Archive for July, 2009
As we relayed a couple of weeks ago, the Treasury Department has been slowly releasing details on the federal renewable energy grant program, which offers companies “payments for specified energy property in lieu of tax credits.” In other words, instead of receiving a federal corporate tax credit worth 30 percent of the costs of an eligible solar energy system, businesses may instead apply to receive a cash grant of equal value. (To qualify for the grant option, systems must be installed in 2009 or 2010.)
As of this afternoon, the Treasury is now accepting applications for funding of renewable (e.g., solar) energy projects.
- Here’s the relevant link to the Treasury, with information on procurement contract and agreement procedures under the American Recovery and Reinvestment Act.
- And here’s the link to the application process.
Finally, read here for more information on federal renewable energy incentives. Or, to learn more about how solar power can benefit your company, tell us about your business and energy use.
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This week, the Department of Energy opened up to applications for lending authority for $8.5 of the $30 billion it has earmarked for advanced renewable energy and smart grid projects. This is round six of such funding. It’s good to see the department is keeping up the momentum–the DOE has “streamlined its processes to accelerate these new loan solicitations”.
On the same day, DOE Secretary Steven Chu also announced that funding to the tune of over $11 billion has been awarded for five new solar-integrated smart grid projects. From the press release:
Washington, D.C. – US Department of Energy Secretary Steven Chu announced today the investment of up to $11.8 million – $5 million from the American Recovery and Reinvestment Act – for five projects designed to advance the next stage of development of solar energy grid integration systems (SEGIS). The selections announced today are part of DOE’s continuing work to help assure the nation’s electrical grid reliability is maintained and improved as solar energy technologies reach cost competitiveness and increased levels of integration with the grid.
“Solar energy will be a critical factor in achieving the President’s goal of creating new jobs as part of a clean energy economy,” said Secretary Chu. “By integrating renewable energy onto the grid now, we can deliver power more reliably and effectively, lower utility bills for American families, and help rebuild our economy along the way.”
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New Jersey regulators yesterday approved a plan for the state’s largest utility to install solar panels atop 200,000 utility poles across the state. As part of the $515 million “Solar 4 All” program, PSE&G will also develop 40 megawatts (mWs) of centralized solar arrays. All told, 80 mWs of solar will be added by 2013, as outlined by PSE&G’s press release:
The program has two segments, each 40 megawatts in size. The first segment consists of installing a solar unit (small distributed solar system of approximately 200 watts) on 200,000 utility poles in PSE&G’s service territory, which includes the state’s six largest cities and roughly 300 rural and suburban communities. It will be the largest pole-attached solar installation in the world. The solar units will be connected directly into PSE&G’s electric distribution system and the power will be sold into the PJM wholesale grid.
The second segment will focus on centralized solar, with PSE&G developing solar gardens and roof-top installations on facilities it owns and also at third-party sites.
“Our program will effectively double the size of New Jersey’s installed solar capacity,” said Ralph LaRossa, president and COO of PSE&G. “That is more solar capacity than currently exists in any state other than California.”
How will all this added solar generation capacity be paid for? A small surcharge is to be levied on every PSE&G customer, in effect costing the average customer an added 10 cents per month. That charge is set to increase gradually, reaching 35 cents per month by 2028.
Critics of the project will undoubtedly hone in on the per-mW cost of solar, which is, on balance, costlier than other electricity generation technologies. Reuters notes that, at $515 million, the 80-megawatt PSE&G plan envisions costs of $6.4 million for each megawatt of solar. This compares with “$500,000/mW for natural gas power plants, $2 million/mW for coal plants and $4 million/mW for nuclear power plants.” Supporters, in turn, will maintain that such projects are key to meeting NJ state renewable portfolio standards — and that, because costs are borne across a large number of customers, aggregate gains outweigh marginal cost hikes.
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The solar industry is still relatively new. It’s going through all kinds of growing pains, from determining the best solar incentives and financing options to figuring out the best materials for solar panels themselves. One of the ways in which the industry has yet to really settle is training: for most highly-skilled trades, there is a proscribed certification process. For solar installers, the single most recognizable professional benchmark is getting a voluntary NABCEP certification. (NABCEP is the North American Board of Certified Energy Practitioners, in case you were wondering. It’s a mouthful.) The organization makes a great argument for certification:
Benefits of certification exist for both installers and consumers:
For installers:
- Identifies installers as professionals, instilling consumer confidence in their work
- Validates extra resources spent on training and gaining experience
- Allows for installer mobility as the market moves from state to state
- Allows installers to distinguish their skills and experience in the field
For consumers:
- Provides a means to identify qualified installers, promoting confidence in the work performed
- Preserves consumer choice, maintaining access to both certified and uncertified installers
We couldn’t agree more, NABCEP. But right now, while this voluntary certification is great to have and does help with quality-control issues, it does not always mean the holder is certified to actually install solar panels in a certain state. This is relevant to solar incentives: most state rebates, tax credits, and other incentives are contingent upon the work being performed by a properly certified installer. This also touches on a serious concern for the future of the solar industry, which is the standardization of training certification. All the benefits of certification NABCEP extolls are true–so is it a good idea to let the only national standard for solar installers be voluntary? But like teacher training, perhaps the needs of individual states are different enough to warrant 50 unique sets of rules for solar training. Let us know what you think, it’s a topic open to wide debate.
So where does one go to get solar training now? Many universities and technical institutes offer training courses, so check your local schools. Some of these are designed for the layperson as a “first step”, and others are designed for the person with a foundation in electrical knowledge so that by the end of the course, you know how to perform an actual solar installation. Short, intensive training sessions–”solar boot camps”–are offered by a handful of sources around the country.
- Solar Energy International (SEI): educating about solar for nearly 20 years, SEI offers both online and hands-on workshops.
- Florida Solar Energy Center: one of the best solar resources on the Eastern seaboard, FSEC offers photovoltaics and solar hot water installation courses
- Solar Living Institute: this Northern California non-profit offers numerous live and online workshops for all aspects of solar
- Boots on the Roof: NABCEP certified, these guys offer 4-6 day courses for sales people and installers
There are other training resources (ask Google), but these are a few of the more established ones–SEI is premier among them. If you’re curious about where exactly you could get hired, or where the green job hot-spots are in this country, check out the solar jobs map from SEIA.
And when it’s up and running, pay a visit to the educational center planned for Rutland, Vermont: the state’s second-largest solar array (50kw) will be part of a “working classroom for students interested in renewable energy”–and will be partly student-built.
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Yesterday, Pennsylvania Governor Edward Rendell announced a new tax credit for renewable energy projects, including solar panel installations, that were completed in the state in the last half of 2008 (July-December). The tax credit is equal to 15 percent of the net cost of such projects. The program budget for 2009 is $5 million. If you completed a commercial solar installation in Pennsylvania in those six months, apply for the credit by this September 15th. Pennsylvania made a splash earlier this year with its long-awaited solar rebate program. If you’re not pursuing solar or another renewable energy project in PA, the governor sure thinks you should be:
“Every day, more and more Pennsylvanians continue to develop alternative energy projects. By doing so, they are investing in their financial futures and the future of our state,” said Governor Rendell. “The Tax Credit Program, along with the Pennsylvania Sunshine Solar program that provides rebates up to 35 percent for residential and small business solar projects, are two examples of how we can continue to work toward energy independence.
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Agitated by plummeting prices and falling market shares, European solar companies may soon be forced to accelerate their moving production to Asia, according to analysts. Long heralded as the solar industry’s role model and original success story, Europe has as of late started seeing its solar sector fall victim to an oversupply of cells and modules, which results in lower prices for solar systems. Add to this diminished government incentives and the stiff competition posed by Asian solar companies, which can offer prices that are on average 30 percent lower (in the case of the Chinese), and it is little surprise that European solar cell manufacturers have lost so much market share.
While the savvy consumer is poised to benefit from this, those working in the European solar sector are likely to have a rough year ahead for them. Manufacturers such as Q-Cells and Ersol have had to slash their 2009 forecasts while shifting their gaze east. The Reuters article linked to above rounds up the following observations:
Already, 2009 is looking like a lost year for the European solar sector. Though Germany is still expected to become the world’s biggest market by installation, according to industry association EPIA, weakening demand and tough credit conditions are dashing hopes for a quick industry recovery.
Europe’s solar companies haven’t ceded their ground yet, though. They plan to get back on top by playing their competitor’s game—slashing prices—and to do so they have had to set up plants abroad, where production costs are lower. But how do you compete with China, which recently announced a subsidy of 50 percent for investments on large solar power projects and which accounted for roughly one third—a number sure to grow—of the market for global solar cell production in 2008? The “you get what you pay for” argument doesn’t seem to be as effective as it used to be, in the face of the tough economic climate and given that Chinese manufacturers have been aggressively pouring capital into development and expansion. But do you think these German solar companies will be able to catch up?
Either way, one thing seems clear, though—the price of solar power can only go down.
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Armed with a net-metering agreement and enough grid-tied solar panels, you could literally eliminate your monthly electricity bills. Poof! Gone. But, as this story from KMGH Denver demonstrates, you’d still need the utility’s infrastructure to make the arrangement work.
Solar energy customers are worried a new fee proposed by Xcel Energy would punish new customers for getting solar panels. The monthly fee, which would pay for distribution and transmission of energy, would go into effect in April 2010 and would have to be paid to Xcel, regardless of whether the solar customer used any electricity that month. Customers who got solar panels before April 2010 would not have to pay the fee.
So what’s going on here? From the customer’s perspective, it seems unfair that they be charged — even in those months where they, in effect, don’t buy any electricity from Xcel. Indeed, the main motivation behind installing solar panels is the desire to minimize monthly payments. With this achieved, some Colorado solar panel owners are, understandably, balking at the additional fee.
Now for the other side of the argument. Even if their monthly energy usage nets to zero, solar panel owners still make use of the electrical grid and associated infrastructure: during the day, for example, excess electricity from the panels flows into the grid, crediting the owner’s utility account; and at night, when the panels are idle, the customer draws power just like anybody else. Solar panel owners should, Xcel maintains, be charged accordingly. Hence the proposed fee for “distribution and transmission” of energy.
Tom Henley, an Xcel Energy spokesman, initially told 7NEWS that implementing the fee would level the playing field for electricity users who are currently subsidizing connectivity fees for solar users, who sometimes use no electricity in a given month and therefore, pay no electrical fees.
“We just don’t think it’s fair that customers that don’t have solar panels on their homes should subsidize these solar panel customers any further,” said Henley.But when pressed, Henley admitted that currently, no Xcel electric customers pay extra to fund solar connectivity fees. In reality, Xcel absorbs those fees. The money from the proposed fee would not go into the pockets of electric customers, but would go back to Xcel. Henley said the fee is a preventative measure to ensure that, down the road, solar customers do not get free rides.
“What we’re looking to do is stop that, avoid that occurrence from happening,” he said. …
In an e-mail, Beth Hart, the executive director of the Colorado Solar Energy Industries Association (CoSEIA), called the fee a “misplaced charge,” and said, “What Xcel didn’t include in their cost analysis were the benefits of PV (photovoltaic) to the electrical grid.”Henley said the fee would add up to, on average, about $1.90 more per month than solar customers currently pay.
But Ferguson [a solar energy consultant], and members of CoSEIA, worried that the fee would be much higher.
Judging from the “comments” section of the KMGH story cited above, there’s a strong temptation to view the impending confrontation between solar advocates and Excel as a case of corporate greed. (One commenter sarcastically notes, “They’ve got to pay those executive bonuses somehow.”) I think the reality of the matter is far less controversial. After all, Xcel already runs one of the country’s most prominent utility-sponsored solar rebate programs. My guess is that, in the end, a fee will be levied, but that it will be constrained by the Public Utilities Commission.
Note: A public hearing on the matter is scheduled from 4pm to 6pm on Wednesday, August 5. See the PUC website for details.
UPDATE: As relayed by Russel Gold at Environmental Capital, Xcel has withdrew its request for a hike in fees, dealing a blow to my previous hypothesis:
The proposal was short lived. On Tuesday, Xcel backtracked and withdrew their request for a new fee.
Here’s how the company explained itself in a press release: “We made this proposal in good faith as a reasonable approach to provide for a fair allocation of costs and benefits between customers with solar panels and customers without solar panels. However, we appreciate that the proposed rate mechanism has caused significant customer confusion.”
What Xcel saw as customer confusion, others might call customers getting upset. The Colorado Public Utility Commission received 76 emails in the last week against the idea.
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Our national power grid is inadequate and inefficient. It suffers from transmission and distribution losses, is vulnerable to power outages, lacks strong data collection, does not communicate with the consumer, and is unlikely to meet the growing demand for electricity in its current state. By looking at these issues, we can better understand the need to bring the grid into the 21st century with the application of digital “smart” technology–the “smart grid“.
Transmission and distribution (T&D) are a concern, as the web-like expansion of the grid from centralized power plants to end users often results in up to 10 percent power loss. Such losses demonstrate the grid’s inadequacy, while transmission bottlenecks illustrate the age of the grid. As more people flip the switch to power economies and lifestyles that are increasingly dependent upon energy consumption, old transmission and distribution lines are increasingly incapable of handling this demand and become congested. While new lines could be added to alleviate the problem, bringing such a solution to fruition is not as easy as it sounds. Building out new lines is expensive and faces political tension between state and federal governments over jurisdiction and funding.
Another common criticism of the grid is the system’s overall vulnerability, particularly with regard to service interruptions. Nothing better highlights this issue than the great power outage that occurred on August 14, 2003. A transmission line, compromised by contact with tree limbs, was identified as the root cause that left fifty million people up and down the Eastern seaboard without electricity. Although power interruptions of this magnitude are rare, they are dangerous and come with a high economic price tag.
Another issue with the grid is that information on energy consumption only flows one-way: towards the utility. The price of power is generally calculated by the utility as the price per kilowatt-hour (KWh) multiplied by the number of KWh consumed over the billing cycle. Some utilities give consumers the option of choosing a fixed rate or monthly variable rate for service, both of which are determined by the wholesale price of electricity on the market. What generally occurs, however, is the following: a consumer flips a switch, uses electricity to run the house, and alerts the utility to how much power is demanded. Power is supplied and at the end of the month the consumer receives a bill.
Out of everything we buy in our society, there are only two main commodities that we purchase without knowing the price beforehand: electricity and water. Given that technology now exists in which consumers could make more informed decisions on power purchasing, it can be argued that such an approach to selling power is a form of consumer injustice. Granting consumers better information on how much power costs in real-time could alter consumption habits and lead to a more efficient use of energy.
We must also ask how the grid will be able to handle projected demand. According to the 2009 Annual Energy Outlook conducted by the Energy Information Administration, electricity demand will increase by 26% from the year 2007 to 2030, with essentially an average annual increase of 1%. The EIA attributes this growth in demand to three causes: population growth, an increase in demand for products and services, and the population shift towards warmer climates. Today, we have more technological tools at our disposal to meet this growth in electricity consumption rather than solely taking the traditional path of constructing new power plants.
While it is inevitable that more capacity will be added and new T&D infrastructure must be built out, a new player is coming onto the field that will significantly alter both the future of solar energy growth and the way in which we have dealt with power issues in years past. This player is known as the smart grid.
Next Week
The Smart Grid, Part III: Benefits
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