December 11, 2007 – Volume 11, Issue 11
I N · T H I S · I S S U E


The California Feed-In Tariff

Well to be honest, it hit me hard. The head of the Energy Division at the California Public Utilities Commission was taking a shot at me. At issue is how to fund solar systems and how to make solar investments a good deal. Sean Gallagher took exception with my assertion that California is applying the brakes with limits on net metering. He claimed that there has to be balance in the level of subsidy. And didn't I know that California has a feed-in tariff? No, frankly, I did not. In EcoMotion Network News Volume 11#10 I challenged the State to follow the German feed-in tariff model that is working so well.

Gallagher asserts that net energy metering has not one but two benefits. In addition to paying small producers retail rates for on-site generation, participants enjoy the benefits of being connected to the grid. "…With solar net metering, they get credit against the transmission and distribution components of their bill when they produce energy, not just the energy commodity component of the bill. Of course, the customer still receives transmission and distribution service from the utility in the hours when the premise is a net consumer of energy. So solar net metering down to zero is a pretty good deal for customers. It is really a second subsidy, in addition to the rebate program." While Gallagher is a strong solar advocate, particularly mandating solar in new developments in appropriate climate zones, he noted, "…other ratepayers, not the utility, effectively pay for net metering. So if you increase the net metering subsidy by allowing the bill to go negative, other ratepayers must pay for it." This is the crux of the policy issue: What level of incentives will move the solar market, and what level of rate increase will our society accept to support sustainable energy resources? In Germany, consumer willingness to pay for renewables was analyzed, and consumers there are willing to pay. The feed-in tariff model allows any solar producer to maximize production without limits.

Sean Gallagher then reported on his division's work developing a feed-in tariff in California: "Happily, perhaps, there is also a feed-in tariff solution. The Commission's implementation of AB 1969 from 2006 expanded on the requirements of the bill to allow any customer to install a small renewable facility (up to 1.5 MW) and sell ALL the energy to the local utility, at the MPR rate. Of course, a customer can't get both net metering and the feed in tariff approach, but now customers can choose based on which approach is a better fit for them." I thanked Sean and dug in to CPUC Draft Resolution E-4137.

The California Feed-In Tariff - formally presented in a CPUC Draft Resolution E-4137 on "tariffs for the purchase of eligible renewable energy generation" - will come before the CPUC Commissioners for approval at their upcoming December 20th meeting. The tariff's genesis was AB 1969 which passed in September 2006. It was designed to accommodate water and wastewater facilities that sought to feed power back into the grid. The CPUC was charged with developing a suitable tariff, and ultimately a resolution called for 250 MW of renewables from water and wastewater facilities statewide. SCE and PG&E expanded the offering to 228 MW for other, "non-water and wastewater facilities."

Further, the feed-in tariff is based on MPR, the so-called "market price referent" and pays renewable energy providers with 10, 15, and 20-year contracts for fixed "feed-in" prices of 9.2 - 11.954 cents per kWh, plus a "time of delivery" (TOD) factor, basically a relatively small sum. (The MPR is the "predicted annual average cost for a base-load proxy plant.") While the tariff may be a good start, it's far from the German model that pays over fifty cents a kilowatt-hour! It certainly appears far from playing a major role in progressing renewable energy and solar power in California; at its current rates it will not become a common means for the average citizen or business or government facility to go solar.

Molly Sturkel at the CPUC writes that, "We're not sure what the interest level will be... but plan to watch it closely. For [power users] that have average retail electric rates below the MPR (like some that actively manage their load to get close to whole power rates) -- this is a good tariff opportunity."
"Hey Ted - I like your newsletter, but I'd expect better from you on the solar net metering issue."
Sean Gallagher, Chief, Energy Division California Public Utilities Commission

The Big Energy Equation: Part Three Renewable Energy

Editor's Note: This concludes a three-part series on "the big energy equation." We began with global energy use (in V1#7), then shifted to national energy use (V11#9), and now conclude with a snapshot of renewable energy resources both globally and domestically.

Renewable energy once was the basis for all modern civilization; using the sun, wind, and water to do work. Today, while "primitive" forms of renewable energy consumption continue such as gathering fuel wood for cooking, (and are not included in the data presented herein), renewable energy has been largely supplanted with the use of fossil and nuclear sources of energy. In 2005, renewable energy forms provided only 8% of global energy consumption, with hydro and biomass sources providing 34 quads of our 400 quad global, annual energy diet.

In the United States, the share is about the same: Renewables, primarily hydro and biomass, provide about 7% of national energy consumption. Remarkably, geothermal, solar, and wind energy resources combined provide less than a quad to our 100-quad per year national energy diet, with hydro and biomass providing about 3% each.

In terms of electricity, renewables provided 9% of the national production in 2005. Of this, conventional hydro provided 269.6 TWh, more than two-thirds the nation's renewable generation base.

The Naked Truth: Coal is King

Editor's Note: This glimpse into the World Energy Outlook 2007 findings on coal is horrifying: If the International Energy Agency is right, and the naked truth is that coal is on an unstoppable roll, then its carbon dioxide and climate implications - short of a sequestration miracle -- are light years beyond demoralizing, potentially fatal to society as we know it. The findings of the International Energy Agency's annual report smack the face of climate protection.

The International Energy Agency (IEA) reports in World Energy Outlook 2007 that the world's dependence on fossil fuels is set "to rocket at a time of global alarm about climate change." The most profound finding: CO2 emissions will surge 56% over the 2005 level to 42 billion tons per year.

IEA predicts that coal will make a comeback, the Middle East and Russia will grow in influence as oil suppliers, and emerging giants China and India will account for most of the growth. The projections "are even worse" than the projections in WEO 2006, giving little hope for technological breakthroughs and finding instead that "coal will be king" in emerging countries, China and India in particular.

Coal will realize the biggest increase in consumption, growing by 73% between 2005 and 2030. China and India already account for 45% of world coal use, and will drive over four-fifths of the increase in coal use through 2030. Because of the role of coal-fired generation in this increase, IEA advocates carbon capture and sequestration (CCS), and notes that if its member countries implement CO2 reduction strategies that they are considering, the tonnage may be as little as 34 billion tons per year. (Current anthropocentric emissions are approximately 25 billion per year.)

Perspective: Deaths per Megawatt

This past August's Crandall Canyon Mine collapse in Huntington, Utah was a horrid story. Six men trapped, followed by three more, all presumably dying a terrible death. Shortly thereafter, another Chinese coal mining accident. This time 161 perished, the biggest accident since a 262-death Chinese mining accident two years ago. Last year, 4,746 Chinese miners died in coal mines, about 13 a day. (And that's a big improvement; the peak year was 2002 with some 7,000 fatalities.) With China's insatiable thirst for coal climbing each day, miners will be deployed to more and more dangerous mines. And the death toll will rise.

Chinese miners toil for a few hundred dollars a month; fearful of reporting dangerous conditions and mine accidents that leave them without jobs at all. Surveyed miners in the Hunan province fear poverty more than mine accidents. Mining is inherently high risk, but China's fatal accident rate is about two deaths per million tons of coal mined, fifty times higher than America's rates and nine times higher than India's rate. Chinese officials note that more deaths occur in small mines that go unreported, "which routinely cover up accidents."

Perhaps we ought to look at power supplies in terms of "deaths per megawatt," internalizing deaths that have heretofore been an externality of power production. Some tried and true environmentalists are calling on "clean coal" and other trade-off technologies in the battle for climate protection. Coal may be a least-cost fuel, but at what climate and now mortal cost?

Such a discussion quickly leads to benign sources of power. Few canaries or miners or caribou or seagulls die "mining" energy waste and becoming more energy efficient. It's the ultimate low-mortality energy source. Efficiency in America is only held back by imprecise - and narrowly defined -- measures of cost effectiveness. Efficiency is restricted, while conventional power sources continue to be subsidized. If the true costs of coal, and nuclear, and gas were internalized, efficiency would no doubt rise to the top of society's energy choices.

The Green New England Patriots

The New England Patriots, known for winning Super Bowls, is also among the greenest of teams. When Gillette Stadium opened in 2002, it was awarded the Environmental Award for Corporate Leadership for the stadium's design. The EPA also gave the Kraft Group - owners of the Patriots - the Environmental Merit Award. Now Jonathan Kraft has announced that pre-season, regular, and post-season home games throughout the season will be powered by wind power purchased from Constellation NewEnergy.

Kennebunkport Wind

Southwest Windpower reports that former President George H. W. Bush and his wife Barbara have installed a wind turbine at their summer home at Walker's Point in Kennebunkport, Maine. The Bushes reportedly opted for the system for financial and environmental reasons. The Skystream 3.7 at the Bush's home will generate power beginning at 8 miles per hour, with projected average monthly production of 400 kWh. The wind turbine, mounted atop a 33 foot tower, is grid connected and will feed excess power into Central Maine Power's system throughout the winter earning the Bushes credit for power that they can then use in the summer. In Maine, Governor Baldacci's wind power task force is encouraging wind turbines at schools to increase their visibility.

At the other end of the spectrum, wind turbines are getting larger and larger, into the megawatts. GE is rolling out a 5 MW wind turbine. Naturally the blades of these massive wind turbines are enormous, requiring very special shipping. The LM Glasfiber plant in Grand Forks, Michigan has doubled its capacity this year, producing over 2,000 wind turbine blades, each of which are 120 - 145 feet long and weigh up to 1,500 pounds. Furthermore, their shipping costs can be as high as $15,000 - 20,000 each. Trucking the blades requires special extra-long trailers with rear steering to navigate turns. Many states also require pilot cars in front and back with flashing lights to escort the giant trailers.