EVERYBODY LOVES NEW ENERGY

The expert presenters in the Solar Electric Power Association (SEPA) monthly webinar were describing the rapidly evolving New Energy incentive programs across the U.S. and around the world. At the same time, enthusiastic approval of the expanded New Energy incentives in the economic stimulus bill came in and reports were emerging that the Congressional compromise not only sustained New Energy's most important supports but also wrote out big boondoggles to the coal and nuclear industries.

On the eve of St. Valentine's Day, one thing was undeniably clear: Everybody loves New Energy.

The SEPA webinar was about Feed-in Tariffs (FiTs), the cutting-edge in New Energy incentives.

Currently, the main U.S. New Energy incentives are (1) tax credits (now, thanks to the stimulus bill, obtainable as grants), (2) rebates, (3) state Renewable Electricity Standards (RESs) requiring utilities to obtain a specific portion of their power from New Energy sources by a date certain, and (4) net metering programs that reward individual system owners for the power they produce up to - but not beyond - the amount of power they consume.

According to the SEPA webinar presenters, the consensus of studies is that a well-designed FiT is more effective at driving New Energy growth than any of those.

The FiT has certainly been effective in Germany where, despite very average insolation (saturation of sunlight per square meter), that country has the biggest installed solar capacity in the world. Spain’s solar installation has boomed over the last 1-to-2 years as the result of a very generous FiT and Italy is expected to show similar results from its relatively new FiT, though the current global credit contraction may compromise this year’s anticipated boom.

An FiT is a tariff, or rate of return, at which owners of New Energy systems are remunerated for all the energy the systems they install generate (on a kilowatt-hour basis). These guaranteed remuneration rates are significantly above standard power rates and are subsidized by taxpayers and/or ratepayers. Individuals can, in effect, become profit-making power producers. The idea is to create an incentive for people to install systems, (solar, small wind, home geothermal, etc.) and generate New Energy.

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With a guaranteed return on system installation comes demand. With the demand comes production volume. With production volume comes economies of scale. With economies of scale come lower system costs.

The elevated return is guaranteed over a long period of time, often 15 or 20 years. Early adopters earn the highest returns, with the tariff lowered progressively over a period of years. This is called a degression rate and it is crucial. A properly designed system uses the degression rate to slowly shift the burden of an incentive away from taxpayers and ratepayers as falling system costs created by economies of scale make system purchase more economically viable.

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Wilson Rickerson of Rickerson Energy Strategies talked about how much Europe loves New Energy, thanks to its FiTs, and about how there is a rising clamor in the U.S. for FiTs at the state and national levels. Karin Corfee of KEMA Consulting Services talked about how much the love of New Energy in Hawaii and California is about to be facilitated by study of and trials with FiTs. Finally, John Crider of Gainesville Regional Utilities talked about how much more Gainesville loves New Energy as the result of its first-in-the-U.S. FiT program.

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In response to Canadian environmental activists who would let the perfect become the enemy of the good, Canadian activist and political leader Marilyn Churley explained something more and more people are coming to understand. It is now imperative to choose New Energy.

Churley: “I'm all for citizen involvement…but let's get some perspective here. Study after study demonstrates that the trigger point for severe climate change is closer than previously thought, and the consequences even more dire. To put a fine point on it, we need action now.”

Churley believes New Energy can provide 1/3 of world energy and Energy Efficiency can cut greenhouse gas emissions (GhGs) 1/4 by 2030. Churley sees a need for environmental sensitivity but also an understanding of the stakes.

Churley: “I am not saying that every proposed site is going to be appropriate and I am not reducing all opposition to NIMBYism, but there is plenty of misleading and outdated information being used that is causing unnecessary alarm (for instance, the design of modern turbines has greatly reduced danger to birds). So yes, of course, there must be a transparent and robust environmental assessment process that examines all aspects of a proposed siting with real input from affected communities…”

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Pay attention. This next bit is crucial.

Churley: “Better to take appropriate steps now than have birds dying in their nests and whole species and ecosystems disappearing – which, by the way, is already starting to happen. And while changing our light bulbs and taking public transportation are part of the solution, they are not going to get coal plants shut down.”

Churley finishes her point with a rhetorical flourish too elegant not to quote.

Churley: “…I say urgently to my friends who care about the environment and future generations, we cannot be split on this issue. We want coal plants closed, no new nuclear or gas plants and we hate the dirty Alberta tar sands. We are going to be laughed out of town if we don't fully and aggressively support all forms of renewable power…”

California Governor Arnold Schwarzenegger is among the biggest of New Energy’s boosters. He regularly tells audiences he looks forward to the time when he can travel the length and breadth of California by air and see roofs everywhere with solar panels. But if the solar power plant pioneers at BrightSource Energy have their way, Arnold may have to settle for mirrors instead of panels.

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As reported yesterday (see DOES BIG NEW ENERGY… below), state RESs and a recent change in the investment tax credit are driving utilities to unprecedented spending for solar power plant outputs. Recognizing that California utilities are already nearing full engagement, solar power plant pioneer BrightSource Energy has now expanded its operations to neighboring Arizona.

Like California, Arizona has an aggressive RES requiring its utilities to obtain a big portion of their power from New Energy sources in the near future and a big portion of the New Energy must be solar energy. Notice that in his statement to a Phoenix newspaper about his company’s intentions in the state, BrightSource’s Arizona developer didn’t mention the state’s sun, he mentioned its utilities.

Brian Rasmussen, director of project development, BrightSource Energy: "If we can make the case we can site a plant in Arizona, we will [and]…We hopefully also will have contracts here in Arizona with (Arizona Public Service) and (Salt River Project) to give us better economies of scale."

Google loves New Energy and is commited to developing New Energy aggressively enough to bring the cost of New Energy-generated electricity down to grid-parity with traditional generation sources. It likes BrightSource’s prospects so much it invested $115 million in the company in 2008.

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The only things between BrightSource and Arizona power production are (1) finding adequate new transmission and (2) satisfying Arizona regulators’ concerns about excessive water consumption. It is possible both hurdles could be more readily cleared if BrightSource was planning to deliver the power to Arizona instead of California – because, of course, Arizona loves New Energy, too.

It is clear from the $50 billion allotment to it in the stimulus package that the U.S. Congress loves New Energy. Crucially, the bill on the verge of being approved by both houses and sent for President Obama’s signature retains the optional transformation of the New Energy tax credit incentives to Department of Energy grants. The New Energy industries have been clamoring like a jilted lover for this adjustment since the impact of the global credit crunch compromised the usefulness of the tax credits as they were originally passed.

In response to this Congressional generosity, the American Wind Energy Association (AWEA) promised to be faithful and do the right thing with the money.

Greg Wetstone, Senior Director for Governmental Affairs, AWEA: “The renewable energy provisions in the final bill will stimulate economic and job growth in the wind industry. More than that, this bill is a critical down payment on long-term policies needed to meet the President’s ambitious renewable energy goals…”

Finally, there is President Barack Obama. His love of New Energy is a true passion. He has essentially staked the success of his presidency on it. Though short term events may threaten to turn his passion into a Romeo-and-Juliet affair, take heart: These are mere dark night tempests before the dawn of the sun's power - and wind power and the power of waves, tides and currents.

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President Obama, February 9, on New Energy: “[There are] three things that we can do, just very specific, and we can do them quickly. And then there’s a fourth thing that we can do that will take a little bit more time.

“Number one is that we need to pass a renewable energy standard. And what that does is — just for people who aren’t sort of experts in the field, it’s pretty simple. What it says is, to the various utilities, it says, “You need to get 15 percent or 20 percent of your energy from renewable sources.”

“And once you set that benchmark, then what happens is, is that people who are producing renewable energy — solar or wind or hydrothermal — what they’re able to do then is count on a pretty solid market that they’re going to be able to sell their energy to. And that means investors then will say, “You know what? This is actually a pretty good thing for us to invest in.”

“And it — over time, what that means is, is that more and more people invest in renewable energy, which means the technology gets better, the research and development improves, and you start growing that sector. So a renewable energy standard is very important.

“That’s point number one.

“Point number two is, we should be providing tax credits and loan guarantees to renewable energy…The third thing that we should be doing is working with utilities all across America…[so that] the utility is able to make money not just on how much energy it sells, but it’s also able to make money on how much energy its customers save…The fourth thing — and this is the thing that’s going to take a little bit longer — is we’ve got to improve basic science research and development. When it comes to solar, when it comes to wind, the — the price has gone down, but, generally speaking, it’s still a little more expensive than fossil fuels, coal, natural gas, and so forth.

“So we’ve got to improve the technology. And that’s why I want to make sure that we’re investing some money every year in the development of new energy technologies that will drive those costs down over the long term.

“The country that figures out how to make cheaper energy that’s also clean, that country is going to win the economic competition of the future.

“And I want that to be the United States of America. That’s one of my commitments as president of the United States.”

President Obama talked about New Energy February 9. From VoiceofAmericans2008 via YouTube.

Westar Energy Looking for More Renewable Energy; Utility Considers Adding up to 500 MW of Energy From Renewable Resources
February 12, 2009 (CNNMoney)
and
No time for NIMBYism, wind power is needed now; Misleading, outdated information about wind turbines is causing unnecessary alarm
Marilyn Churley, February 12, 2009 (Toronto Star)
and
Firm surveys Arizona for solar sites
Ryan Randazzo, February 12, 2009 (Arizona Republic)
and
Feed-in Tariffs: The Good, the Bad and What Utilities Need to Know
Wilson Rickerson, Karin Corfee, and John Crider, February 12, 2009 (Solar Electric Power Association)

WHO
Wilson Rickerson, Rickerson Energy Strategies; Karin Corfee, KEMA; John Crider, Gainesville Regional Utilities; Westar Energy, Inc. (Bill Moore, CEO); Green Energy Act Alliance of Canada; Marilyn Churley, former Ontario NDP cabinet minister and Toronto city councilor, presently co-founder of Citizens for a Safe Environment; Ontario Premier Dalton McGuinty; BrightSource Energy Inc. (Brian Rasmussen, director of project development)

WHAT
New Energy policy analysts are upping the ante on incentives by pushing for state FiTs, with their eyes on eventually getting to a national program. Westar Energy is shopping for 500 megawatts of new Energy in Kansas. Ontario political leaders are developing a more aggressive New Energy policy. And BrightSource California, not satisfied with its own abundant New Energy resources, is eyeing Arizona’s sun.

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WHEN
- Westar aims to bring 200 additional megawatts of New Energy online by late 2010 and 300 megawatts more by late 2013. All proposals are due March 30.
- Churley introduced New Energy and Energy Efficiency legislation in the 1980s. She points out that the 2009 world summit in Copenhagen that will set global protocols after 2012 is pivotal and calls on her province and her nation to participate aggressively.
- BrightSource will brinbg a 100-megawatt solar power plant online in 2013 for Southern California Edison and then a 200-megawatt facility in 2014, and then 2 more in 2015 and 3 in 2016.

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WHERE
- FiTs have been thoroughly pioneered in Germany and Spain where they have driven unprecedented capacity growth.
- FiTs are being investigated in: California, Hawaii, Wisconsin, Michigan, New Jersey, Indiana, Illinois, Minnesota, New York, Rhode Island
- Westar Energy, the largest consolidated electric utility in Kansas, launched the state’s biggest New Energy project in 2007 with its participation in 3 wind installations (the Central Plains Wind Farm in Wichita County, the Flat Ridge Wind Farm in Barber County, and the Meridian Way Wind Farm in Cloud County) with a total capacity of 300 megawatts.
- BrightSource Energy Inc. is based in Oakland, CA. With solar power plants planned for the southeastern California deserts, it opened a Phoenix office in September 2008 and is also scouting Arizona and Nevada for power plant sites.

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WHY
- Westar owns 295 megawatts of wind power, 6% of its customers' peak demand. 200 megawatts more would put it at 10%. Westar also invests in transmission.
Westar Energy wants to own the New Energy generating facilities after development and construction but is open to power purchase agreement offers.
- Offers to Westar must follow guidelines created by the Kansas Energy Council and address potential environmental impacts.
- The Green Energy Act Alliance is a coalition of environmental, farming, community and native groups pushing the province to develop aggressive New Energy policies.
Ontario Premier Dalton McGuinty will introduce a Green Energy Act, advocated by the Green Energy Act Alliance, that will streamline the regulatory and approvals process for New Energy projects.
- An Ontario-wide group is fighting wind turbine production and even resisting the placement of a wind research platform in Lake Ontario to measure the offshore wind resource.
- BrightSource Energy has applications for Arizona solar power plant sites with the Bureau of Land Management (BLM) and is negotiating with Arizona landowners.
- Solar power plant builder Abengoa Solar is trying to get funding for a project it has a power purchase agreement with Arizona utility APS to develop.

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QUOTES
- Bill Moore, CEO, Westar Energy: "Westar Energy continues to seek additional generation resources to provide for Kansas' electricity needs with clean, renewable energy…This is an important step in our support of our renewable energy goals."
- Greg Greenwood, vice president of generation construction, Westar: "Wind energy is already a valuable component of our generation portfolio…It will take a combination of several types of resources -- renewable, peaking and baseload -- to meet the future needs of our customers."
- Churley: “Ontario has the chance to seriously tackle climate change, shut down its coal plants and, as a very important added benefit these days, stay competitive with the United States under a pro-green Obama administration…We can be world leaders, build the technology here, employ thousands of Ontarians and save our planet all at the same time…Let's not blow it.”
- Brian Rasmussen, director of project development, BrightSource Energy: "We compare sites in [Arizona, California and Nevada] based on tax incentives, policies and quality of the sun…Arizona is not Number 1 in all those areas. We think there is room for improvement."