Tag Archives: solar power

How cool WAS that? Not that cool, it turns out.

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Michael Giberson

While digging through the KP archives looking for another old story, I can across a 10-year old post titled “How cool is this?“

(Let me warn you now that there isn’t much more to this 2013 post other than to observe that not every cool-sounding technology in 2002 turned out to work. You already know that; you can stop reading now. -MG)

What seemed pretty cool at the time was a new bladeless turbine that the inventor said would drastically reduce costs in a number of applications. The Hydrogen Renewable Energy Enterprise, LLC in Hawaii was reportedly very excited about the possibilities and signed up to be the exclusive seller of the technology.

Since I hadn’t noticed bladeless turbines taking over the world, I wondered what became of the technology. Unfortunately, other than a bunch of press release inspired news reports from about 10 years ago, not a lot of information is findable online about Hawaii-based The Hydrogen Renewable Energy Enterprise, LLC.

Utah-based International Automated Systems, Inc. (IAUS), developer of the bladeless turbine technology appears to be still around. In addition to the bladeless turbine, the company has developed products including a automated self-checkout retail system and a fingerprint identification system. The newest technology seems to be a solar energy thermal system which can be used with the bladeless turbine. The company website lauds its solar technology as “Years Ahead of Schedule” and costing less than “the World Government’s goal for solar power cost per kilowatt by the year 2020.”

In June 2009 Renewable Energy Development Corporation contracted with Needles, California to supply the town with solar power based on the IAUS technology. In an interview published in November of 2009, REDCO owner Ryan Davies touted the IAUS technology, saying, “All of our engineering reports and research data indicate that this technology will be significantly more efficient than PV. We’re quite excited about it.” A year later REDCO was pleading with Needles to boost the $128 per MW price in the contract after REDCO “discovered … fatal flaws in the technology they were going to use. Those flaws included cost and efficiency issues.” In 2012 REDCO filed for bankruptcy.

Neldon Johnson, President and CEO of IAUS, is quoted as saying he thinks the technology would have worked, had Davies and REDCO attracted enough investment. Maybe, but IAUS has apparently attracted a detractor online who has collected information about the company: See http://www.iausenergy.com, particularly the page http://iausenergy.com/NewsHistory/index.html, and don’t miss the website’s collection of photos from the IAUS solar pilot plant west of Delta, UT.

That’s about it. No real surprises.

 

Is Iowa solar power ruling a camel’s nose into electric utility’s monopoly tent?

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Michael Giberson

Eagle Point Solar, a for-profit solar power installer and operator, proposed to build a solar PV array on a Dubuque, Iowa municipal building under a long-term contract with the city. Under the contract, Eagle Point would own the solar array and sell power to the city in a “behind the meter” arrangement.

The local electric utility, Interstate Power and Light Company (IPL), challenged the arrangement as infringing on its exclusive service territory. In April of 2012, the Iowa Utilities Board agreed with IPL that the retail electric sales contract would require Eagle Point to be an electric utility and it would thereby be prohibited from providing service in IPL’s assigned exclusive electric service area.

Eagle Point appealed and in March 2013 the Iowa District Court for Polk County overturned the Iowa Utilities Board ruling. Eagle Point was declared not to be a public utility and therefore not in conflict with IPL’s assigned exclusive electric service area. Kari Lydersen at Midwest Energy News summarized key parts of the ruling:

The ruling emphasized that since there is no state statute defining what it means to sell to the public, the utility board should have relied on a decision in a 1968 Iowa case involving the state commerce commission and a natural gas company. Based on a series of tests outlined in that case and actually drawn from a previous Arizona case involving a natural gas company, the court decided that Eagle Point would not meet the definition of either a “public utility” or an “electric utility.”

Among other things, Schemmel noted, Eagle Point would not be able or required to meet all requests for service and it would not be competing with Alliant or creating a monopoly of its own.

Schemmel also pointed out that the solar panels would not meet all of the building’s electricity needs, hence the building would still be hooked up to the grid and buying electricity from Alliant. The building’s demand for electricity from the grid would be reduced, but this would be equivalent to the demand reduction created by energy efficiency measures like weatherization, Schemmel found.

The court also considered a state law declaring it “the policy of this state to encourage the development of alternative energy production facilities” as balancing against the public interests in the law granting monopoly territories to electric utilities.

A significant factor in this case was the ability of for-profit companies like Eagle Point, but not non-profit entities like city governments, to access numerous federal and state subsidies for solar power installations. If the deal was just about power supplies the city could have simply bought the solar array from Eagle Point. But this angle is actually less interesting that the broader possibilities of the precedent to support distributed generation.

The Iowa Utilities Board could appeal the decision to the state’s Supreme Court. But at least until that happens, or if the Supreme Court affirms the district court rules, behind-the-meter distributed power systems appear to be legal in Iowa (at least if they are “alternative energy” based generators, and if they don’t result in entirely removing a customer from electric utility service).

Small renewable providers and cogenerators, start your engines.

Eagle Point Solar: Dubuque City Operations Center

Eagle Point Solar: Dubuque City Operations Center

Free solar power tomorrow!

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Michael Giberson

Well, not free-free, but subsidy-free. Maybe.

When I read a headline promising “Solar Power to Hit Cost Parity Next Year,” it reminds me of the sign above the bar promising “Free Beer Tomorrow.” Like tomorrow, “next year” is always approaching and never here.

RP Siegel begins his Triple Pundit article, “Solar Power to Hit Cost Parity Next Year,” in full solar triumph mode:

They said it couldn’t be done. They tried to tell us that renewable energy could only survive if it were propped up with government subsidies. Never mind that our whole system of economic development, beginning with the patent office, is predicated on the idea that fledgling, underfunded industries need special protection for a limited time until they are strong enough to go it alone. Never mind that the fossil fuel industry, which can hardly be considered fledgling or underfunded, is still receiving billions in taxpayer subsidies.

But like the little engine that could, or the middle aged rock star that, after twenty years of struggling in sleazy dives has suddenly become an overnight sensation, solar power, having now surpassed the 100 GW threshold, has finally arrived and is good to go, in many places, without subsidies.

Great, so can we now pull the plug on solar power subsidies? And, by all means, yank the fossil fuel subsidies too.

(I’m passing over the wildly off-the-mark claim about “our whole system of economic development.” Not credible enough to take seriously. As it turns out, neither is the “grid parity” claim credible yet. But let’s at least explore the triumphant claims of success.)

Curiously, the article follows the “has finally arrived and is good to go … without subsidies” declaration with accounts of subsidized success. Apparently one-third of the 100 GW of world solar power capacity has been installed in Germany because of its generous feed-in tariff policies. Installations in China are growing fast. India and then Spain are mentioned. Spain built a lot of solar with subsidies, but recently stopped the subsidies. I’ll come back to India, but let’s look closer at the claim for Spain. Let the fisking begin!

Spain, the article declares, has achieved “grid parity,” backing the claim with only a link to a post at Forbes.com last December. The Forbes.com blog by Peter Kelly-Detwiler, “Solar Grid Parity Comes to Spain,” builds off a report from Bloomberg titled “First Large Solar Plants Without Subsidy Sought in Spain.” The Bloomberg article reports that many large-scale solar projects have applied to connect to the power grid, and the head of solar energy analysis at Bloomberg New Energy Finance is quoted as saying, “Spain is probably set to have Europe’s first utility- scale solar parks without subsidies.” So following the chain of links we have gone from gleeful declarations of “grid parity” to mere grid-connection paperwork that “probably” will yield “solar parks without subsidies” according to a solar energy analyst.

But read a little more and you get the views of the solar power lobbyist in Spain who reports that while many companies are anxious to develop solar power projects…

The biggest hurdle they face is to get the government of Prime Minister Mariano Rajoy to restart the planning process for new solar generation, said Eduardo Collado, director of operations at lobby group Union Espanola Fotovoltaica. Rajoy ordered the end of subsidies for new projects 10 months ago.

“None will go ahead until that changes, even though there are a few plants definitely needed at points in the system where the network operator wants them,” Collado said in an interview.

So, none of the subsidy-free projects will go forward until the policy that ended subsidies is changed?

Still, just a bit later in the article, a solar power developer said it would be able to build without subsidies. Maybe, at long last, this report justifies the triumphant claim that Spain has reached “grid parity”?

Not exactly. In June 2012 the developer said it expected to be able to build without subsidies in the last half of 2013, because ”we think the cost of photovoltaic will have dropped enough by then and, given the irradiation in Spain, will be totally competitive.” So once again we have hopes of grid parity “next year,” which through the magic of sloppy reporting become triumphant claims that “Spain has … achieved grid parity.”

So what about India? As the Triple Pundit post reports, Deutsche Bank anticipates solar power transitioning “from subsidized to sustainable markets in 2014″ based on the emergence of “large unsubsidized markets in places like India, where sunshine is plentiful and the alternatives are expensive.” Okay, so once again we have analysts claiming that solar power could live subsidy free soon, just not yet, and no doubt one day such predictions will come true.

But in parts of India, as with many other places around the world, where centralized grid power is expensive or unreliable or unavailable altogether, solar power is already an economical option. Solar power is a product with a few successful market niches, and these market niches will likely continue to grow as (and if) costs continue to fall.

Without extensive policy interventions, a sustainable solar power industry would tend its market niches and prepare to exploit other niches as it became more competitive.

And, by the way, please do yank fossil fuel subsidies and address externalities with appropriate policies, and let fossil fuels shrink to their market-justified size as well.

Get policy right and let the market sort ‘em out.

No, the federal solar power subsidy does not pay for itself

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Michael Giberson

Last Friday the US Partnership for Renewable Finance, a coalition of financiers who invest in renewable energy, issued a report in which they claimed the federal investment tax credit for solar power is not a taxpayer burden because the tax credit “pays for itself” (to use their phrase). As I explain below, the report fails to support its claims.

In essence the US PREF report sums up federal tax collections that can be somehow linked to subsidized solar PV projects and concludes that the sum of the future tax collections is greater than the cost of the current tax break. For example, they claim a $10,500 residential solar credit will eventually lead to $22,882 in federal tax revenues, and a $300,000 commercial solar credit would yield $677,627 in federal tax revenues over the life of the project. Most of the tax revenues are federal income taxes paid by the companies, investors, and employees on income that is associated with the subsidized solar project.

The report led to a couple of rewrites of the press release in the renewable energy trade press. RenewablesBiz: “federal tax credit that has helped energize the recent boom in solar construction pays for itself and even generates excess revenue…”; RenewableEnergyWorld): “finds that the solar investment tax credit … can deliver a 10% internal rate of return … on the government’s initial investment.” Clean Technica wasn’t content with the press release’s own puffery, so it puffed up the report more: “Contrary to erroneous, misleading assertions to the contrary, the federal government’s Solar Investment Tax Credit (ITC) is proving to be an excellent investment for US taxpayers and the federal budget.”

Let’s be clear: the report does not demonstrate that the solar subsidy “pays for itself.” First, the report does not discount future revenues as is traditional in this kind of analysis, so the effects of time value of money and inflation are completely ignored. In effect they suggest it doesn’t matter if the subsidy ‘investment’ is paid back tomorrow, next year, or thirty years from now. Do you know any lenders that loan out money on these terms? If the federal government and current taxpayers had absolutely no other currently useful tasks requiring investments (technically, if current decisions had no opportunity costs), maybe one could ignore the time value of money. An investment is excellent only if the net present value of the future revenues is better with the investment than it would be with any other investment. The report doesn’t tell us if that claim is true of the solar subsidy.

Second, the report mostly neglects the effects of depreciation on the calculated taxes. They did analyze the tax collections with and without depreciation, and it turned out that assuming depreciation has a significant effect on their results. In their residential case assuming a $10,500 tax credit, the eventual federal tax revenue is $12,469 with depreciation instead of the $22,882 in taxes they highlight. In their commercial case, the eventual federal tax revenue collected is $380,127 with depreciation instead of $677,627. But they claim they can ignore depreciation and focus on the larger results.

Their justification for ignoring depreciation is that they’re assessing the effect of the subsidy on eventual federal tax collections, and depreciation would be the same whether a company invested in subsidized solar PV projects or some other unsubsidized capital projects. In their words, they are ignoring depreciation “since the depreciation of capital improvements applies without regard to how the capital improvements have been financed” and “depreciation is not specific to the solar industry.” (See pp. 2-3.)

But income tax laws, too, apply the same for income from subsidized solar projects or income from elsewhere–well, of course, there are thousands of variations in how income gets taxed under the federal tax code, but generally speaking income taxes are “not specific to the solar industry.” If we should ignore depreciation, why don’t we also just ignore income taxes?

This point leads us to the most fundamental of problems with the US PREF analysis. To analyze the benefits of the solar investment tax credit, we’d want to compare the world with the tax credit to the world without the tax credit. For example, the US PREF report simply estimates the corporate income from sales of electricity from the solar projects and then counts a fraction of this as federal tax revenue. But a reasonably safe assumption about a “world without the tax credit” is that electricity sales would have been about the same, so income and income tax revenues would have been about the same. The net effect of the subsidy on future tax revenue is near zero. (In effect, US PREF’s analysis proceeds under the amazing assumption that without the subsidized projects, consumers would have just used less electric power.)

The same criticism applies to investor and employee incomes. In the absence of the subsidized projects, it is safe to assume that investors would have found other investments to profit from and employees would have found other jobs. US PREF might claim that subsidized solar projects are more profitable to investors and lead to higher pay for employees than otherwise, so income tax collections would be a little higher than otherwise. But in this case they should only claim the increment in tax revenue, not the whole of it, as a “return on investment.”

All of this preoccupation with net federal tax collections is mostly, if not entirely, beside the point. Even if the report was any good–and it isn’t–public policy analysis is much more that gross impact on the federal budget over the lives of subsidized projects. The usual first step for sound policy analysis is a benefit-cost analysis, and a reasonable second step is careful considerations of alternative approaches to achieving desired policy goals. There is still more to good policy analysis, but these are useful starts. The US PREF analysis stands woefully short of a complete policy analysis and therefore is mostly useless as an argument for the solar investment tax credit.

Solar subsidies in Italy

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Michael Giberson

Carlo Stagnaro, writing in the European Energy Review, finds that Italy’s generous feed-in tariffs for solar power are creating challenges for both the Italian budget and the Italian energy market.

In terms of investments, Italy’s experience with solar power is definitely a success… Only Germany has more PV capacity. Indeed, Italy has more solar capacity than Japan, the US and China together.

[Image] Congested nodes in the high-voltage power grid in Italy. (Source: Terna)

But the success of Italian solar power came at a cost. It is built on Italy’s very generous incentive scheme, based on an extremely high feed-in tariff that is awarded to PV-installations (at least, to installations that were built before the end of June 2011). In addition, distributors are required to accept and dispatch “green” energy with top priority, regardless of the volumes offered. The combination of a guaranteed high price and virtually unlimited supply created the grounds for the boom.

Not only has government support for solar power led to high costs (€3.9 billion in subsidies in 2011 alone), it has also had another unforeseen effect: it has undermined the very market design that, until recently, had worked remarkably well, and had made Italy one of the most competitive electricity markets in Europe.

Stagnaro works for the Istituto Bruno Leoni, based in Milan.

New Jersey solar installers seek “Endless Summer” at ratepayer expense

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Michael Giberson

A crisis is coming for the New Jersey solar power installation industry. Stringent solar power purchase requirements imposed on electric utilities (i.e. on electric utility ratepayers) has turned the state into the nation’s second largest for solar power capacity installed, behind only sunny California.

But now that installed capacity is sufficient to meet current requirements, the installation business is expected to drop way off.  (The purchase requirements actually increase each year through 2021, but the rate of growth is slowing.) That expected drop off has lobbyists for both the solar power industry and unionized solar installers descending on the state capital, pleading for imposition of still higher purchase requirements on electric power consumers. The rallying cry has been to “save the jobs” created by the solar power purchase mandate.

Here is one report, “NJ looking to rescue ailing solar industry“:

New Jersey has long been known as the Garden State, but during the last five years, it could have easily been known as the Solar State from all the sunlight-absorbing panels that have cropped up nearly everywhere.

They’re on the roofs of schools, churches, municipal buildings and sewage treatment plants. They’re in farm fields and attached to utility poles. Even one of New Jersey’s trademark diners recently went green and installed panels.

But all is not well with New Jersey’s once-thriving solar industry, which has grown so big, so fast, that it’s now in danger of collapsing on top of itself.

The industry’s future could hinge on the work of the state Legislature during the next several months as lawmakers look to craft a bailout bill that rescues the solar market and the thousands of jobs it created.

A bailout bill was approved by the Senate Environment and Energy Committee on Thursday, but Bill S 1925’s chances of becoming law are far from certain as it relies largely on making power companies buy more electricity from solar generators.

Critics warn that doing so could mean higher bills for the state’s ratepayers. Supporters say without government help the entire industry will likely collapse.

“We have a crisis, and the crisis is this: If the market stays the way it is, there will be no new projects in the future, and the ones out there now will fail,” Sen. Robert Smith, D-17th of Piscataway, said Thursday at the onset of the lengthy hearing on the bill, which drew hundreds to the Statehouse, many of them union members who work in the industry.

At issue is the market for the electricity that solar panels produce, which has crashed during the last year because of an oversupply of solar development.

Under state law, utilities must obtain part of their electricity from solar generation. To do so, most must buy solar renewable energy credits, or SRECs, from solar panel owners.

The market for the credits originally boomed and helped New Jersey become the nation’s second-largest solar power producer behind California. All that development caused a glut in the market that has seen SREC prices decline from $650 or more in 2010 to less than $100 at times this year.

“We’ve become a victim of our own success,” Smith said. “We’ve had so much solar built in New Jersey that the market for SRECs has crashed.”

Historical SREC values are charted at the Flett Exchange.

The crash in the value of an SREC has cut into revenues projected for private businesses and public schools that have had solar panels installed. Banks have become less willing to loan for solar projects as subsidy revenues have dropped off.

A bill circulating to bail out the industry would both increase the mandated purchases, cap the size of solar projects built, and require projects gain approval from state regulators before they are built. The bill has failed, or at least stalled, on the issue of regulator review – the industry wants all existing projects exempted from regulatory review while the Governor’s office and some others insisted on no exemption.

All hope is not lost for the industry, even should the legislature fail to raise the cost imposed on ratepayers in order to bail out the New Jersey solar industry. The chairman of the New Jersey Board of Public Utilities has said if legislators don’t act then the BPU might simply impose a higher solar mandate on its own authority.

BACKGROUND: For an extended assessment of solar power incentives in state Renewable Portfolio Standards see Ryan Wiser, Galen Barbose, and Edward Holt, “Supporting Solar Power in Renewable Portfolio Standards: Experience from the United States,” Lawrence Berkeley National Laboratory, Berkeley CA, October 2010. LBNL-3984E.

Net metering in Indiana sees exciting 50 percent growth

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Michael Giberson

From the Indianapolis Star, “More Hoosiers reap benefits of generating their own electricity“:

[M]ore and more people around Indiana are starting to generate their own electricity, motivated by environmental concerns and feelings of energy independence.

The arrangement is known as “net metering,” allowing customers to offset part of their energy costs and feed the excess back to the utility for credit.

From 2010 to 2011, the number of Indiana customers taking part in net metering rose from 199 to 298 — a 50 percent increase, according to the Indiana Utility Regulatory Commission.

Sounds exciting, right? Okay, granted that in a state with about 2.6 million eligible retail electric customers, a move from  0.7 one-hundredths of one percent up to 1.2 one-hundredths of one percent of customers is not exactly a big deal.

The “big” jump in participation came mostly because the state allowed commercial and industrial customers to participate along with residential customers.

But at least a few customers are getting a great deal, right?

The system was expensive, about $30,000, or about as much as a new car. And so far, the savings are relatively modest, a few hundred dollars a year. So even with federal tax credits and a small grant from IPL, the system will take decades to pay for itself.

Decades to pay for itself, for a system with a projected lifespan of maybe two and a half  or three decades tops.

Marc Gunther on the brewing solar PV trade wars

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Michael Giberson

Marc Gunther asks, “Should we worry about Chinese government subsidies to its solar industry? Or send the Chinese a thank-you note?“ The issue is a “dumping” complaint filed by several U.S. based manufacturers with the U.S. International Trade Commission alleging China so subsidizes its solar PV production that the PV panels are being sold here at a loss.

As Gunther notes, “it takes chutzpah (that’s a technical term in economics) for US solar manufacturers to complain about subsidies in China since they, too, benefit from … [long list of subsidies provided by U.S. federal and state policies].”

ASIDE: Elements of the wind power industry have taken inspiration, as a few weeks ago four U.S.-based manufacturers of wind turbine towers filed a complaint with the ITC against Chinese and Vietnamese wind turbine tower manufacturers.

[HT to AltEnergyStocks.com, where Gunther's column was republished.]

The “first feel-good sustainability story of 2012,” so long as you ignore the costs

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Michael Giberson

Consider the claim in the headline, “How One Man’s Roof Paid for His Car.” Here’s the introduction:

It’s the first feel-good sustainability story of 2012. A man in Orlando, Florida installed solar panels on the roof of his home, sold the excess power back to the grid, and then used that money to make a down payment on a new Chevy Volt, the plug-in car that gets 60 miles to the gallon.

Now those solar panels are charging his new car.

The nut of the story is that over the last two years the Orlando homeowner netted $5,600 in power sales to his local utility due to the oversized solar power system installed on his roof and in his backyard, and he recently made a similarly-sized down payment on a Chevy Volt.

If we were to assume that the solar panels fell like manna from the skies and were installed by angels refusing payment for their services, it still just isn’t the case that the solar system paid for the car. One indication: it took two years to accumulate $5,600, an average of about $117 per month, and actual monthly car payments for a Volt are likely north of $400. Maybe the homeowner is (reasonably) figuring in foregone electric power bills, but that value is not reported.

The story appearing at StateImpact Texas was based on a newspaper article appearing in the Orlando Sentinel under the more modest headline of “Sun Powers Orlando Man’s Electric Car.” The Sentinel article describes the homeowner’s own investment in the solar power system as “hundreds of thousands of dollars” and mentions “tax breaks and rebates” provided by taxpayers and ratepayers without quantifying them.

Let’s look at it this way: If I poured hundreds of thousands of dollars into the ocean and caused other taxpayers and ratepayers to pour tens of thousands of dollars into the ocean, and then the waves washed a few hundred dollars back each month, the claim that “the ocean paid for my car” would seem a little silly.

The Sentinel reported the owner’s own estimate of the payback period at an astounding “50 years or more.” (Astounding because, as the NPR story discussed yesterday indicates, the projected lifespan of the system is much closer to 20 or 25 years.)