Uncategorized Archive

San Antonio Muni To Launch Limited Solar FIT

Monday, September 14th, 2009

Another utility has announced that it will voluntarily launch a limited solar PV feed-in tariff. The municipal utility serving San Antonio, Texas, CPS Energy, will introduce the program in January of the new year.

CPS Energy claims that it is the nation’s largest municipally owned energy company providing both natural gas and electric service. The utility serves 690,000 electric customers.

Like other utilities that have voluntarily proposed feed-in tariffs, the CPS Energy program is extremely limited. Effectively a pilot, the total program is limited to only 10 MW of solar PV.

The annual cap for Gainesville (Florida) Regional Utilities, a much smaller municipal utility, in their solar PV feed-in tariff program is 4 MW.

And while San Antonio’s solar tariff of $0.27 USD/kWh is superior to those among Midwestern utilities in Wisconsin and those proposed in Indiana, it is less than that in Gainesville ($0.32 USD/kWh).

The CPS program also will use 20-year contracts instead of the 10-year contracts found in the Midwest. Industry analysts suggest that 20-year contracts are probably the minimum necessary in North America.

CPS Energy Program Summary

  • Contract term: 20 years
  • Solar PV tariff: $0.27 USD/kWh
  • Pilot program length: 2 years
  • Launch: January, 2010
  • Project size cap: 250 kW
  • Project size threshold: 25 kW
  • Program cap: 10 MW
  • Targeted rate of return: 3–5%

Like Indianapolis Power & Light’s proposed program, the San Antonio muni specifically excludes homewoners and small businesses through a high threshold of 25 kW.

In contrast, the San Antonio muni’s release said the company is developing 41 MW of solar PV in large, central-station plants outside the city.

CPS Energy Outlines Plans For Solar Program

China Launches Differentiated Wind Energy Tariffs

Tuesday, September 1st, 2009

China has instituted a new system of differentiated wind energy tariffs based on four wind energy zones. The move is the first in Asia since South Korea implemented a feed-in tariff program in 2005. China now joins a growing list of developing countries with feed-in tariffs, including South Africa and Mongolia.

China is also the first jurisdiction outside Europe to implement wind energy tariffs differentiated by geographic location. Canada’s Ontario province is expected to implement wind tariffs this fall differentiated by two simple classes, those on land, and those offshore. Germany, France, and Switzerland have wind energy tariffs based on wind resource intensity. Currently, no North American jurisdiction has implemented tariffs for wind turbines on land that are differentiated by wind resource intensity or geographic location.

The new program by China’s National Development and Reform Committee [NDRC Pricing Reg. (2009)1906] was issued July 20, 2009. The tariffs for new projects were to go into effect August 1, 2009.

Costs of the new program above the cost of coal-fired generation will be split between provincial grid operators and the central government as in current policy.

The tariffs themselves are less than those in Germany and France and less than those proposed in Ontario. Though the Chinese tariffs are thought to be based on the differences in the wind resource across the vast country, it is impossible to estimate the effectiveness of the tariffs without knowing the specific wind resources of the four wind energy zones. Nevertheless, the Chinese program may represent an innovative hybrid between the graduated wind energy tariffs in Germany and France and those single-value tariffs in Ontario, Vermont, and California.

No further details are available.

The nominal parliament of the Peoples Republic of China passed a Renewable Energy Law on February 28, 2005. The law was widely rumored at the time to include provisions for feed-in tariffs. However, as in most countries, the path to implementation is never direct and only now has specific tariffs been proposed in a program that could be called a system of feed-in tariffs.

Power Engineering is also reporting that China is expected to announce feed-in tariffs for solar PV sometime later this year. The industry trade magazine quoted Suntech chairman Zhengrong Shi as suggesting the tariff for large-scale solar PV plants could be equivalent to $0.22/kWh. Whether these tariffs also include access to state subsidies is unknown.

Indianapolis Power & Light Proposes Modest Midwestern Feed-in Tariff Program

Monday, August 31st, 2009

Indianapolis Power & Light (IP&L), an electric utility that provides retail electric service to 470,000 residential, commercial and industrial customers in and around Indianapolis, Indiana, proposed a pilot feed-in tariff program in a regulatory filing earlier this year.

IP&L’s proposal to the Indiana Utility Regulatory Commission (IURC) will become part of the utility’s Demand Side Management program. The IURC is expected to rule on the proposal later this year.

Several Midwestern utilities either have feed-in tariffs in place or have proposals before state regulatory commissions. Without exception, these voluntary programs are extremely limited in the maximum capacity that is permitted. None of the programs in Wisconsin and Michigan conform to best practices of successful policies elsewhere and none have resulted in any significant renewable energy development to date.

For example in Michigan, Consumers Energy has proposed a tariff only for solar PV, though the tariffs themselves exceed those of other Midwestern utilities. IP&L, in contrast, has proposed a series of tariffs for different technologies, not solely solar PV. IP&L includes tariffs for wind and biomass as well as solar PV.

Further, IP&L’s proposal caps total capacity of the program to one percent of retail sales. This greatly exceeds that of Consumers Energy where their program is limited to only 2 MW.

IP&L delivers 15 TWh per year to retail customers. Under IP&L’s proposal, the program would be limited to some 150 million kWh per year. Under Hoosier conditions that’s equivalent to 75 MW of wind or 150 MW of solar PV. While that’s 75 times greater than the Consumers Energy program, German farmers and homeowners install that much solar every month.

IP&L itself is developing a 106 MW wind project with French company EnXco in northern Indiana.

Below are some elements of IP&L’s proposed three-year pilot program.

  • Contract term: 10 years
  • Technologies included: Solar PV, wind, biomass
  • Project size minimum: wind, 50 kW; solar PV, 20 kW
  • Project size cap: 10 MW
  • Program cap: 1% of retail sales
  • Solar 20 kW-100 kW: $0.24 USD/kWh
  • Solar >100 kW: $0.20 USD/kWh
  • Wind 50 kW-100 kW: $0.14 USD/kWh
  • Wind 100 kW-1 MW: $0.105 USD/kWh
  • Wind >1 MW: $0.075 USD/kWh
  • Biomass: $0.085 USD/kWh (with a capacity payment)

The tariffs were derived using the problematic Discounted Cash Flow model that is highly reliant on federal tax subsidies. As a consequence, the proposed solar PV tariffs are one-third less than those in the much sunnier city of Gainesville, Florida. The wind energy tariffs are also substantially less than those recently implemented in Vermont. Thus the tariffs are not particularly attractive, notably in light of the short contract term of only 10 years.

Most successful programs internationally have contract terms of 20 years or more. Ontario’s program uses 20 year contract terms for most technologies, as does Vermont.

“When you do the math,” says Renew Wisconsin’s Michael Vickerman, “there’s not enough [money] there to get you over the hump. The tariffs, by themselves, are simply not high enough.” Vickerman speaks from experience. Similar tariffs in Wisconsin have not resulted in any significant development-and Wisconsin has a state subsidy program on top of the federal tax subsidies.

In another twist on feed-in tariffs, Midwestern utilities often limit participation with a high lower threshold that is nearly certain to limit development. IP&L’s proposal is no exception.

For wind energy, the minimum size to participate is 50 kW. There are few new wind turbines manufactured in that size class. Hoosiers will be limited to importing used wind turbines from Europe or California to use the tariff. Similarly, the 20 kW lower threshold for solar PV will exclude all homeowners except only the largest McMansions.

IP&L says in its filing that this severe limitation on the program is intentional. The utility says it doesn’t have sufficient resources to read the meters if there was any substantial uptake of the program.

Internationally, successful feed-in tariff policies have no lower thresholds for participation. These programs welcome all participants, even the smallest generators.

Still, IP&L has proposed a far greater program limit for its service area than that in California, once a leader in renewable energy. Current California feed-in tariff policy as well proposed legislation limits total contribution to only 500 MW, well below the one percent cap in the I&PL proposal.

Though IP&L’s proposal is another marker in the development of feed-in tariff policy in North America, the program is unlikely to result in any significant renewable development outside a few “show case” projects.

Britain to Launch Innovative Feed-in Tariff Program in 2010

Thursday, July 23rd, 2009

They said it couldn’t be done, but Britain has risen to the challenge. Britain’s Secretary of State for Energy and Climate Change Ed Miliband has released long-awaited details on the Labour Government’s feed-in tariff policy.

Miliband, an up-and-coming politician in the cabinet of besieged Prime Minister Gordon Brown, has done what was once unthinkable, put a British stamp of approval on feed-in tariffs as a policy mechanism for developing renewable energy.

The move has potentially far reaching ramifications in the English speaking world where there has been reluctance to use full-fledged systems of feed-in tariffs, sometimes on ideological grounds. Now that Britain, Ontario, and South Africa, two of Britain’s former colonies, have definitively moved toward implementing sophisticated feed-in tariff programs, there may be less reticence to do so elsewhere in the Anglophone world.

Of course, like politicians everywhere, Miliband had to rebrand feed-in tariffs to something more to his liking. His “clean energy cash back” creates yet another term for what everyone else calls, sometimes grudgingly, feed-in tariffs.

Nevertheless, the program’s designers took their task seriously and didn’t opt for a system of faux or false feed-in tariffs, what North American campaigners have begun derisively calling FITINOs, feed-in tariffs in name only.

The British proposal has also contributed several innovative new twists on feed-in tariff design that will mark the program as “made in the United Kingdom”.

One new feature is the inclusion of tariffs for Combined Heat & Power (CHP). While not a first, it is one of the few programs to do so. Another feature of the proposed program is a distinct tariff for small solar PV systems on new homes, and a separate tariff for existing homes.

Most significantly, program designers have included a mechanism to encourage homeowners and small businesses to reduce their electricity consumption. For example, a solar PV generator will be paid for all their generation. However, they will receive a bonus, currently at £0.05/kWh ($0.08 USD/kWh, $0.09 CAD/kWh), for electricity delivered to the grid over and above their domestic consumption. Thus, if a homeowner is able to cut their domestic consumption, and sell more electricity to the grid as a result, they are paid the bonus on top of the posted feed-in tariff.

The proposed program, like the successful programs it was modeled after, was designed to “set tariffs at a level to encourage investment in small scale low carbon generation.” This is in contrast to faux feed-in tariffs that set the tariffs on the “value” of renewable energy to the system as in the California Public Utility Commission’s largely ineffective program.

British designers were instructed to calculate tariffs not on ideology or economic theory but on the tariffs needed so “that a reasonable return can be expected for appropriately sited technologies” to meet the country’s renewable energy and carbon mitigation targets.

Unfortunately, the program’s targets are timid at best, two percent of Britain’s electricity consumption by 2020, and the tariffs are limited by law to projects less than 5 MW to protect the country’s stumbling Renewable Obligation, the preferred mechanism for developing larger projects.

The two percent target requires the generation of only 8 billion kWh (TWh) per year. For comparison, Germany generated 40 TWh in 2008 from wind energy and more than 4 TWh from solar PV. France, Britain’s longtime cross-channel rival, generated nearly 6 TWh from wind energy in 2008 from its system of feed-in tariffs.

Some of the proposed tariffs are not competitive with those on the continent, or those in Ontario. “For community-scale or larger on-site projects,” says David Timms, a senior campaigner with Friends of the Earth (UK), “the rates [tariffs] are inadequate.”

The tariff proposed for large wind turbines is low by international standards. Britain has some of the best winds in Europe. Nevertheless, many of the smaller projects that may be built under the feed-in tariff program may not be as advantageously sited as commercial projects under the Renewable Obligation. Consequently, the proposed tariff for wind projects from 500 kW to 5 MW may be insufficient to drive development.

Timms also adds that the “degression for solar PV is quite aggressive” at 7 percent per year and that the bonus payment of £0.05/kWh for export to the grid may not be bankable. Because the bonus payment will fluctuate with the “market price” it won’t necessarily have a fixed value and, consequently, it will be discounted by banks providing debt for projects financed under the feed-in tariff.

If implemented as proposed, though, the British program will offer some of the highest tariffs for small wind energy in the world. The tariffs will rival those in Italy, Israel, Switzerland, and Vermont, possibly reflecting the British government’s belief that it can encourage development of a domestic small wind turbine industry. For example, the tariff proposed for small wind turbines from 1.5 kW to 15 kW is £0.23/kWh ($0.38 USD/kWh, $0.42 CAD/kWh) about that paid in Italy and Israel.

The proposed program also includes a number of anti-gaming provisions to avoid breaking up bigger projects into several small ones to fit within the 5 MW project size cap. These will prevent companies from moving big wind projects from the Renewable Obligation to the feed-in tariff program.

Britain’s feed-in tariff program is expected to begin in early April, 2010 after an extensive consultation. Below is a summary of the program’s key elements.

Program Cap: 2% of Supply, 8 TWh in 2020
Project Cap: 5 MW
Generator can be green field (doesn’t have to be a metered customer)
Contract Term: 20 years
Program Review: 2013
Costs for the program will be borne by all British ratepayers proportionally

While limited in scope, Britain’s proposed feed-in tariff program is as sophisticated, if not more so, as any proposed in the United States, and will put the country on the world map of innovative renewable energy policy.

Consultation on Renewable Electricity Financial Incentives 2009: Program Details

Consultation on Renewable Electricity Financial Incentives: Background Documents & Reports

Warwick Wind Trials Gives Failing Grade to Rooftop Wind

Monday, July 20th, 2009

If further proof is needed that mounting wind turbines on rooftops is a bad idea, the final report on the Warwick Wind Trials is it.

The report, while bending over backwards to give the British small wind turbine industry the benefit of the doubt, clearly lays out the principle problems with rooftop-mounted small wind turbines–poor performance and noise.

Encraft, the private firm performing the study, provides a wealth of information in its report, including measured power curves using 10-minute averages for the

  • Zephyr Air Dolphin Z1000,
  • Ampair 600 (two units),
  • Eclectic StealthGen D400, and
  • Windsave WS1200.

The summary of the results is particularly damning but the entire report is worth reading.

“Of particular note is that turbines on our high rise sites, Eden, Ashton and Southorn Court were able generate as much energy in one month as other turbines in the trial did in one year. It is unfortunate that these high performing turbines had to remain switched off for the majority of the trial following complaints about noise from the building residents. The best performing turbine in the trial generated an average of 2.382 kWh per day when in operation, equivalent to 869 kWh in a full year. The poorest site generated an average of 41Wh per day when in operation or 15 kWh per year, which is less than the energy it consumed to run the turbine’s electronics. [emphasis added]

“Overall the trial has painted a picture of an industry and technology that is still at development stage and is likely to make a tangible contribution to energy and carbon saving only on the most exposed sites and tallest buildings. The combination of this reality, aggressive and over-optimistic marketing by some suppliers, and the enthusiasm and credulity of the market (and regulators) has potentially led to an unfortunate outcome where the wind industry as a whole is in danger of suffering from a setback in credibility.

“The evidence form this trial is that such potential setbacks can be avoided in future by greater openness by the industry as a whole, and more effort to educate the market and opinion formers about the fundamental science and challenges of new technologies earlier. Micro-technologies need not fear customer resistance, because there are plenty of early adopters out there willing to give things a go. Sustainable technologies and a sustainable future require customers who are properly informed and able to take individual decisions that are both economically optimal and environmentally sustainable. Without open data this is impossible.”

Unfortunately, this report and the others that are now appearing have failed to dampen the unfounded enthusiasm for rooftop-mounted wind turbines by an il-informed public and the hustlers who prey on them.

As I try to explain in my new book, Wind Energy Basics, there’s a phenomenon at work here. The public wants renewable energy and wants to participate in its development. Where public policy, such as in the USA and Britain, prohibit it, people will take action on their own. Rooftop promoters understand this and take malicious advantage of the public’s deep-seated desire to do something.

Final Report, Warwick Wind Trials