No net metering without grid connection, no net metering controversy where wires and energy products are unbundled

Around the country lobbyists for utilities and solar power companies are fighting over public policy, mostly for and against reform of net metering policies.* Today, The Alliance for Solar Choice (TASC) trumpeted in a press release recent victories in the states of Utah and Washington over net metering reforms urged by utilities. TASC highlighted the involvement of conservative policy group the American Legislative Exchange Council (ALEC), which joined the battle over net metering via a January 2014 resolution calling for “policies to require that everyone who uses the grid helps pay to maintain it and to keep it operating reliably at all times.”

In the TASC press release the group makes the odd and laughable claim:

Net metering allows rooftop solar customers to … receive full retail credit for any excess electricity sent back to the grid. Utilities turn around and sell this energy at the full retail rate to the neighbors, even though they paid nothing to generate, transmit or distribute that cleaner power.

I wonder how TASC thinks the net-metered customers’ excess electrical power actually flows to the neighbor’s property?

On the other hand, I take the next sentence in the TASC press release as obviously true: “Utilities attacking net metering want to eliminate the policy to stifle energy choice and protect their monopolies.” Evidence for the point is contained in the Washington state bill which, in addition to reforming net metering would have banned third party financing of rooftop solar if the utility itself offered a leasing program.

But one can oppose net metering and still favor “energy choice.” In fact, net metering is in the end incompatible with energy choice since net metering requires a grid connection and a cross-subsidy from grid-connected, non-net metered customers to survive. Giving energy choice to the customers subsidizing their solar-paneled neighbors will, if the burden grows large enough, push unsubsidized customers off the grid.

Currently, the burden is rather small most places. The utility industry is worried, though, about the possible rapid spread of net metering as the economics of rooftop solar improve and the consequent rate “death spiral” as fewer and fewer customers remain who actually pay for the costs of local distribution systems. See the report Disruptive Challenges, distributed by EEI in early 2013, and now the Economics of Grid Defection, published by the Rocky Mountain Institute this year.

The fight over net metering and other rooftop solar policies has broken out in a number of states, from Georgia to Massachusetts to Wisconsin to the solar-rich states of California and Arizona. Perhaps most interesting, however, is to note one solar-rich state lacking a battle over net metering: Texas. As Lynne noted here last summer, with generation and retailing already divorced from the monopoly wires business (in most of the state), Texas’s wires utilities are not nearly as threatened by distributed generation resources.

Power retailers in Texas are free (within limits) to offer a variety of contract to customers with distributed generation capability, and at least one offers a net metered-style product. Reliant’s e-Sense Sell-back plans credit customers for the full retail energy rate for the first 500 kwh of power put onto the grid (about $0.17 kwh at peak prices, and any additional power at $0.05 per kwh). Notice that as Reliant is an unregulated retail power provider, not a regulated utility, there is no forced cross-subsidization of distributed energy resources in the offering.

No subsidy, no undermining of grid finances, supports energy choice without promoting energy poverty. What is not to like?

 

 

*Net metering policies allow consumers capable of self-generation to be credited for any generation put onto the local distribution grid at the full retail price of electricity. Because the full retail price of electricity covers both energy and grid costs, utilities object that net metered customers are overpaid for the power they inject into the distribution grid.

Chu’s solar power regrets

Michael Giberson

From The Onion:

WASHINGTON—Sources have reported that following a long night of carousing at a series of D.C. watering holes, Energy Secretary Steven Chu awoke Thursday morning to find himself sleeping next to a giant solar panel he had met the previous evening. “Oh, Christ, what the hell did I do last night?” Chu is said to have muttered to himself while clutching his aching head and grimacing at the partially blanketed 18-square-foot photovoltaic solar module whose manufacturer he was reportedly unable to recall… According to sources, Chu’s encounter with the crystalline-silicon solar receptor was his most regrettable dalliance since 2009, when an extended fling with a 90-foot wind turbine nearly ended his marriage.

What, no Solyndra jokes?

Secretary Chu responded on Facebook:

I just want everyone to know that my decision not to serve a second term as Energy Secretary has absolutely nothing to do with the allegations made in this week’s edition of the Onion. While I’m not going to confirm or deny the charges specifically, I will say that clean, renewable solar power is a growing source of U.S. jobs and is becoming more and more affordable, so it’s no surprise that lots of Americans are falling in love with solar.

Reading between the lines here, in particular, the claim “renewable solar power is a growing source of U.S. jobs,” I think we can conclude that the solar panel’s manufacturer has even more damning photos in a vault somewhere.

The Onion:

The Onion: “Hungover Energy Secretary Wakes Up Next To Solar Panel”

New Jersey politicians poised to pour more ratepayer money into solar power developer pockets

Michael Giberson

The bill isn’t signed into law yet, but New Jersey solar installers are probably breathing a little easier given reports that New Jersey Governor Chris Christie is expected to sign a law that would boost the state’s electric utility’s solar power purchase obligation from about one-half of one percent to over two percent of the utilities’ electric power sales. (See related.)

Meanwhile, a New Jersey-based unit of an Italian solar panel maker is calling it quits, saying it couldn’t compete with Chinese solar panel manufacturers. The company, MX Solar USA, LLC, had taken $3.3 million in loans and grants from the state of New Jersey, but apparently it wasn’t enough to enable the solar panel maker located in the countries hottest solar PV market to out compete international solar panel manufacturers. MX Solar was among the U.S. companies that filed the anti-dumping complaint against China that resulted in significant tariffs being imposed on several Chinese manufacturers. The company complains that Chinese manufacturers are evading the tariffs by partnering with companies in other countries.

In an amusing tidbit tossed in right at the end of the article on MX Solar, reportedly the company purchased at least some of the solar cells it used in its solar panels from Chinese solar cell manufacturers. It claimed Chinese solar panels were unfairly subsidized, but when it went shopping for parts, it found Chinese solar cells at prices hard to beat!

Pat Wood: The Texas Tribune Interview

Michael Giberson

Pat Wood, the former FERC chairman and former Texas PUC chairman, was interviewed recently by The Texas Tribune. Wood is surely one of KP‘s favorite ex-regulators, so of course we’re linking to the interview. Here’s just one bit:

Wood: … There is also a lot that can be done, particularly on the energy demand side. By that I mean more aggressive conservation programs where you let market signals encourage customers that have the ability to shut down for a certain small amount of hours in the day to get paid to do so.

TT: Do you mean even individual consumers can potentially do more — or be helped to do more — to save energy?

Wood: They could, but if you went from the current penetration we have today, which is focused on the largest customers, to then focus on the medium-sized customers  — and by that I mean grocery stores, shopping centers, Target, customers like that — you can pick up a whole lot more responsive load before you need to get to the residential customer. The residential customers comprise about 40 percent of the [electrical] load at peak. Industrial and commercial are each about 30 percent. That’s a lot of lower-hanging fruit to pick before you get to residential.

And in discussing this, I’m not saying that Target would have to bid to shut down a store to get paid; it would maybe curtail 20 percent of its demand from 4 to 6 pm [when electricity usage peaks].

This capacity tightening may force that day to come sooner rather than later, which I think is a great thing for Texas, to latch onto this smart-grid investment that we’ve been making statewide over the past couple of years into a level of demand responsiveness that really moves our grid to 21st century capability well ahead of the other states.

Wood also addresses the lack of incentives to build new plants in Texas, the prospects for wind and solar in the state, energy storage, and among other things the role of the Public Utility Commission after the state “moved the dial from 10 to 4 in terms of regulation.”

Wherein the jobs jobs jobs rhetoric hampers solar power development

Michael Giberson

If you believed what politicians say about green energy and jobs, you probably think they fit together like peanut butter and jelly squished between layers of bread. Has there been a renewable power subsidy announcement or ribbon-cutting ceremony where the word “jobs” was not featured in the first two or three sentences uttered by politicians? When it comes to public policy, job counting is the new measure of policy.

So in the outer suburbs of Phoenix, Queen Creek town officials counted up the jobs associated with a couple of solar power projects proposed to occupy a large bit of their industrially-zoned property with the help of some town economic development funds. Turns out it doesn’t take a lot of people to maintain a large-scale PV power system, and they’re mostly low level maintenance workers. The jobs-counting is giving the town second thoughts about the projects.

Now, in some big-picture, overall costs-and-benefits, thorough and balanced look at energy technologies, that it doesn’t take a lot of highly paid professionals to operate a PV solar power facility is a good thing. It is one of the reason that PV power has such a low marginal cost of operation. But in the kookier world where local economic development, renewable power rhetoric, and taxpayer subsidies collide, jobs are counted as benefits and then the analysis stops.

Two comments: First, PV power remains more expensive than alternative sources of power even admitting the presence of larger external costs for fossil-fueled power plants. We likely would be better off if money currently being used to build solar projects now were spent on additional research instead. Queen Creek may be on the right track, even if for the wrong reason. Solar advocates are promising that grid-parity is just around the corner, so why are we wasting money building inefficient projects now instead of spending that money on getting us around that corner?

Second, the number of jobs a policy is expected to create has very little relevance to the evaluation of public policy proposals. Mostly what matters is whether the benefits of a policy proposal exceed the projected costs (plus, you know, those old-fashioned ideas about the proper scope of government and trying not to infringe on people’s rights).

Environmental economist John Whitehead is right to hope that environmental policy creates few jobs, because, as he explains, it would mean that businesses have found lower cost ways to get cleaner air and water.

Massachusetts wants $22.5 million in tax breaks back from Evergreen Solar, company in dire financial condition

Michael Giberson

Happier Days, from The Boston Globe: "Evergreen Solar's CEO, Richard M. Feldt (right), says Governor Deval Patrick's commitment to solar power played a key role in the company's decision to expand in Massachusetts. (Photo by Ellen Harasimowicz for The Boston Globe/File 2007)"

Politicians show up, grinning for the cameras at groundbreaking, they come applauding the expansion announcement (and why not, public tax breaks and other policy support for solar power manufacturers were chief among the reasons the plants were built in the first place), but where are the toothy smiles of supporting public officials when the company closes the manufacturing plant down? Evergreen Solar, a prized clean-energy/green jobs catch of the state of Massachusetts thanks to some creative economic development work by state and local governments, is closing its manufacturing plant in Devens, MA.

According to one summary, “Among the incentives the state offered Evergreen Solar were a $15 million property tax break, a $7.5 million in state tax break, $2.7 million through a subsidized lease and $21 million in cash grants. Not to mention that the state spent $13 million in construction on roads and other infrastructure to support the plant.” Another report put the figure at “at least $43m in state aid.”

Massachusetts politicians no longer swarm the gates of Evergreen Solar; instead they send notice that they want the tax breaks back, seeking $22.5 million from a company that has been losing money so quickly that it may not survive to the end of 2011. And perhaps Massachusetts should not feel especially foolish, Evergreen managed to squeak out significant support from government entities in Germany (“grants totaling approximately $34 million at current exchange rates”) and China, too  ($33 million in state-owned company loans to Evergreen and a similar amount to its Chinese partner).

Just another warning sign that the business of promoting business with tax breaks and other local subsidies is fraught with difficulty.

New Jersey is not exactly the sunshine state, but solar panels spring up with help of state government

Michael Giberson

Casually scanning a solar resource map wouldn’t naturally lead you to think that New Jersey would be a good candidate for solar power, but state government policies have resulted in it leaping into second place in PV installations (after California) in 2010.

NREL PV Solar Resources Map

NREL PV Solar Resources Map

More PV was installed in New Jersey last year than in Nevada, Arizona, Florida, Colorado, New Mexico, Texas, or Utah. Much more than Oregon, which has a lot better quality resource for PV solar, is about 12 times larger, and no slouch when it comes to flashing its environmental credentials.

The New York Times reports that not all residents of the state are happy with the solar panels popping up on utility poles and other places. Guess you can’t make everyone happy, right? Whether they like it or not, electric ratepayers throughout the state have been helping to fund the project.

Some highlights from the Times:

ORADELL, N.J. — Nancy and Eric Olsen could not pinpoint exactly when it happened or how. All they knew was one moment they had a pastoral view of a soccer field and the woods from their 1920s colonial-style house; the next all they could see were three solar panels.

“I hate them,” Mr. Olsen, 40, said of the row of panels attached to electrical poles across the street. “It’s just an eyesore.”

Like a massive Christo project but without the advance publicity, installations have been popping up across New Jersey for about a year now, courtesy of New Jersey’s largest utility, the Public Service Electric and Gas Company. Unlike other solar projects tucked away on roofs or in industrial areas, the utility is mounting 200,000 individual panels in neighborhoods throughout its service area, covering nearly three-quarters of the state.

The solar installations, the first and most extensive of their kind in the country, are part of a $515 million investment in solar projects by PSE&G under a state mandate that by 2021 power providers get 23 percent of their electricity from renewable sources. If they were laid out like quilt pieces, the 5-by-2.5-foot panels would blanket 170 acres.

New Jersey is second only to California in solar power capacity thanks to financial incentives and a public policy commitment to renewable energy industries seeded during Gov. Jon S. Corzine’s administration.

But his neighbor Tony Christofi, a 47-year-old contractor, wondered aloud whether Fair Lawn, by not fighting, was getting more than its fair share.

“I’m fine with green energy,” he said, “but are the savings going to be passed on to consumers?”

PSE&G officials said solar energy was still more expensive to produce than more traditional power sources and acknowledged that bills were going up 29 cents a month. Each panel produces 220 watts of power, enough to brighten about four 60-watt light bulbs for about six weeks. When complete, this project is expected to provide half of the 80 megawatts of electricity needed to power 6,500 homes.

The article notes a shift in priorities that came in with the state’s new governor: “Although he supports renewable energy, Gov. Chris Christie, through a spokesman, characterized the mandates that spawned the panel project as ‘extremely aggressive.’ He has already asked that they be re-evaluated.”

In February, a New Jersey newspaper reported, “The state will move away from subsidizing residential solar projects to emphasize commercial installations and encourage the construction of more gas power plants in a revised energy master plan….”