Hickenlooper is chair of the National Governors Association, the letter sent a powerful message. As someone who's been in the clean energy business for more than two decades, I have witnessed the private sector's ability to innovate. Technological advances in the wind and solar industries, corresponding cost declines and financing mechanisms like community solar projects and power-purchase agreements for wind farms have all led to a major increase in clean energy projects in Colorado and beyond. Last year, 47 percent of all the new electricity-generating capacity installed in the U.S. was powered by the wind and sun. Over the past three years — 2012, 2013 and 2014 — more than 40 percent of all new electricity-generating capacity that's come online nationwide is from wind turbines and solar panels. During the first four months of this year, those two sources provided more than 80 percent of our new capacity to generate electricity. And in April, all our new electricity-generating capacity came from wind and solar power. None of this surprises me. My career has spanned the wide range of opportunities in our industry — including working in wind turbine manufacturing, at the trade association of investor-owned electric utilities, in power marketing and trading, as a project developer, and now in my current role providing operations and maintenance services. I've seen first-hand how the private sector is ready and willing to innovate and to create jobs to help meet an expanded RPS and the Clean Power Plan's standards. Michael Rucker is president of Boulder-based Harvest Energy Services and a director of the Rocky Mountain Chapter of Environmental Entrepreneurs (E2), a national nonpartisan business group that advocates for policies that are good for the economy and good for the environment.