R.E.preneur

REpreneur Debates: Why Germany Raised Their Wind Feed-In Tariff

Last Thursday, Glen Estill blogged about the effect that Germany will have on the Ontario Standard Offer Program (SOP) by raising their Feed-In Tariff (FiT) for wind and to a greater extent, off-shore wind.

My feelings on the issue followed --

From His Post:

"They know what it costs to produce electricity from wind, so when they deem it necessary to increase the price, you know it is needed."

  I'm going to have to disagree with this statement.  Germany announced this move last year due to the wildly successful implementation of solar power in their country.  The government recognized that the funds they had set aside (at least from the utilities) for use in support of renewables had achieved their solar goals far in advance of the plan because they set the FiT for PV extremely high, the highest in the world. 

After achieving their solar target ahead of schedule, they transferred money and effort to the wind and specifically off-shore wind because they recognize that off-shore wind is still an emerging market that Germany, with investment, can become a world leader in this field in the same way that they did with PV.  This is in contrast to the on-shore wind industry which has already gone through the consolidation stage and is already accepted in the industry as competitive with fossil fuels. 

Which brings me to my next point.  You state that they raised the off-shore wind FiT because they recognize that costs are higher.  But you also stated that fossil-based energy sources have experienced a never before seen run-up in prices across the board.  So wouldn't that mean that wind would be even more competitive without subsidies?

Finally, I disagree with the policy of providing higher FiTs to wind developments in less-than optimal wind sites.  That's like giving SUV buyers a bigger tax break because they get poor fuel economy, its idiotic.  Unless there is some legitimate reason not to develop all of the optimal wind sites, these should be developed first and supported by adequate transmission.  This should be relatively easy in Germany because all of the off-shore wind is located in one general geographic region. 

I wholeheartedly support all of the policies that Germany has implemented that have accelerated the growth of renewable energies nearly across the board.  I just think the reason that they increased the FiT for off-shore wind had less to do with what you argued and more to do with their success in PV and desire to be a global leader in off-shore wind.

New AWEA report: Wind Generation By State

Hat tip to the website Environmental Leader which I discovered after rummaging around through Al Gore's new WE campaign website.

If you haven't heard of the WE campaign, you gotta check it out.  It is a collaboration, supported by the non-profit Alliance for Climate Change. 

I love the Action Alerts that allow citizens to send messages & sign petitions to politicians, business leaders, banks, and the press urging them to consider and act on global climate change now. 

Back to the report.  Out today by the American Wind Energy Association, the AWEA Annual Rankings Report summarizes leading wind supporters by state, congressional district, managing owners, manufacturers, IOUs, Public utilities, and rural electric cooperatives.  Its really quite well done.

Plus the writers knew that executives hate reading long paragraphs, so they pretty much summarized everything using pictures, charts, graphs, and lists.  Love it.

Anyone looking to invest in Wind energy?  From the report a market share breakdown by manufacturer. 

Are You An American? Make Your Voice Heard On Offshore Wind

If you read much REpreneur at all you know I'm big on activism.  Being young I'm idealistic about being a part of the process.  I also believe this is important if you work in the industry as "Green begets more Green".

Though I have little exposure to the wind industry, I know that wind is a visible and economic depiction of how renewable energy can be developed at a price point that is attractive to utilities.  As solar moves in this direction, it will be important for our industries to work together in lobbying legislation, and sharing our collective knowledge about best practices for development of projects and overcoming regulatory hurdles.

With that in mind, take a moment to read over this article from PlanetSave about the commenting period now open on the Cape Wind Project.  If you are an American, then you have the opportunity to comment on the project.  I hope you will do so in support of Cape Wind, the first offshore wind project in America. 

Haven't heard about the project, then you MUST watch this satirical depiction of the debate over the project from The Daily Show:

So what was my argument, as an American from the other side of the country? Here was my comment:

   

Comment Title:      Every Region Of Our Nation Must Develop Its Unique Renewable Resources

        Illinois, Wyoming, Montana. Do you know what these states all have in common? Massive coal reserves. The economic and political forces in those states are not bashful about the fact that in order to reap the benefit of said reserves, their own state must aggressively harvest that fossil fuel to provide cheap energy for its citizens (and much of it gets shipped to the southeast US).

    If the US is to make ANY significant progress in moving to a clean energy economy, it will require that every region of the nation identify its renewable resources and streamline the political and economic processes to develop the renewable generation assets that will provide clean, affordable renewable energy to local and regional citizens.

    While my own state of Arizona is behind on developing our solar resources, we acknowledge the need to do this and organizations are working within the political process to accelerate this development quickly. Across Texas and the midwest, farmers are taking advantage of their large wind resource. California and Nevada are ahead on wind, solar, and geothermal. In the northeast, great progress can be made with biomass and offshore wind.



    The Cape Wind project is an important development for our nation because offshore wind involves economies of scale not possible for land-based wind power. Currently, the largest wind turbines on land in the US are between 1.5 and 2.5 MW. Current technology for offshore wind includes turbines as big as 7.5 MW, and getting bigger. Climate Change must be addressed aggressively and this Cape Wind project, whose EIS has shown general favorability for, represents a landmark tipping point in renewable energy development.

    Please approve this project, allowing many more offshore projects to begin development with the certainty that they will be approved if they do their due diligence. This will allow for a windfall of offshore renewables and help clean up America's energy supply.

Big Week in Renewable Energy Legislation

You know what makes me sad?  Legislation that hurts/fails to help renewable energy.

You know what makes me ecstatic?  Legislation that is pro-renewable energy and cleantech.

Of course, I was heart broken when both last year's energy bill and last week's economic stimulus package failed to include significant long-term extensions of ITC & PTC for renewable energy. 

Fortunately, stories abound this week on new renewable energy legislation that will significantly benefit the renewable marketplace for years to come. 

First, the economic stimulus package passed by the House & Senate last week and to be signed by the President this week contained a significant caveat that allows renewable energy projects brought online in 2008 to have the land they are built on be depreciated 50% + advanced depreciation five-year MACRS for the remaining 50% all in the first year.  This is important because it means that the landowners tax burden will be significantly smaller in the first year of operation and going forward, than before this rule was in place.

Full Story Here

    Next up, new legislation has been introduced by House leaders addressing nearly all of the specific needs of the RE industry in terms of long-term extensions of the ITC & PTC for most RE technologies, now including marine renewables too. 

From the article,

    The bill would extend the 30% investment tax credit (ITC) for solar energy property and qualified fuel cell property for eight years (through the end of 2016). It also includes a long-term extension and modification of the production tax credit (PTC), extending for three years (through December 31, 2011) certain qualifying facilities such as wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation hydropower, landfill gas and trash combustion facilities. It also includes a new category of qualifying facilities: marine renewables (e.g., waves and tides). The bill would cap the aggregate amount of tax credits that can be earned at 35% of the facility's cost.

 

A long-term extension and modification of the residential energy-efficient property credit is also included. The credit for residential solar property would be extended for six years (through the end of 2014) and the annual credit cap (currently $2,000) would increase to $4,000. Residential small wind equipment and geothermal heat pumps would also qualify for this credit.

The bill also establishes a $4,000 credit for plug-in hybrid vehicles.

A fabulous piece of legislation that will probably face significant opposition because the incentives are still being paid for (though not as drastically as before) by repealing tax benefits that oil and gas industries currently receive. 

I would encourage all REpreneur readers to visit SolarNation and sign up for their Action Alerts email campaign so that when this bill is reaching critical discussion points in D.C., they can notify you and provide an easy way for you to contact the senators and representatives in your district and urge them to support this bill.  This is your responsibility as the most important position in a democracy, you are a citizen.  What do you want your country to support?

Finally, a brilliant piece of state legislation introduced in California.  From the release on RenewableEnergyAccess.com today:

California State Assemblymember Jared Huffman has introduced legislation that would require utilities to pay individuals for any excess solar power produced at a home, government building or business. Currently, the best consumers can get is a "zero" energy bill.

"This bill will encourage not just more solar power but conservation and efficiency as well as owners see a benefit to generating surplus power."

--Bernadette Del Chiaro, Advocate, Environment California

Assembly Bill 1920, which is sponsored by Environment California, was unveiled at the location of California’s largest solar producer, SPG Solar in Novato. AB 1920 will enable consumers who produce solar power to get paid by their utility company for any excess electricity they produce on an annual basis. The level of compensation would be set by the Public Utilities Commission and would help the utility meet their renewable energy goals mandated by state law.

This is really leapfrog legislation that will truly incentivize consumers and industry to adopt solar power on-site at a more rapid rate. If you live in California, contact your local state politician and ask them to support AB 1920. 

 

 

EUEC 2008 Renewable Energy Track: Abbreviated Notes, Info Bites and Loose Ends

I promised more insight from the Electric Utilities Environmental Conference 2008 conference so here it is.  These are my rough notes of any insightful info gleaned during a speaker's presentation or Q & A.

Jeffrey Michel, Ing.-Büro Michel, Germany
The United States has 460 different sets of regulations for solar power – Can you keep track?  Quoted from E & Y annual RE study.
    Believes that America needs designated solar energy parks where transmission can support a large amount of renewables located in the right places.

Jordan Fruge, NewPoint Energy:
A solar PV system in the U.S. costs an average of $7.84/watt installed
    - 50% of that is module cost, 20% is Balance of Systems, and 30% is Installation & Commissioning
    - Germany, who has 35K trained workers in solar has a lower installed cost despite higher module pricing
    - Emphasis is need for broad-based support to educate cleantech workforce

Return on Energy Investment:
    Silicon: 1.6 years
    Thin Film PV: 1 year
    Wind: Less than 1 year
    Palo Verde Nuclear: 14 years of energy out = the amount of energy used to build & fuel it

Allen Jay St. Clair, Windstone Capital Partners
    2.2B in private equity into cleantech in 2007, up 46%
    Green Construction is a $15B industry growing at 50%/year
    2007 brought America’s first reduction in miles driven since 1973

John O’Donnell, Ausra
    Ausra’s CLFR (compact linear fresnel reflector) technology uses 1-5% the water of conventional power generation
    They can produce energy right now at $0.12/kWh, with storage at $0.09/kWh
    31-33% efficiency @ converting solar thermal energy
    Two areas of innovation:
        40x concentration of the sun, 550 degree saturated steam
        Energy stored as pressurized water & “other”
    CA: Peak is Noon to 8pm
    16 hours of energy storage at a 60% capacity factor
    1 positioner controls 300-400 m2 of glass
    Glass is 8’ off the ground: size is 60’ x 8’
    The company’s Australian factory produced 1 module every 2.5 hours
    The company’s claims their Las Vegas factory using robotic construction will produce one module every 10 minutes
    Their glass covers 75% of the total land area

Xavier Baldwin, Burbank Water & Power
    PHEV Benefits:
    Reduce GHG, dependence on foreign oil, provide peaking capacity and reserves, help integrate (shape) wind power into the resource mix, improve system efficiency and load factor.

    Smart (Grid) means ability to communicate both ways.  Charge-up your PHEV at off-peak rate of $0.05/kWh.  Grid gets 8 kW of “spinning” reserve per PHEV. 

    How can we make this a reality?
-    Develop and integrate a Grid Control System
-    Plus a PHEV charging system
-    And a Smart Grid Communication System
-    Finish it off with a cross utility accounting system

Any entrepreneurs interested in building some solutions?

New Company V2Green partnered with Xcel Energy to test VCM on Ford Escape PHEV
The Cascadia Institute is working on smart grid technologies and applications

Interested in PHEV’s? You must read FERC Commissioner John Wellinghoff’s paper on PHEV’s. 

Thomas Jensen, Sonnenschein, Nath, & Rosenthal LLP
    Ocean Renewables: 800x denser than air @ sea level
    Not an intermittent power source
    The federal laws for ocean energy are a MESS!  It’s a public lands issue, since there are no private sites

Emerging Energy Research "Top Renewable Producers" - Charts Are Cool

As a follow up to “Go Big or Go Home”, this week the guys over at Emerging Energy Research released a report detailing the world’s 20 largest renewable energy producers (excluding large hydro) for 2006.  For those of you who have recently started following this industry, this is a great resource to see who the real players in this space are. 

As I’ve stated before I believe that utilities will play a central role in the growth and long-term adoption of renewable energy.  A lot of newcomers do not understand how the value chain of the energy market is set-up.  This is an important distinction to make because without it you cannot understand how the money flows, who is demanding these renewable solutions, and where the bottlenecks occur. 

So where do utilities fit?  Utilities are the retailers of the energy industry.  They are generally operators of energy services, not developers or constructors.  Utilities purchase a product (a power generation facility) or a service (the energy from a power generator) and sell that energy on the retail market to individuals, commercial and industrial customers. 

Utilities have unique power because although they operate primarily in highly regulated markets, we have begun to see competitive retail energy markets.  As a monopoly or oligopoly, a utility has a lot of power over what they charge, the market does not necessarily set the price.  Utilities are also the 800 lb. gorilla of the energy industry because they represent the aggregated buying power of their collective customer pool, often numbering in the multi-millions. 

Back to the chart.  This chart lists the top RE producers and breaks their RE production out by technology.  One exciting point about this chart is how it will change at year-end 2007.  Iberdrola, #1 on the list, has already announced their acquisition of Scottish Power, #7 on the list.  Additionally, world’s third largest wind developer Gamesa has been purchased and the assets will be split between E. ON, Enel, and Acciona, pending regulatory approvals.   

All very exciting stuff for the RE world.  Finally, take a look at the proportion of solar energy produced by these companies.  It is miniscule.  Currently, wind dominates this retail sector.  In the future, as costs continue to drop, the benefits of solar will begin to outweigh the low cost of wind and we will see rapid adoption by the utilities.  That’s a snowball that has just begun rolling.

Alright, I'm off to Orlando for the weekend.  But look for an upcoming COW post about one of the utilities on this list.  Oddly enough, there's a connection between Orlando and this company, but not related to my trip.  The first reader to comment which utility I am speaking of gets a free interview post: ask me anything (hopefully related to RE).