NewEnergyNews: 09/01/2011 - 10/01/2011

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge: To make every day Earth Day.

YESTERDAY

  • Weekend Video: Climate Change For The Birds
  • Weekend Video: The Evidence Mounts
  • Weekend Video: Colbert On Birds And Climate Change
  • THE DAY BEFORE

  • FRIDAY WORLD HEADLINE-NOW CO2 TOO HIGH FOR PLANTS AND OCEANS TO ABSORB
  • FRIDAY WORLD HEADLINE-NEW ENERGY IS THE WORLD’S BEST OPTION
  • FRIDAY WORLD HEADLINE-SWEDEN WINNING SCANDINAVIAN WIND RACE
  • FRIDAY WORLD HEADLINE-INDIA DISPLAYS SOLAR'S VERSATILITY
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    GET THE DAILY HEADLINES EMAIL: CLICK HERE TO SUBMIT YOUR EMAIL ADDRESS OR SEND YOUR EMAIL ADDRESS TO: herman@NewEnergyNews.net

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    THE DAY BEFORE THE DAY BEFORE

    THINGS-TO-THINK-ABOUT THURSDAY, Sept. 11:

  • TTTA Thursday-GETTING GREEN BY MIXING RED AND BLUE
  • TTTA Thursday-PRICEWATERHOUSE COOPERS’ CLIMATE CHANGE NUMBERS
  • TTTA Thursday-THE RACE FOR EV DOMINANCE
  • TTTA Thursday-THE BIG FUTURE FOR ZERO ENERGY BUILDINGS
  • THE DAY BEFORE THAT

  • THE STUDY: THE 2013 U.S. DISTRIBUTED WIND MARKET
  • QUICK NEWS, Sept. 10: A WAY TO INVEST IN WIND ENERGY; SOLAR POWER TOWERS GET SAFER; TEST COMING FOR GIANT TURBINE BLADE
  • AND THE DAY BEFORE THAT

  • THE STUDY: COMPARING SOLAR IN JAPAN AND THE U.S.
  • QUICK NEWS, Sept. 9: CLIMATE CHANGE TO GET MORE THAN HALF OF ALL BIRDS; U.S. OFFSHORE WIND STARTS BUILDING; THE EMERGENCE OF COMMUNITY SOLAR
  • THE LAST DAY UP HERE

  • THE STUDY: THE ENERGY FUTURE (SOLAR, BATTERIES, ELECTRIC CARS AND UTILITIES)
  • QUICK NEWS, Sept. 8: NEW ENERGY INVESTMENT HITS $5.7 TRILLION; CALIFORNIA RE-ORIENTS ROOFTOP SOLAR; THOSE WHO LIVE W/WIND DOUBT ‘WIND SYNDROME’
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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge

    2013-11-05-Figure_ES2_FULL.jpg

    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here (http://www.huffingtonpost.com/anne-butterfield). Thanks.

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    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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    Your intrepid reporter

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

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  • Friday, September 30, 2011

    NEW ENERGY DRIVING DOWN POWER PRICES IN EUROPE

    Germany Continues Exporting Electricity--Renewables Driving Down Power Prices--despite Closing Reactors
    Paul Gipe, September 27, 2011 (Wind-Works)

    "Recent data shows Germany continues to export electricity despite closing seven nuclear reactors…[and] renewable energy expansion in Germany is driving down power prices.

    "Germany… exported more electricity than it imported during the first half of 2011…[disproving] rumors circulating in North America that Germany is closing its nuclear power plants by relying on imports of electricity…"


    click to enlarge

    "…[T]he margin of exports over imports has decreased from 2010…The surplus for export represents about 1% of consumption…Germany is expected to add 7,000 MW of wind and solar generating capacity in 2013, exceeding the installations projected for 2012. This massive expansion of renewable energy generating capacity is affecting the futures market for fossil-fuel fired generation.

    "…The installed solar base in Germany is growing rapidly thanks to continued feed-in tariff support…[affecting] power spot prices…because renewable energy has priority grid access and near-zero marginal cost…"

    WHY THE U.S. SNEEZES AT CLIMATE CHANGE

    The American 'allergy' to global warming: Why?
    Charles J. Hanley, September 25, 2011 (AP via Knox News)

    "…[T]he headline on the 1975 report [in the journal Science] coined the term [“global warming]…In the paper, Columbia University geoscientist Wally Broecker calculated how much carbon dioxide would accumulate in the atmosphere in the coming 35 years, and how temperatures consequently would rise. His numbers have proven almost dead-on correct. Meanwhile, other powerful evidence poured in…And yet resistance to the idea among many in the U.S. appears to have hardened…

    "…[E]conomist-ethicist Clive Hamilton…and others who track what they call "denialism" find that its nature is changing in America, last redoubt of climate naysayers. It has taken on a more partisan, ideological tone…[though the] basic physics of anthropogenic — manmade — global warming has been clear for more than a century, since researchers proved that carbon dioxide traps heat. Others later showed CO2 was building up in the atmosphere from the burning of coal, oil and other fossil fuels. Weather stations then filled in the rest: Temperatures were rising…"



    From ClimateReality via YouTube

    "…[In 1989] U.S. oil and coal interests formed the Global Climate Coalition to combat efforts to shift economies away from their products. Britain's Royal Society and other researchers later determined that oil giant Exxon disbursed millions of dollars annually to think tanks and a handful of supposed experts to sow doubt about the facts…[A] document emerged years later showing that the industry coalition's own scientific team had quietly advised it that the basic science of global warming was indisputable…

    "In the face of years of scientific findings and growing impacts, the doubters persist. They ignore long-term trends and seize on insignificant year-to-year blips in data… focus on minor mistakes in thousands of pages of peer-reviewed studies…[and] carom from one explanation to another…[But] Al Gore, for one, remains upbeat…[He recently] pointed to tipping points in recent history — the collapse of the Berlin Wall, the dismantling of U.S. racial segregation — when the potential for change built slowly in the background, until a critical mass was reached…Last May the Vatican's Pontifical Academy of Sciences, arm of an institution that once persecuted Galileo for his scientific findings, pronounced on manmade global warming: It's happening…"

    WIND PROTECTING THE ENVIRONMENT

    Seeing the Big Picture
    August-September 2011 (American Wind Wildlife Institute)

    "Wind energy siting decisions require complex information that can overwhelm the decision-making process. Computerized tools are being developed that collate, overlay, and display a wide variety of information in visual, map-based form. These tools provide information that is widely applicable to landscape-level and regional assessment, allowing wind energy developers and advocates to anticipate potential environmental risks earlier in the wind siting planning process.

    "AWWI has commissioned development and testing of one such resource, the Landscape Assessment Tool (LAT), with The Nature Conservancy and with input from industry and environmental partners…"


    click thru to see or try the tool

    "[I]t is a general screening tool using publicly available data to provide up-to-date information about the environmental characteristics and important landscape-level wildlife values of a geographic area…

    "The LAT will be most useful in offering early guidance about possible sensitivity of a site within a larger landscape context, and in identifying sensitive wildlife habitat and areas likely to have low wildlife risk. It will also be useful in the development of conservation plans, monitoring plans, and mitigation strategies…"

    $50 MIL TO ROOFTOP SOLAR LEASING

    OneRoof Energy Secures $50 Million in Financing, Introduces New Leasing Model for Solar Roof Installations; Hanwha International, U.S. Bank and Black Coral Capital lead financing to launch its SolarSelect® Lease product
    28 September 2011 (World of Photovoltaics)

    "OneRoof Energy, the nation’s first residential solar company that works directly with roofers to lease and install residential solar power systems, has secured $50 million in financing…OneRoof Energy develops and maintains rooftop solar energy systems for homeowners. The company works with builders and roofing contractors to combine roofing and solar installation into one seamless process…

    "Homeowners can install solar easily and affordably because there are no upfront costs or ongoing maintenance expenses…through OneRoof Energy’s SolarSelect Lease. Customers simply make a monthly lease payment for the system, which when combined with their new, lower electric bill, is typically lower than their existing bill without solar. Once complete, a simple warranty covers both the roof and solar installation."


    click to enlarge

    "Series A financing was led by Hanwha International, part of the Hanwha Group…one of the largest corporate conglomerates in Korea…[and holder of] a controlling interest in Hanwha SolarOne, a leading global solar manufacturing company…

    "OneRoof Energy has also closed its first fund to finance residential solar projects in partnership with Black Coral Capital, a leading cleantech investment firm, and with a subsidiary of U.S. Bancorp (NYSE:USB). The fund provides capital for the company’s lease financing program…"

    NASA SEEKS ROBOTICS FROM CLEANTECH OPEN

    NASA and The Cleantech Open Partner in Robotics Challenge; Energy innovations stemming from this challenge may be beneficial to broader terrestrial applications, including vehicles and renewable energy generation systems.
    September 21, 2011 (Cleantech Open)

    "NASA has selected The Cleantech Open of Redwood City, Calif., to manage the agency's Night Rover Challenge that will culminate in a competition in fall 2012. The event is a new Centennial Challenges prize competition seeking revolutionary energy storage technologies for future space robotic rover missions. NASA is offering a prize purse of $1.5 million to challenge winners

    "The
    Night Rover Challenge is to demonstrate solar energy collection and storage systems suitable for rovers to operate through several cycles of daylight and darkness. During daylight, systems can collect photons or thermal energy from the sun. During darkness, the stored energy would be used to move the rover toward a destination and to continue its exploration work…"

    click to enlarge

    "[Meanwhile, the Northeast Regional Finals event and reception of The Cleantech Open will take place at the Microsoft New England Research and Development (NERD) Center on October 4th, 2011. 35 teams - among the top cleantech entrepreneurs in the Northeast region – will compete for three regional cash and in-kind prizes and the opportunity to compete for the national grand prize of $250,000 in cash and services at the Cleantech Open Global Awards Ceremony in San Jose, California in early November.

    "The mission of the Cleantech Open is to find, fund, and foster the big ideas that address today’s most urgent energy, environmental, and economic challenges. Since its inception in 2006, nearly 400 promising teams have availed themselves of the Cleantech Open’s one-of-a-kind hands-on workforce development, nurturing, and funding programs…Alumni have raised over $280M in private capital, 80% remain economically viable today, and more than 2,000 new clean technology jobs have been created at a cost of less than $5,000 per job, far below the cost estimated for job generation under state and federal programs or the American Reinvestment and Recovery Act.]"

    Thursday, September 29, 2011

    TODAY’S STUDY: THE HISTORY OF ENERGY SUBSIDIES

    Governments always subsidize energy -- because energy is vital to governments.

    To accuse a government of picking winners or succumbing to special interests because it supports the energy that will make the country go is as sensible as accusing a car driver of picking a winner or succumbing to a special interest for buying gas.

    As detailed in the report below, the coal industry had no problem with this principle when it was the darling of the British government in the 19th century. The oil industry had no problem with it when it was the United States' golden child in the first half of the 20th century. The nuclear industry was pleased to be the chosen one from the 1960s to the 1980s.

    But when the nations of the world responded to the threat of greenhouse gas emissions or nuclear waste by supporting renewables, the vested interests began throwing fits about energy subsidies.

    Do renewables get an inequitable slice of the federal pie? It depends: The U.S. Energy Information Administration (EIA) calculates subsidies per year for each generation source. This makes it possible for the renewables’ subsidies to be characterized by opponents as radically disproportionate to the BTUs for which they account. However, this is not necessarily the most accurate way to assess subsidy dollars.

    As the EIA itself has acknowledged, electricity generation technologies that have been supported for decades and that are now mature and self-supporting do not need or get as much support as renewables, which are less mature and have only recently become more highly valued and subsidized.

    But the mature industries that emerged in the past would not be so successful today if they had not been given support when it was needed.

    An example: A coal plant built in 1965 has been the beneficiary of subsidies for 45 years. A wind farm built in 2008 is collecting the bulk of its support now but will get no more federal money after 2017. Yet, by the EIA calculation, the wind farm is at present getting the bulk of the federal dollars.

    With the benefit of historical perspective, it becomes clear that the subsidies now flowing to renewables mean federal lawmakers intend to prioritize renewables in the same way other electricity sources were prioritized in past decades. Similar support for renewables is now emerging even more strongly at state and local levels in the U.S. and in other governments all over the world.

    More importantly, subsidies to renewables imply that governments all over the world believe them to be a more important and/or better value proposition going forward and they realize they must put a higher emphasis on developing the energy of the 21st century.

    This is how governments always use energy subsidies, as the historical perspective detailed in the study below demonstrates.

    The coal industry would not be what it is without the railroad system it was given a century and a half ago.

    The U.S. oil industry would have strangled by its own terminal greediness had Congress not provided it with the Oil Depletion Allowance and Golden Gimmick tax breaks in the middle of the last century.

    Nobody would have built nuclear plants in the 1970s if the Price-Anderson Act hadn’t indemnified the industry against its occasional catastrophes.

    And renewables, in partnership with efficiency and storage technologies, will not reach scale or replace fossil fuels if not provided with reasonable subsidies.


    (Versions of the preceding essay have appeared previously at NewEnergyNews and Greentech Media.)

    What Would Jefferson Do? The Historical Role of Federal Subsidies in Shaping America’s Energy Future
    Nancy Pfund and Ben Healy, September 2011 (DBL Investors/Double Bottom Line Venture Capital)

    “Some argue that the consumer can purchase warmth or work or mobility at less cost
    by means of coal or oil or nuclear energy than by means of sunshine or wind or
    biomass. The argument concludes that this fact, in and of itself, relegates renewable
    energy resources to a small place in the national energy budget. The argument
    would be valid if energy prices were set in perfectly competitive markets. They are
    not. The costs of energy production have been underwritten unevenly among
    energy resources by the Federal Government.” …August 1981 report of the DOE Battelle Pacific Northwest National Laboratory

    click to enlarge

    Executive Summary

    This paper frames the ongoing debate about the appropriate size and scope of federal subsidies to the energy sector within the rich historical context of U.S. energy transitions, in order to help illuminate how current energy subsidies compare to past government support for the sector. From land grants for timber and coal in the 1800s to tax expenditures for oil and gas in the early 20th century, from federal investment in hydroelectric power to research and development funding for nuclear energy and today’s incentives for alternative energy sources, America’s support for energy innovation has helped drive our country’s growth for more than 200 years.

    click to enlarge

    Using data culled from the academic literature, government documents, and NGO sources, in this paper we examine the extent of federal support (as well as support from the various states in pre-Civil War America) for emerging energy technologies in their early days. We then analyze discrete periods in history when the federal government enacted specific subsidies. While other scholars have suggested that the scope of earlier subsidies was quite large, we are—as far as we know—the first to quantify exactly how the current federal commitment to renewables compares to support for earlier energy transitions. Our findings suggest that current renewable energy subsidies do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. For example:

    - As a percentage of inflation-adjusted federal spending, nuclear subsidies accounted for more than 1% of the federal budget over their first 15 years, and oil and gas subsidies made up half a percent of the total budget, while renewables have constituted only about a tenth of a percent. That is to say, the federal commitment to O&G was five times greater than the federal commitment to renewables during the first 15 years of each subsidies’ life, and it was more than 10 times greater for nuclear.

    - In inflation-adjusted dollars, nuclear spending averaged $3.3 billion over the first 15 years of subsidy life, and O&G subsidies averaged $1.8 billion, while renewables averaged less than $0.4 billion.

    The charts below clearly demonstrate that federal incentives for early fossil fuel production and the nascent nuclear industry were much more robust than the support provided to renewables today.

    click to enlarge

    Introduction

    Over the course of decades, contentious debates have raged in Washington, DC about the appropriate size and scope of federal subsidies to the energy sector, including support for both traditional fossil fuel industries and the emerging renewable energy sector. Certainly, a quick survey of existing subsidies demonstrates that critics have plenty of legitimate reasons to complain. Take the capital gains treatment of royalties on coal as an example. This subsidy allows owners of coal mining rights to reclassify income traditionally subject to the income tax as royalty payments, thereby allowing owners to pay a reduced tax rate:

    This subsidy totaled well over $1.3 billion in government tax expenditures from 2000 – 2009…

    click to enlarge

    In 1950 and 1951, Congress increased a number of taxes to pay for the United States’ entry into the Korean War. With prevailing 1951 marginal income tax rates ranging up to a high of 91 percent and capital gains tax rates at 25 percent regardless of income, the reclassification was primarily adopted to insulate certain owners of coal mining rights from high marginal income tax rates … thus encouraging additional production. Since then, both income and capital gains tax rates for individuals have fallen, and the capital gains tax rate for individual owners currently stands at 15 percent. However, the credit is still available to members of the coal industry.

    True, this Korean War-era tax break seems grossly out of place in the 21st century, but not all subsidies are created equal. Historically, policymakers have justified intervention in energy markets “1) to promote a new technology during the early developmental stages and 2) to pay the difference between the value of an activity to the private sector and its value to the public sector.”2 Thus, it is worth evaluating our current energy subsidies through a longer historical lens, so that we can better understand how current incentives compare to past government support for the energy sector.

    click to enlarge

    We can read the history of the United States—our country’s geographic and economic expansion—through the history of our energy production and consumption. Through war and peace, through westward expansion and our rise to economic and military superpower status, we find that energy transitions fueled it all. Wood and small hydro powered our country’s early, rural days. As cities expanded, railroads crisscrossed the nation, and the Industrial Revolution took hold, coal dominated. With the invention and improvement of the internal combustion engine, oil catapulted into our preeminent fuel. Large hydro became a reality thanks to Depression-era initiatives that have continued to drive economic development programs across the country decades later, followed by nuclear power on the heels of World War II. And today, in pursuit of greater energy security, enhanced environmental quality and economic growth on a globalized playing field, renewable energy sources are transitioning from the margins to the mainstream. As the chart below starkly illuminates, our wealth and our energy usage are intimately intertwined.

    Energy innovation has driven America’s growth since before the 13 colonies came together to form the United States, and government support has driven that innovation for nearly as long. In this paper, we identify specific government interventions in the energy sector during moments of transition, and we attempt to quantify that support in order to compare it to current support for emerging renewable sources of energy. Although most of our quantitative analysis focuses on federal support, it is important to note that states have also contributed to the American energy narrative throughout our history, from the support of coal in the 19th century to incentives for renewable energy production 200 years later, and we will not ignore the role of the various states in the discussion that follows.

    click to enlarge

    Overall, what we find, in contrast to much of today’s headline-grabbing rhetoric, is that today’s government incentives for renewable energy pale in comparison to the kind of support afforded emerging fuels during previous energy transitions.

    Look back to the 1700s: From Battelle National Lab – “The first recorded commercial coal transaction in the United States was a 32-ton shipment from the James River district in Virginia to New York in 1758.”

    …Into the 1800s: From Stanford’s Center for International Security and Cooperation – “As a pamphleteer wrote in 1860, a year after Uncle Billy Smith struck oil at Oil Creek in Titusville, Pennsylvania, ‘Rock oil emits a dainty light, the brightest and yet the cheapest in the world; a light fit for Kings and Royalists and not unsuitable for Republicans and Democrats.’”…

    From the Renewable Energy Policy Project – “The first attempt to transport natural gas on a large scale was in Rochester, New York in 1870. A 25-mile line was constructed of hollowed pine logs. It was a failure.”

    …Through the 1900s: From Greenpeace – “In December, 1953, President Eisenhower inaugurated an ‘Atoms for Peace’ [nuclear energy] program that…would ultimately swallow the lion’s share of federal dollars for energy research.

    click to enlarge

    Conclusion–In Energy We Trust

    In closing, we present the two images below, the first a 1962 Life magazine advertisement from Humble Oil (now Exxon Mobil) and the second a graphical representation of America’s current dependence on foreign sources of energy.

    Together, these two images demonstrate the fact—more clearly than we ever could in words—that America’s energy needs and priorities have changed over time, and that they will continue to evolve going forward, driven by economics, environmental concerns, and security issues. Throughout our history, energy incentives have helped drive critical innovation, speed U.S. economic transitions, and helped shape our national character. Today, as we seek to move towards a more independent and clean energy future, the truth is that renewables—from a historical perspective—are if anything under-subsidized. This weak support is inconsistent with our nation’s own historical energy narrative, which suggests:

    click to enlarge

    Today’s market for cheap power results in part from substantial investment by the federal government in innovative technology.

    It takes a substantial amount of money, invested over several years, to bring an electricity generation technology to maturity.

    Although energy subsidies can and do serve many policy purposes, the most basic relate to furthering the development and commercialization of technologies deemed to be in the public interest.

    We titled this paper, “What Would Jefferson Do?” We believe that the answer to that question is now clear. He would do what our country has always done—support emerging energy technologies—to drive innovation, create jobs, protect our environment, enhance our national security in a time of rapid change, and to further a distinctly American way of life in which resources once thought to be endless are replaced by ones that actually are.

    QUICK NEWS, September 29: BIG TURBINE FOR SLOW WINDS; GIANT MILITARY PV DOWNSIZED; FLORIDA PLANS HUGE PV SUN

    BIG TURBINE FOR SLOW WINDS
    Alstom launches low wind turbine with 122-metre rotor
    Michael McGovern, 28 September 2011 (Windpower Monthly)

    Alstom has launched its 2.7MW ‘ECO122’ machine, claiming the 122-metre rotor to be ‘the largest in the 2-3MW turbine segment’."

    (from Alstom - click to enlarge

    "The machine, a variation of Alstom’s 3MW turbine and part of the same manufacturing platform, is designed for sites with low wind speeds where longer blades are needed to capture more power…"


    GIANT PV FOR BASES LOSES LOAN
    SolarCity Scaling Back SolarStrong Project After DOE Loan Guarantee Fails
    Jessica Lillian, September 27, 2011 (Solar Industry)

    "Facing an uncertain project-finance future, solar integrator SolarCity has been forced to reduce the size of its massive SolarStrong initiative. The project had received a conditional loan guarantee from the U.S. Department of Energy (DOE), but the company is now not expected to meet the Sept. 30 deadline to finalize the guarantee…SolarStrong was touted as a project that could double the number of U.S. PV installations in the U.S…"

    (about to be gone - click to enlarge)

    "The original plan called for up to 371 MW of new solar generation capacity through the installation of rooftop PV arrays on up to 160,000 homes on as many as 124 military housing developments in 33 states…The approval hold-up was attributed to increased due diligence on the part of the DOE, following the intense political fallout from module manufacturer Solyndra's bankruptcy and the investigation into its 2009 loan guarantee…"


    FLORIDA PLANS HUGE PV SUN
    National Solar Power Selects Florida's Gadsden County For Planned 400 MW Solar Project
    27 September 2011 (Solar Industry)

    "National Solar Power says it will build a 400 MW solar installation in Gadsden County, Fla. The project is expected to generate hundreds of new jobs and create $1.5 billion in economic investment in the region. A minimum of 20 farms will be built on 200-acre sites at a cost of $70 million each…"

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    "Once the appropriate local and state permitting process is completed, the first phase of the project is expected to be up and running within six months of ground-breaking. Hensel Phelps Construction Co. will design, build and operate the projects for National Solar Power…National Solar Power has entered into an agreement with Progress Energy Florida and says it is having discussions with other potential customers to purchase power…"

    Wednesday, September 28, 2011

    TODAY’S STUDY: DROPPING PV COST DRIVES SUN GROWTH

    Tracking the Sun IV; An Historical Summary of the Installed Cost of Photovoltaics in the United States from 1998 to 2010
    Galen Barbose, Naïm Darghouth and Ryan Wiser, September 2011 ()

    Executive Summary

    As the deployment of grid-connected solar photovoltaic (PV) systems has increased, so too has the desire to track the installed cost of these systems over time and by location, customer type, system characteristics, and component. This report helps to fill this need by summarizing trends in the installed cost of grid-connected PV systems in the United States from 1998 through 2010, with preliminary data for 2011, and includes, for the first time, installed cost trends for utility-sector PV. The analysis is based on installed cost data for approximately 116,500 behind-the-meter (i.e., residential and commercial) and utility-sector PV systems, totaling 1,685 megawatts (MW) and representing 79% of all grid-connected PV capacity installed in the United States through 2010…

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    It is essential to note at the outset the limitations inherent in the data presented within this report. First, the cost data are historical, focusing primarily on projects installed through the end of 2010, and therefore do not reflect the cost of projects installed more recently (with the exception of a limited set of results presented for behind-the-meter projects installed in the first half of 2011); nor are the data presented here representative of costs that are currently being quoted for prospective projects to be installed at a later date. For this reason and others (see Text Box 1 within the main body of the report), the results presented herein likely differ from current PV cost benchmarks. Second, this report focuses on the up-front cost to install PV systems; as such, it does not capture trends associated with PV performance or other factors that affect the levelized cost of electricity (LCOE) for PV. Third, the utility-sector PV cost data presented in this report are based on a small sample size (reflecting the small number of utility-sector systems installed through 2010), and include a number of relatively small projects and “one-off” projects with atypical project characteristics. Fourth, the data sample includes many third party-owned projects where either the system is leased to the site-host or the generation output is sold to the site-host under a power purchase agreement. The installed cost data reported for these projects are somewhat ambiguous – in some cases representing the actual cost to install the project, while in other cases representing the assessed “fair market value” of the project.2 As shown within the report, however, the available data suggest that any bias in the installed cost data reported for third party- owned systems is not likely to have significantly skewed the overall cost trends presented here.

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    The report separately describes cost trends for behind-the-meter PV systems and utility- sector systems. Key findings regarding the installed cost of behind-the-meter PV systems are as follows:

    The capacity-weighted average installed cost of all behind-the-meter systems installed in 2010 – in terms of real 2010 dollars per installed watt (DC-STC)3 and prior to receipt of any direct financial incentives or tax credits – was $6.2/Watt, and was $1.3/W (17%) below the average for systems installed in 2009.

    Partial data for the first six months of 2011 indicates that installed costs have continued to rapidly decline, with the capacity-weighted average installed cost of projects funded through the California Solar Initiative falling by an additional $0.7/W during the first half of 2011, amounting to an 11% drop from average costs in 2010.

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    The recent decline in installed costs is, in large part, attributable to falling wholesale module prices, which fell by $0.9/W from 2008 to 2009, by $0.5/W from 2009 to 2010, and which have fallen further still in 2011 (based on Navigant Consulting’s Global Power Module Price Index). The fact that average installed costs remained flat from 2008 to 2009, before dropping significantly in 2010, illustrates that movements in global wholesale module prices do not necessarily translate into an immediate, commensurate change in the cost borne by the final system owner; a time lag is apparent.

    The recent decline in installed costs is also attributable to falling non-module costs. Based on component-level cost data reported by installers to PV incentive programs, non-module and non-inverter costs (which may include such items as mounting hardware, labor, permitting and fees, shipping, overhead, taxes, and installer profit) fell by roughly $0.6/W from 2009 to 2010.

    PV installed costs exhibit significant economies of scale, with systems ≤2 kW completed in 2010 averaging $9.8/W, while >1,000 kW behind-the-meter systems averaged $5.2/W (or about 47% less). The cost of utility-sector systems was even lower, as discussed further below. These economies of scale partially explain the long-term decline in average installed costs, as the size distribution of PV systems has shifted towards larger systems over time.

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    Large systems exhibited the greatest year-over-year cost declines from 2009 to 2010. For example, the average installed cost fell by $1.9/W (26%) for behind-the-meter systems in the >500 kW size range, but fell by a lower $0.9/W (11%) for ≤5 kW systems.

    The growing prevalence of third party owned PV systems has introduced some distortion into the underlying cost trends, but at least at an aggregate sample-wide level, the magnitude of the distortion is likely to be relatively modest. Among systems of all sizes installed in 2010, the capacity-weighted average installed cost of third party owned systems was $0.3/W higher than for customer-owned systems, though the differences are somewhat larger when comparing within specific system size categories.

    Average installed costs vary widely across states; among ≤10 kW systems completed in 2010, average costs range from a low of $6.3/W in New Hampshire to a high of $8.4/W in Utah. The country’s largest state PV markets, California and New Jersey, were near the center of this range, suggesting that, in addition to absolute market size, other state and local factors (e.g., permitting requirements, labor rates, the extent of third party ownership, and sales tax exemptions) also strongly influence installed costs.

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    International experience suggests that greater near-term cost reductions in the United States are possible, as the average installed cost of 3-5 kW residential PV installations in 2010 (excluding sales/value-added tax) was significantly lower in Germany ($4.2/W) than in the United States ($6.9/W), where cumulative grid-connected PV capacity in the two countries through 2010 totaled roughly 17,000 MW and 2,100 MW, respectively.

    The new construction market offers cost advantages for small residential PV systems. Among 2-3 kW residential systems (the size range typical for residential new construction) installed in 2010 and funded through California’s incentive programs, new construction systems cost $0.7/W less, on average, than comparably sized residential retrofit systems (or $1.5/W less if comparing only rack-mounted systems).

    Systems with crystalline (multi- or mono-crystalline) modules had lower average installed costs than those with thin-film (amorphous silicon or non-silicon) modules, when focusing on <100 kW systems installed in 2010, but average installed costs were nearly identical for crystalline and thin-film systems within the >100 kW size range.

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    As to be expected, systems with tracking equipment had higher installed costs than fixed-tilt systems, with a difference of $1.0/W in average installed costs for 10-100 kW systems installed in 2010 (insufficient data were available for larger system sizes).

    The drop in installed costs in 2010 was partially offset by falling incentives. State/utility cash incentives continued their historical decline, with average residential incentives falling by $0.5/W to $1.6/W and average commercial incentives falling by $0.3/W to $1.8/W (all on a pre-tax basis).4 The average dollar-per-watt value of the federal investment tax credit (ITC) or Treasury cash grant in lieu of the ITC also fell in 2010, due to the decline in installed costs.

    The capacity-weighted average net installed cost faced by PV system owners – that is, installed cost minus the combined after-tax value of state/utility cash incentives, the federal ITC (or Treasury grant), and any available state ITCs – stood at $3.6/W for residential PV and $3.0/W for commercial PV in 2010, in both cases an historic low.

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    This report separately summarizes installed cost data for utility-sector PV projects, but these data must be interpreted with a certain degree of caution. First, the sample size is small (31 projects in total, including 20 projects installed in 2010), and includes a number of small wholesale distributed generation projects as well as a number of “one-off” projects with atypical project characteristics. The cost of these small or otherwise atypical projects is expected to be higher than the cost of many of the larger utility-scale PV projects currently under development. Second, the installed cost of any individual utility-sector project may reflect component pricing one or even two years prior to project completion, and therefore the cost of the utility-sector projects within the data sample may not fully capture the steep decline in module prices that occurred over the study period. With these important caveats in mind, several key trends for utility-sector PV systems emerge from our analysis:

    The installed cost of utility-sector systems varies significantly across projects. Among the 20 utility-sector projects in the data sample completed in 2010, installed costs ranged from $2.9/W to $7.4/W, reflecting the wide variation in project size (from less than 1 MW to 34 MW), differences in system configurations (e.g., fixed-tilt vs. tracking and thin-film vs. crystalline modules), and the unique characteristics of individual projects.

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    Current cost benchmarks for utility-sector PV are generally at the low-end of the range exhibited by the 2010 projects in the data sample, with various entities estimating an installed cost of $3.8/W to $4.4/W, depending on system size and configuration for utility sector systems installed at the end of 2010 or beginning of 2011.

    The installed cost range of utility-sector systems in the data sample declines with system size, consistent with expected economies of scale. For example, among fixed-tilt, crystalline systems installed over the 2008-2010 period (we include a broader range of years here in order to increase the sample size), costs ranged from $3.7-$5.6/W for the five 5-20 MW systems, compared to $4.7-$6.3/W for the three <1 MW systems. Similarly, among thin film systems, the installed cost of the two >20 MW projects completed in 2008-2010 ranged from $2.4-$2.9/W, compared to $4.4-$5.1/W for the two <1 MW projects.

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    Installed costs are lowest for thin-film systems and highest for crystalline systems with tracking. Among >5 MW systems installed from 2008-2010 (we again include a broader range of years in order to increase the sample size), installed costs ranged from $2.4-3.9/W for the five thin-film systems, compared to $3.7-$5.6/W for the five crystalline systems without tracking and $4.2-$6.2/W for the four crystalline systems with tracking. To more comprehensively compare the cost of these alternate system configurations, one would need to also consider differences in performance and the related impact on the LCOE.

    The wide distribution in the installed cost of utility-sector systems in the data sample is partially attributable to the presence of systems with unique characteristics that increase costs. For example, among the 2010 installations in the data sample are a 10 MW tracking system built on an urban brownfield site ($6.2/W), an 11 MW fixed-axis system built to withstand hurricane winds ($5.6/W), and a collection of panels mounted on thousands of individual utility distribution poles totaling 14.6 MW ($7.4/W).

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    Conclusions and Policy Implications

    The number of PV systems installed in the United States has grown at a rapid pace in recent years, driven in large measure by government incentives. Given the relatively high historical cost of PV, a key goal of these policies has been to encourage cost reductions over time. Available evidence confirms that the installed cost of PV systems has declined substantially since 1998, though both the pace and source of those cost reductions have varied over time. Prior to 2005, installed cost reductions were associated primarily with a decline in non-module costs. Starting in 2005, however, cost reductions began to stall, as the supply-chain and delivery infrastructure struggled to keep pace with rapidly expanding global demand. Starting in 2008, global wholesale module prices began a steep downward trajectory. Those reductions in module prices began to drive the average installed cost of PV systems installed in the United States significantly lower in 2010, when average installed costs fell by 17%.

    In addition, average non-module costs also fell significantly in 2010, after several years of apparent stagnation. Trends in non-module costs may be particularly relevant in gauging the impact of state and utility PV deployment programs. Unlike module prices, which are primarily established through global markets, non-module costs consist of a variety of cost components that may be more readily affected by local programs – including deployment programs aimed at increasing demand (and thereby increasing competition and efficiency among installers) as well as more-targeted efforts, such as training and education programs. Both the long-term and more recent reductions in non-module costs suggests that PV deployment policies have achieved some success in fostering competition within the industry and spurring improvements in the cost structure and efficiency of the PV delivery infrastructure.

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    Preliminary cost data for the first half of 2011, as well as current cost benchmarks published by a variety of other entities, indicate that installed costs have continued to decline. Notwithstanding this success, further cost reductions will be necessary if the U.S. PV industry is to continue its expansion, given the expectation that PV incentive programs will also continue to ratchet down financial support. Lower average installed costs in Germany suggest that deeper near-term cost reductions in United States are, in fact, possible and may accompany increased market scale. It is also evident, however, that market size alone is insufficient to fully capture potential near-term cost reductions, as suggested by the fact that the lowest-cost state markets in the United States are relatively small PV markets. Targeted policies aimed at specific cost barriers (for example, permitting and interconnection costs), in concert with basic and applied research and development, may therefore be required in order to sustain the pace of installed cost reductions on a long-term basis.

    Finally, installed costs vary substantially across system sizes, market segments, technology types, and applications. Policymakers may wish to evaluate whether differential levels of financial support are therefore warranted (e.g., to avoid over-subsidizing more cost-competitive installations while providing sufficient support for promising but less mature technologies and applications).

    QUICK NEWS, September 28: OCEAN WIND SEES OPPORTUNITY; BIG SUN’S REAL CHALLENGE; ADVANCED BIO-REFINING GETS FED BACKING

    OCEAN WIND SEES OPPORTUNITY
    Utility merger could end up helping 1st offshore wind farm sell its power, get financing
    Jay Lindsay, September 25, 2011 AP via Minneapolis Star Tribune)

    "…The nation's first offshore wind farm…Cape Wind…needs to attract big power customers to obtain the financing to fully build out its 130-turbine project in Nantucket Sound…[because] the utility NStar has taken a tepid public stance on Cape Wind…[but a] pending merger between NStar and Northeast Utilities has become a possible pressure point to get NStar to buy Cape Wind power.

    "Since the merger was announced last year, regulators added a requirement that such deals must advance the state's clean energy goals, which include developing offshore wind. The state also made a request, still pending, to stay proceedings for a review of the merger's effect on rates — a lengthy process that could lead to a merger-killing delay."


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    "The moves are obvious attempts to pressure NStar to buy power from a favored private developer, [opponents say]… Robert F. Kennedy Jr. accused Gov. Deval Patrick's administration of ‘trying to hold hostage the proposed NStar-Northeast Utilities merger unless the two electric companies agree to buy Cape Wind's power.’

    "But the state says it's just upholding the law and protecting the public interest…The state is now in discussions with NStar about the utility buying Cape Wind's power..."



    BIG SUN’S REAL CHALLENGE
    Solyndra: Solar sector’s storm in a teacup; Political backlash aside, the Solyndra bankruptcy isn’t likely to have a lasting impact on the solar energy sector, nor does it toll the death knell of support for CSP…
    Dan McCue, 22 September 2011 (CSP Today)

    "Solyndra, a Silicon Valley-based solar company promoting an innovative, rolled-tube technology, has cost US taxpayers US$535 million in federally guaranteed loans and exposed the Obama administration to unrelenting criticism from Republicans in the US House of Representatives…

    "Solyndra was supposed to have been the poster child for clean-energy job creation…Then came the collapse and a subsequent investigation…[and] the media’s frenzy over the case…[but] the blow up of a loan to a technology-specific manufacturer…[does not mean failure of] project related investment…"


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    "CSP is under a lot of pressure from competing technologies…[There is] little interest right now in buying electricity in 250 MW and 500 MW chucks, when there’s the option…[of] acquiring the same amount of capacity from a portfolio of smaller PV projects…

    "…[But] the US has got quite a few CSP projects already in the works, including a 400 MW project by Brightsource, two 250 MW projects by Abengora, a 250 MW project by NextEra, and a 110 MW molten salt storage power tower by SolarReserve…The bigger problem for CSP…[is] that it hasn’t been able to reduce costs quite as rapidly as PV…"



    ADVANCED BIO-REFINING GETS FED BACKING
    Energy Department Finalizes $105 Million Loan Guarantee for First-of-its-Kind Cellulosic Bio-Refinery in Iowa; It is expected to generate around $14 million in new revenue to area farmers who will provide the corn crop residue.
    26 September 2011 (World of Renewables)

    "…[The U.S. Department of Energy] finalized a $105 million loan guarantee to support the development of one of the nation's first commercial-scale cellulosic ethanol plants. Project LIBERTY, sponsored by POET, will be built in Emmetsburg, Iowa and is expected to produce up to 25 million gallons of ethanol per year. POET estimates the project will fund approximately 200 construction jobs and 40 permanent jobs. It is expected to generate around $14 million in new revenue to area farmers who will provide the corn crop residue…"

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    "Project LIBERTY’s innovative process uses enzymes to convert cellulose from corncobs, corn leaves and corn husks into ethanol. The facility will produce enough biogas to power both Project LIBERTY and most of POET’s adjacent grain-based ethanol plant. POET plans to replicate its unique process so that it is integrated into all the company's 27 grain-ethanol plants for a combined annual capacity of one billion gallons per year of cellulosic ethanol. The company estimates that 85 percent of Project LIBERTY will be sourced with U.S. equipment…"

    Tuesday, September 27, 2011

    TODAY’S STUDY: THE MILITARY’S TURN TO NEW ENERGY

    With Congress likely to cut federal spending and private funds still awaiting market certainty, New Energy might run out of support but for a surprising benefactor, the U.S. Department of Defense (DoD).

    As detailed in the report below, DoD spending for renewables and efficiency went from $400 million in 2006 to $1.2 billion in 2009, a jump of 300 percent.

    Because military leaders believe investments in New Energy, which began during the George W. Bush administration, preserve lives on the battlefield, protect the nation’s security and save taxpayer money, current plans call for an increase in the DoD’s spending on renewables to $3 billion by 2015 and to over $10 billion per year by 2030.

    Besides its profound impact on military operations, this promises a major infusion of funding just when New Energy needs it most.

    New Energy will also benefit the military, as well as the U.S. economy, by generating jobs. A recent estimate put military veterans’ jobless rate at an unacceptable 30 percent, costing the military $882 million yearly in unemployment benefits. This could grow significantly as some 200,000 active duty personnel leave the services each year over the next quarter century.

    Meanwhile, job opportunities in New Energy and Energy Efficiency are growing twice as fast jobs in the economy as a whole. The U.S. solar industry saw 6.8 percent job growth last year. And a recent report estimated U.S. utilities will lose some 200,000 workers to retirement by 2014. Military personnel with service experience in New Energy and grid technologies should be among the best candidates applying for such jobs.

    Military spending in support of energy is not new. Winston Churchill’s decision in 1911 to move the British Navy, then the world’s then most dominant military force, from coal to oil changed the world’s energy marketplace. The emerging trend in DoD spending on New Energy is an equally historic marker.


    From Barracks to the Battlefield; Clean Energy Innovation and America’s Armed Forces
    September 21, 2011 (The Pew Project on National Security, Energy and Climate)

    Executive Summary

    Throughout its history, the U.S. Department of Defense (DoD) has invested in new ways of harnessing energy to enhance the strength, speed, range and power of the armed forces. Until recently, the U.S. military’s innovation agenda has not placed a high premium on energy efficiency and new sources of energy and fuels. But the department’s experience conducting wars in Iraq and Afghanistan and the rise of new global threats and challenges have caused DoD to rethink its strategic energy posture. Special emphasis has been placed on reducing battlefield fuel demand and securing reliable, renewable energy supplies for combat and installation operations.

    DoD’s major energy challenges include risks associated with transporting liquid fuels to and on the battlefield; growing oil price volatility; the impact of fuel dependence on operational effectiveness; the fragility of energy supplies for forces that must have assured power 24 hours a day; and energy laws and mandates the department must comply with.

    This report details how energy innovation and clean energy can help DoD respond to these energy challenges. It also explores ways in which DoD’s commitment to energy transformation is contributing to development of new energy technologies that can serve American consumers and commercial interests alike. Special attention is given to priority DoD initiatives in key areas of the world’s burgeoning and competitive clean energy sector: vehicle efficiency, advanced biofuels, and energy efficient and renewable energy technologies for buildings.

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    How Innovation Can Help Address DoD Energy Challenges

    The emergence of the clean energy sector and increasingly competitive alternative energy sources presents DoD with opportunities for saving lives and money in the years ahead. Energy efficiency measures help reduce fuel demand and operational risk while enhancing combat effectiveness. For example, DoD insulated 9 million square feet of temporary structures, reducing energy consumption by 77,000 gallons per day…Alternative fuels and renewable energy sources can be domestically produced (and locally sourced around the world) to enhance the security of energy supplies. Similarly, microgrids and “smart” energy technologies help protect DoD installations from commercial power outages.

    New energy technologies also help shield the department from oil price volatility. In contrast to oil prices, the cost of renewable energy has been declining rapidly in recent years. The cost of solar panels, for example, has decreased by more than 60 percent since 2009…

    How DoD Can Help Advance Energy Innovation

    In recent decades, DoD technology development efforts have supported commercial development of computers, the Internet, the Global Positioning System, semiconductors and many more innovations. DoD has a broad range of strengths that can help accelerate clean energy technology development and commercial maturity. These include an established research and development infrastructure, ability to grow demonstration projects to scale, significant purchasing power and the necessary culture and management infrastructure necessary to foster innovation.

    In recent years, DoD has begun to harness these capabilities in service of energy technology innovation. Its budget for energy security initiatives has risen from $400 million to $1.2 billion in the past four years…and market experts project steadily increased expenditures for energy innovation activities in the coming years. Pike Research estimates that DoD investments in advanced energy technologies will reach $10 billion a year by 2030…

    DoD Progress on Key Technologies

    While the Department of Defense is exploring a wide range of innovations to enhance energy security and improve operational effectiveness, its efforts in three areas stand out: 1) developing of more efficient vehicles to reduce battlefield fuel demand;
    2) harnessing advanced biofuels as an alternative to petroleum fuels; and
    3) deploying energy efficient and renewable energy technologies at fixed and forward
    bases.

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    More Efficient Vehicles

    Energy efficiency across DoD’s large fleet of airplanes, ships and ground vehicles represents the cheapest, fastest and most effective means of reducing fuel consumption and addressing operational risk to soldiers, price volatility, supply security and mission success. Liquid petroleum fuels account for approximately three-quarters of DoD’s annual energy consumption and more than $11 billion of its annual energy bill. The department’s efforts to reduce its dependence on petroleum are taking shape through research and development, demonstration projects, and deployment of clean vehicle technologies in air, land and sea fleets.

    Airplanes

    Improving the efficiency of the military aviation fleet is the most promising opportunity for reducing DoD fuel consumption. A leading efficiency expert has estimated that a 35 percent efficiency upgrade in defense aircraft would offset as much fuel as is currently used by all DoD facilities and ground and marine vehicles combined…Developing new airplanes with more efficient off-the-shelf technologies and accelerating aircraft replacement will reduce petroleum use in the near term, but development and adoption of new technologies will be critical as the Air Force seeks to reduce the amount of fuel burned by legacy aircraft (those currently in use) by 20 percent by 2030…In addition to its own aircraft fuel efficiency improvements, the Navy is also working to reduce fuel consumption by mandating greater use of aircraft training simulators…Overall DoD spending to harness clean energy technologies in the air, at sea and on the ground is projected to increase to $2.25 billion annually by 2015…

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    Electric Ground Vehicles

    The department is also advancing electric vehicle technologies. By focusing on improvements in advanced combustion engines and transmissions, lightweight materials, thermal management and hybrid propulsion systems, DoD hopes to meet the requirements of Executive Order 13423, which mandates a 30 percent reduction in non-tactical fleet fossil fuel use by 2020.

    In June 2011, the department issued a request for information from electric vehicle manufacturers, battery manufacturers, suppliers, financing corporations and other stakeholders on equipment costs, availability of technologies, financing options and other innovative proposals that would allow DoD to deploy electric vehicles at a cost that is competitive with internal combustion engine vehicles. With more than 190,000 non-tactical vehicles, the deployment of medium and heavy duty electric vehicles in military fleets could be significant in just a few years, assuming that procurement can be achieved at competitive prices.

    Ships

    With a goal of increasing efficiency and reducing fuel consumption on ships by 15 percent between 2010 and 2020, the Navy is testing and advancing new technologies in its operational vessels.10 To achieve its fuel reduction goal, the Navy is investing $91 million in fiscal year 2012 to develop more efficient materials and power systems for engines, advanced materials for propellers and water jets, and systems that allow ship hulls to eliminate biological growth that can reduce efficiency…By installing stern flaps, which reduce drag and the energy required to propel a ship through the water, the Navy has already generated annual fuel savings of up to $450,000 per ship.

    The Navy has also made progress on hybrid systems for ships. The USS Makin Island was commissioned in 2009 with a hybrid electric propulsion system that will save more than $250 million in fuel costs over the life of the ship…Looking forward, a hybrid electric drive system will be tested and installed as a proof of concept on the USS Truxtun. The Navy estimates successful testing will result in fuel savings of up to 8,500 barrels per year.

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    Advanced Biofuels

    Even with sustained improvements in vehicle efficiency, the department will rely for the foreseeable future on liquid fuels as its primary energy source. Therefore, DoD is taking prudent steps to harness advanced biofuels. In fact, the various service branches have set ambitious goals:

    • The Air Force wants to use alternative aviation fuels for 50 percent of its domestic aviation needs by 2016.

    • The Navy aims to sail a “Great Green Fleet” and along with the Marines plans to use alternative energy sources to meet 50 percent of its energy requirements across operational platforms by 2020.

    • The Army seeks to harness alternative fuels to power its vehicle fleet and meet the EO 13423 goal of increasing non-petroleum fuel use by 10 percent annually in non-tactical vehicles.

    To reach these goals, the armed services are considering a variety of alternatives with potential for fulfilling military requirements. DoD is moving forward prudently to ensure that advanced biofuels can be developed and produced in a manner that is cost-competitive, compatible with existing military hardware, domestically available at the scale DoD needs, and environmentally sound.

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    Research

    The Defense Advanced Research Projects Agency (DARPA) is exploring a variety of biofuel technologies on behalf of the armed services, including production of cost competitive algal-based biofuels within five years.

    Testing and Certification

    On March 25, 2010, the Air Force successfully conducted the first flight test of an aircraft powered by a 50-50 camelina-based biofuel blend. As of mid-2011, 99 percent of the Air Force fleet has been certified to fly on biofuel blends.15 The Air Force expects to complete all flight testing by February 2012 and all certifications by December 2012.

    The Navy also is actively engaged in testing and certifying advanced biofuels for planes and ships—flying the “Green Hornet” on a camelina-based jet fuel and floating Riverine Command Boat-Experimental (RCB-X) on a biofuel derived from algae…

    Demonstration

    The Navy is planning to demonstrate a carrier strike group powered solely by alternative fuels in 2012. Dubbed the Great Green Fleet, the ships and planes are expected to conduct an extended mission in 2016, and all energy provided to operational platforms is to be 50 percent alternative by 2020.

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    Cooperation With Industry

    Cognizant of the extensive commercial interest in development of advanced biofuels, DoD is working closely with domestic agriculture, aviation and other transportation industries.

    In August 2011, President Barack Obama announced that the U.S. Navy, along with the Departments of Energy and Agriculture, would invest up to $510 million to co-finance construction or retrofit plants and refineries capable of producing significant quantities of advanced biofuels over the next three years…The Navy, DoE and USDA issued a request for information (RFI) to the industry about ideas for how to establish a commercially viable drop-in biofuels industry…This initiative will help reduce the cost of advanced biofuels, ensure that supplies of these new fuels are available for military testing and use, and spur job creation and economic opportunities in rural America.

    Clean Energy at DoD Bases

    The Department of Defense manages more than 500,000 buildings and structures at 500 major installations around the world. The building space under DoD management totals about 2.2 billion square feet, three times the square footage operated by Wal-Mart and more than 10 times that of the U.S. government’s General Services Administration…In theater, DoD also runs a number of forward operating bases that require energy to power electronics, provide lighting, and heat or cool air and water.

    Across its fixed building stock and forward operating bases, DoD has ample opportunities to save energy and deploy new alternative energy sources. Since 1985, DOD has reduced its facility energy consumption by more than 30 percent…Over the past decade, its Energy Conservation Investment Program (ECIP) financed more than $440 million worth of energy-saving measures at installations. In addition, from 1999 to 2007, more than $3.8 billion worth of energy efficiency improvements at DoD facilities were financed through innovative third party finance mechanisms…Including third-party financing, DoD expenditures in fiscal year 2010 alone totaled $1.09 billion for energy and water efficiency and renewable energy…

    Recognizing the benefits of actively managing energy use at its facilities, DoD is pursuing energy efficiency, renewable energy, and energy storage measures at fixed and forward bases.

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    Energy Efficient Technologies and Operations

    From fiscal 2003 to fiscal 2010, Department of Defense installation energy initiatives reduced overall energy intensity (energy use per square foot) by 11.4 percent, short of the goal of the Energy Independence and Security Act (EISA) of 2007…To continue these efforts and deploy successful initiatives across installations, the department has initiated the Installation Energy Test Bed Program, which has more than 45 demonstration projects underway and hopes to reduce demand by 50 percent in existing buildings and 70 percent in new construction…

    DoD is also exploring energy efficiency initiatives at forward operating bases. During a recent demonstration at Marine Corps Air Ground Combat Center Twenty Nine Palms in California, a company of Marines ran their equipment solely on solar and battery power for 192 hours and saved a total of eight gallons of fuel per day…As a result of the demonstrations, a group of Marines from India Company, 3rd Battalion, 5th Marines was deployed to Afghanistan in the fall of 2010 with equipment from the Experimental Forward Operating Base (ExFOB) program…Energy savings from the deployment included…

    • Two patrol bases operating entirely on renewable energy.

    • A third base reducing generator fuel use from 20 gallons a day to 2.5 gallons per day.

    • A three-week-long foot patrol that did not require a battery resupply, saving the Marines 700 pounds of weight.

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    Microgrids

    The Department of Defense is moving rapidly to examine the potential of self-contained “microgrids” that hold promise for ensuring the continuity of critical operations at domestic bases. It is estimated that DoD is reliant on civilian utility companies for 99 percent of its electricity requirements…Microgrids are self-contained islands of energy generation and management capacity that may or may not be attached to the commercial grid.

    DoD’s aggressive move toward microgrid technology is helping to spur industry growth and demonstrate technological feasibility. In part because of the numerous DoD microgrid projects underway, the U.S. microgrid market reached $4 billion in 2010…Market analysts indicate that DoD will account for almost 15 percent of the microgrid market in 2013 and that military implementation of microgrids will grow by 375 percent to $1.6 billion annually in 2020…

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    Renewable Energy Generation Technology

    As the world’s largest institutional energy user and with a broad range of facilities, DoD is an important player in the development and deployment of renewable energy technologies. In fiscal 2010, the department produced or procured 9.6 percent of its electric energy consumption from renewable energy sources, just shy of the National Defense Authorization Act goal of 10 percent…

    Research: At the research level, DARPA has led a concerted effort to develop solar cells that achieve 50 percent conversion efficiency, more than twice the current rate of leading technologies. Record conversion efficiencies of greater than 40 percent have been achieved, and the public-private partnership is exploring next steps in product engineering and manufacturing…

    Deployment: As of mid-2010, the Department of Defense was operating more than 450 projects involving solar, wind, geothermal and biomass energy…The U.S. Navy accounts for 60 percent of DoD’s renewable energy projects—some 250 in total. The 14-megawatt solar array at Nellis Air Force base in Nevada is one of the largest projects in the United States, although large-scale projects in the 250 to 1,000 MW range are in development. One of the largest projects under development in the United States is a 500 MW concentrated solar power project at Fort Irwin in California. DoD renewable energy spending is projected to reach $3 billion by 2015 and $10 billion by 2030.

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    Energy Storage

    Lightweight and long-lasting power is crucial for troops who need computers, radios or night-vision goggles on extended missions.

    Batteries: It is estimated that up to 20 percent34 of a soldier’s 70- to 90-pound pack consists of batteries. Army Soldiers must carry seven or more pounds of batteries for each day on mission.35 A typical infantry battalion uses $150,000 worth of batteries during a one-year deployment.36 More efficient, longer-lasting, lighter battery systems, such as the Army’s Rucksack Enhanced Portable Power System, can significantly improve mission effectiveness and mobility. Technological research into advanced battery technologies is being pursued actively by DoD and the Department of Energy, and the military is pairing rechargeable batteries with renewable energy technologies to extend soldier range and effectiveness.

    Fuel Cells: The military is also utilizing fuel cells as an additional source of portable power for troops. The benefit of fuel cell technology from a war fighting standpoint is that the cells outperform traditional batteries by up to sevenfold.37 Fuel cells are applicable to a wide range of military uses, from small amounts of power for individual soldiers to large amounts for facilities, bases and tactical vehicles. Compared with traditional generators, fuel cells are lighter, quieter, produce fewer emissions and are estimated to be 83 percent more efficient…

    In its clean energy efforts, the department is demonstrating that U.S. economic, energy and national security are inextricably linked. For DoD, today’s investments in clean energy will save lives and money for many years to come. For the nation, farsighted energy policies help reduce dependence on imported oil, create manufacturing and economic opportunities, reduce harmful pollution and make our country safer.

    With its commitment to using energy more efficiently, harnessing alternative sources of power, and developing technologies that promote a more reliable and secure electricity grid, today’s DoD is helping to point the way toward a more secure, clean and prosperous tomorrow.

    QUICK NEWS, September 27: CHINA’S LOAN GUARANTEES TO SOLAR; INLAND TX CITY BUYS COAST WIND; SUPERGRID IS A SUPER DEAL

    CHINA’S LOAN GUARANTEES TO SOLAR
    $41 Billion in Loans awarded by Chinese Banks to Chinese Solar Companies Since 2010
    Septemeber 25, 2011 (Mercom Capital Group)

    "Loans by state owned Chinese banks to Chinese solar companies in multiple transactions amounted to almost $41 billion since last year. In 2010 the loans amounted to $32.6 billion and year to date in 2011 the loans have amounted to $8.1 billion…"

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    "Most active lenders were China Development Bank with about $30.5 billion in loans issued, followed by Bank of China with about $8.8 billion in loans issued. LDK solar has received the largest loan amount so far with $8.9 billion, followed by Jinko solar with 7.6 billion, Suntech with $7.3 billion, Yingli with $5.9 billion, JA Solar with $ 4.4 billion, Trina Solar with $4.4 billion, Hanwa Solar One with $1.9 billion, China Sunergy with $160 million and Daqo New Energy with $154 million."


    INLAND TX CITY BUYS COAST WIND
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    SUPERGRID IS A SUPER DEAL
    U.K. Lawmakers: 'Supergrid' Could Reduce Cost Of Offshore Wind Power By 25%
    22 September 2011 (North American Windpower)

    "A network connecting the electricity system in the U.K. with that of mainland Europe could reduce the costs of interconnecting offshore wind farms by 25%...

    "In addition, the hypothetical ‘supergrid’ could create up to 775,000 jobs across Europe by 2020, the U.K. parliament's Energy and Climate Change Committee [report calculated]…"


    The ultimate goal (click to enlarge)

    "…[T]he development and construction of such a grid could cost 200 billion euros (approximately $275 billion)…

    "Companies including GE, Siemens and National Grid have expressed support for the supergrid concept…"

    Monday, September 26, 2011

    TODAY’S STUDY: THE VALUE OF EFFICIENCY

    What Have We Learned from Energy Efficiency Financing Programs?
    Sara Hayes, Steven Nadel, Chris Granda, and Kathryn Hottel, September 2011 (American Council for an Energy-Efficient Economy)

    Executive Summary

    The building sector consumes about 74% of the electricity used in the United States (EIA 2011a). ACEEE and others have found that electricity consumption can be cost-effectively reduced by about 20–30% in the next 10–15 years (Eldridge et al. 2010; Granade et al. 2009). These savings would reduce annual electricity consumption in the residential and commercial building sector by over 695 billion kWh annually (EIA 2009). These savings are enough to power the entire western United States (including Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, New Mexico, Nevada, Oregon, Utah, Washington, and Wyoming) for a year (EIA 2011b). This reduction would mean a reduction in electricity bills for American consumers and businesses by over $78 billion per year.1 Similarly, natural gas consumption can be cost-effectively reduced by approximately 22% in the near term (Eldridge et al. 2010). This would save over 1,795 billion cubic feet of natural gas annually, which equates to over $20 billion per year of reduced energy bills for consumers. 2 This is more than enough to offset the natural gas consumed to heat hot water by every household in the U.S. (EIA 2005). These numbers don’t account for the corollary energy benefits of improved building efficiency such as improved occupant comfort and safety.

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    Loan programs are a mechanism used to help achieve energy savings in the building sector by providing financing to pay for energy efficiency retrofits. While several programs have many years of experience and have issued thousands of loans, this market has yet to come to scale. There is a lack of information, uniformity, and standards that make it difficult for private lenders to evaluate the risk these types of loans present. The lack of uniformity also makes it difficult to package these small loans into larger portfolios for sale to larger financial institutions on the secondary market. Without access to private capital there will be limited funding for efficiency retrofits—and the associated jobs, energy and cost savings, and environmental benefits will not be realized.

    This report is a first step toward scaling up efficiency financing. Our research summarizes the results of a survey of efficiency loan programs throughout the nation. The quantitative results of our research focused on data such as loan terms, interest rates, default rates, application approval rates, participation rates, and loan amounts. All of this information is reported in the body of the report and summarized in tables in Appendix A. We also looked at funding sources, finding that these programs are being funded by a range of sources. In some states funding was provided by the state via a legislative mandate or collected via a charge on utility rates. Some programs are privately funded by participating financial institutions. In many cases program funding is a combination of both public and private sources. For example, public funding may be used to buy down interest rates for loans provided by private institutions such as banks and credit unions.

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    The programs surveyed with the largest origination budgets (i.e., the total dollar amount of loans issued during the life of the program) were the Sacramento Municipal Utility District (SMUD) ($447.4 million), Southern California Home ($300 million), and Texas LoanStar ($296.3 million) programs. Further we found that:

    • Only one program required all loans to be secured though most programs do require a credit review and many offer a secured loan product.

    • Default rates were very low ranging from 0–3% (cumulative).

    • Loan application approval rates averaged approximately 76% though there was a wide range across programs with several programs reporting approval of 100% of applicants.

    • Most programs do not base project approval on measureable energy savings though most have pre-approved measures. Some programs link the loan repayment to energy savings by requiring that savings exceed loan repayment amount. This can effectively limit the types of measures that will qualify for approval as all programs have repayment time limits.

    • Participation rates are generally low across programs. The percentage of total customers in the classes served by programs compared to the total number of program participants reveals that only two of the programs surveyed had rates that exceeded 3% of the customers targeted by the programs and more than half of the programs had participation rates below 0.5%. These two were SMUD and Connecticut Light & Power’s Commercial & Industrial Financing (CL&P CI) and Small Business Energy Advantage (CT SB) programs.

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    We found that very little data on energy savings data is available. Although energy savings are rarely reported, those that we were able to find fall within a similar range of 12–17% of annual energy use for the eligible customer class served by the utility or utilities participating in the program. Table A5 in Appendix A provides reported savings data.

    Based on our research we were able to make some general observations. Key findings include:

    • Most programs are not penetrating the market of potential customers;

    • Some residential programs have high rates of application decline;

    • Residential loan program participants tend to be “reactive;”

    • Project bottlenecks sometimes occur due to burdensome and inflexible program requirements;

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    • Minimum program size can attract additional lenders;

    • Good loan terms don’t assure the success of a program;

    • The housing market crash has tightened the lending market;

    • Some programs with interest rate buy-down have found the costs to be high; and

    • There is a lack of uniform criteria for evaluating credit of small businesses and institutions.

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    A key purpose of efficiency loan financing programs is to maximize the energy savings achieved with the program’s limited resources. Energy savings can be maximized when programs implement a large number of projects (“broad participation”) and when each project achieves significant energy savings (“deep retrofits”). No single program design element can guarantee the success of a program. Program characteristics that may play a role include program design, eligible measures, audit requirements, points of access by customers to program, incentives, length of program duration, utilization of one-stop contracting, sophistication and extent of marketing strategy (including use of trade ally and neighborhood partners), trustworthiness and credibility of program sponsor, skills and sophistication of program contractors, and quality assurance procedures, to name a few. In order to expand the scope of these programs to a larger audience, we make several recommendations to achieve broad participation in these programs such as:

    • Budget for and invest in ongoing marketing of the program;

    • Simplify the loan application process;

    • Offer attractive loan terms;

    • Design the program for a target audience; and

    • Consider on-bill financing

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    In order to maximize energy savings we make several recommendations for achieving “deep retrofits” including:

    • Require whole house energy audit to educate consumers about all cost-effective options;

    • Package loan programs with utility incentives and rebates;

    • Require additional complementary measures to reach beyond the “reactive” market;

    • Tier program benefits (such as loan terms) to incentivize greater energy savings; and

    • Train participating contractors to ensure the credibility of the program and the achievement of energy savings...

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