Bipartisan U.S. Senators Push for Distributed Wind

Bipartisan U.S. Senators Push for Distributed Wind | December 29th, 2014
by Nick Blitterswyk, CEO, UGE International

A group of Senators recently urged the US Department of Energy to continue funding programs for the domestic distributed wind energy industry. The bipartisan group, led by Sen. Al Franken, wrote a letter highlighting the clear potential for distributed wind power to “contribute many gigawatts of electricity similar to other renewable technologies.”

Reactions have been mixed, and that’s understandable. The distributed wind industry has faced a good deal of critique (some of which is warranted).

Nevertheless, the Senators are correct: Distributed wind is a useful technology, with useful applications, and stands to benefit from the increasingly attractive economic conditions for distributed generation.

Choppy beginnings

When distributed energy took off over the last five years, small wind got caught flat-footed. The reason was primarily because it hadn’t reached a level of maturity where it could take advantage of the changing tide. As a result, there were several cases of companies manipulating incentives and hawking shoddy products on unsuspecting customers (and lest this become an anti-China argument, virtually all such products came from US and European companies).

One of the better known examples was DyoCore, which made lofty claims about the power of its SolAir turbine in order to game California’s Emerging Renewables Program. California actually received so many complaints about the company that it cancelled the entire program.

Early failures like these were possible because standards and certifications hadn’t yet been established in the distributed wind industry. And though the DyoCores of the world eventually failed, these early companies and their stories damaged the reputation of even the best small wind products on the market, greatly holding back the industry.

2011 was when the wind started to come out of the industry’s sails (and yes, pun intended). The economy had tanked, and solar prices were gaining economies of scale, making small wind expensive by comparison in a market where customers were holding their wallets more tightly.

But just like with solar, distributed wind has continued to evolve and innovate

The technology and business models have continued to advance, the industry has consolidated, and as the senators noted in their letter, the distributed wind power industry is at the threshold of rapid commercialization.

The future of small wind: Worth investing in

Vertical axis wind turbines on a Hilton Hotel in Ft. Lauderdale, FL. Hilton 11_0
Vertical axis wind turbines on a Hilton Hotel in Ft. Lauderdale, FL. | A note about Florida; Some $50 billion dollars leave the state every year to pay for electricity produced by coal-fired or natural gas-fired generation in other states and for transportation fuels. For states like Florida, the transition to renewable energy can’t happen soon enough.

Economic conditions are increasingly attractive for all distributed generation. In just a few short years, distributed wind has changed dramatically. There are fewer players, and the standards are much tougher as the SWCC, in the US, and comparable certification programs around the world, have reached maturation.

The technology has advanced — and has a wide variety of applications. You’re not going to find distributed wind atop 20% of rooftops, like you will already with solar in Australia, but you will find that the modern technologies from the companies that remain in the industry — the strongest, best run ones with the best technology, and with better economies of scale — will start gaining a resurgence.

Distributed wind has particularly great potential in applications such as:

  • Farms: A 10kW or larger turbine can be installed in windy locations and produce energy at a rate less than that available from the grid, or in farms in remote regions with difficulty accessing the grid.
  • Northern and Southern regions, from Scandinavia to Patagonia: There are limitations to solar resources during the winter months at the poles, but wind is a great resource in most of these areas.
  • Hybrid installations: Particularly in off-grid situations, a mix of energy sources adds resiliency and lowers the cost of energy.

This list also doesn’t include the many forward-thinking businesses and consumers who want to support and benefit from the technological advancements in the industry, and who have also been a key customer base for distributed wind turbines.

Many of these projects, from Lincoln Financial Field in Philadelphia to Whole Foods in Brooklyn, inspire greater interest in sustainability and emerging technologies that shouldn’t be overlooked.

SunEdison solar installation with vertical axis wind turbines on a commercial rooftop in Walpole, MI.
SunEdison solar installation with vertical axis wind turbines on a commercial building rooftop in Walpole, MA.

The importance of investment

The small wind industry began its life far too dependent on incentives and government funding. But limiting or eliminating development of the industry would be a huge mistake. R&D has developed the technology significantly in the past several years, and with certifications and standards in place, as well as new business models that remove financial barriers and mitigate performance risks, there’s additional efficiencies to explore.

The US has a strong advantage in the field, and the DOE’s support will be essential for distributed wind to “cross the chasm” and find its footing amidst Cleantech 2.0 — an era with much promise for new business models and advanced distributed generation. A group of senators understands this — I hope the rest of the industry will follow suit.

About the Author: Nick Blitterswyk is the CEO and founder of UGE International, a leading developer of distributed renewable energy solutions for business and government, with projects in over 90 countries, including several for Fortune 1,000 companies.

This article first appeared on CleanTechnica.com

Game-changing Solar Finance Model for Mid-size Projects

by Guest Contributor Camilo Patrignani, CEO of Greenwood Energy

Mid-size solar farms hit the ‘sweet spot’ with investor groups willing to invest in renewable energy. 2.9MW ground-mounted Soltage-Greenwood Walpole, MA solar array image via Greenwood Energy
Mid-size solar farms hit the ‘sweet spot’ with investor groups willing to invest in renewable energy. 2.9MW ground-mounted Soltage-Greenwood Walpole, MA solar array. Image via Greenwood Energy

These days, a $40 million dollar equity financing deal might not seem groundbreaking in America’s power markets. But for the keen analyst of distributed solar energy, that same investment may just herald a shift toward the future of project financing.

Count our team at Soltage-Greenwood among the latter, with an outlook brightened by the recent announcement John Hancock Life Insurance would lead a $40 million initial round of equity funding destined to finance multiple project pools across America, starting with 13 megawatts (MW) at six locations across four northeastern state.

Just another solar investment, right? Not really. While the boom in distributed solar energy generation is one of the hottest topics in today’s energy economy, most large institutional investors haven’t traditionally been interested in medium-sized solar installations, and as such, are just now getting into the game.

This trend is especially important considering clean energy investment fell for the second year in a row in 2013, down 11 percent after a similar 10 percent decline in 2012, according to Bloomberg New Energy Finance. While investor appetites in solar are growing, good investment opportunities can often be hard to find, meaning dollars are scarcer and thus more important for solar developers.

Big investors typically want to invest in big projects and standardized contracts, creating difficulty financing distributed solar. That problem hasn’t played out in the rooftop residential market, where developers like SolarCity have installed record amounts of solar panels because all contracts are standard and investors only need to review a diversified pool of credit scores. The same pattern is true for the large utility-scale market where companies like SunEdison have been able to construct massive solar farms and investors only need to review one set of contracts.

But that problem has vexed mid-sized developers who can often fund project-planning phases on their own but rely on securing long-term investors after projects are fully permitted and construction can begin. Individual arrays aren’t large enough to attract large investors, but project pools can involve many different contracts. Without investment to cover the long period of exposure between when the first rack goes in to when the system switches on, potential projects pile up but result in far too few interconnections to fulfill America’s solar energy promise.

Our approach to this problem may seem simple, but it’s been a success: Package together multiple solar projects in states with favorable renewable polices to create the scale and standardization required for big investors to take notice.

Think back to that 13MW project pool I mentioned earlier – it was sizable enough to attract a major institutional investor and secure sufficient equity financing that not only funds our initial project pool, but empowers Soltage-Greenwood to look ahead to an aggressive series of additional (and larger) project pools in 2014.

Now combine that equity financing with our business model of partnering with leading solar developers through the Soltage-Greenwood joint venture, and solar engineering, procurement, and construction contractors through the Greenwood Biosar joint venture to handle every aspect of projects from engineering to procurement and construction through maintenance, and the reason for our optimism comes into focus.

By vertically integrating the solar development business, mid-sized developers like Soltage-Greenwood can reach the scale needed to attract institutional investors, ensuring project financing through construction and interconnection, allowing power-purchase agreements to be put in place, and providing a positive return on investment that encourages additional investment.

Add it all up, and we believe we are well positioned to quickly and efficiently capitalize on the growing demand for distributed clean energy well into the future.

Greenwood Energy is the North American clean energy division of the Libra Group, a privately owned international business group comprising 30 subsidiaries operating across five continents.

Greenwood creates clean energy options by building and investing in new solar energy projects, manufacturing sustainable fuel to replace coal, and developing combined heat and power fuel cell systems.

This article, Just Another Solar Deal, Or The Future Of Mid-Size Project Financing?, is syndicated from Clean Technica and is posted here with permission.

Local Renewable Energy or Utility Co. Who’s Your Energy Daddy?

by John Farrell.

Photo Credit: Michael Kappel
Photo by Michael Kappel

For now it remains large, investor-owned utilities, and ostensibly locally-focused rural cooperatives and municipal utilities. But the energy landscape of today gives me uncomfortable reminders of the Athenian tragedy by Sophocles – the Oedipus tale.

John Farrell, ILSR’s Director of Democratic Energy, gave this panel presentation at the 23rd annual conference of the Society for Environmental Journalists in Chattanooga, TN, on Oct. 4, 2013.

For those who don’t recall their college or high school English class, that’s the tale of the man who grows up to murder his father the king and marry his mother.  And in this 21st century version, the utilities are the king and Little Oedipus is represented by rooftop solar panels, wind turbines, and other ways that utility customers can produce their own energy. I won’t speculate who is the mother.

Earlier this year, the Edison Electric Institute (the daddy’s club of the investor-owned utilities) released a report suggesting that Oedipus has grown up and his daddy may not be prepared for the climax of this play. It’s summarized in two headlines from the clean energy press this summer. In Grist: “solar panels could destroy U.S. utilities” and in GreenTechMedia, “adapt or die.”

The problem is that customer power generation from local renewable energy reduces utility sales.*

(I asterisk this statement because there’s a robust debate about whether this distributed renewable energy brings other benefits to the grid not reflected on the balance sheet – for more information, read up on Minnesota’s value of solar process.) But if your utility (or state regulatory regime) has built its business model around growing energy sales, this creates what some are calling a utility death spiral. Falling energy sales force utilities to raise rates, which further enhances the attractiveness of generating your own energy from solar.

It explains why the chair of the Federal Energy Regulatory Commission, Jon Wellinghoff, recently said: “solar is going to overtake everything.”

So Oedipus a growing threat, and the utility daddy is trying desperately to stave off the storybook conclusion.

The problem is that the energy daddies grew up in a very different era.  In the early days of the electric system, you needed big capital to build big power plants and big power lines to bring energy to big cities. We gave them monopolies to facilitate that infrastructure development. And for decades, it worked.

But in the next 10 years, electricity from rooftop solar energy will be competitive – without subsidies – with utility energy prices in almost every state. The overlay of renewable energy standards and incentives for distributed renewable energy illustrates how the public interest, the energy model, and the economics have changed.

The way utilities respond will determine whether this Oedipus tale ends like the play. In Arizona, Wisconsin, and many other states, utilities are trying to gut the basic policies allowing people to generate their own energy. In some places, they are successful.  But a recent story from Georgia should give them pause – a “Green Tea Coalition” of environmentalists and tea party activists successfully lobbied the public utility commission to require the state’s biggest utility, Georgia Power, to launch a large distributed solar program.

Utilities that try to maintain the status quo, to remain the energy daddy, are going to have a hard time. Their customers will fight them for the right to self-generate, especially if it costs less than utility power, and these local energy producers will also be energy voters.

What we need is to have the utility become the facilitator rather than the ruler, the kindly elder sibling rather than an energy daddy. Because even as utility customers look to their own options for electricity generation, they will still need the utility network…

1)  to help them use their rooftop solar to power their electric vehicle.
2)  to finance high-efficiency appliances, efficient lighting, insulation and other strategies to cut their energy use and energy bills.
3)  to use existing on-demand energy sources (like natural gas) and future ones (like batteries) to keep power delivery smooth and high quality as the grid transitions to primarily renewable energy.

This won’t be easy. For one, utilities have a lot of money sunk into power plant and transmission infrastructure that may or may not be useful in this new era. For another, the regulatory system doesn’t necessarily reward this facilitation role rather than energy sales. But there’s no real alternative, because people are not likely to accept, nor should they, giving up this opportunity to have more control over their energy future.

Photo Credit: Michael Kappel

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This article, Who’s Your Energy Daddy?, is syndicated from Clean Technica and is posted here with permission.

About the Author

John Farrell directs the Energy Self-Reliant States and Communities program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His latest paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.

Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World. John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.

4 States Lead US In Freeing The Grid For Distributed Solar Energy

by Silvio Marcacci

Pro-solar energy state-level energy policies are arguably as strong right now as they’ve ever been across America, just in time for consumers to take advantage of affordable technologies to generate their own clean electricity.

Vote Solar and the Interstate Renewable Energy Council (IREC) concluded the policy outlook for distributed generation from solar energy is bright as ever in Freeing the Grid 2013, the 7th annual report card ranking all 50 US states on net metering and interconnection policies.

The report helps policymakers, regulators, and renewable advocates understand the best approaches to these two wonky but critical influences on the growth of solar energy and small-scale renewables across the country. States are “graded” on an A to F scale depending on their policies – and America’s grades just keep getting better.

Freeing the Grid net metering rank image via Freeing the Grid
Freeing the Grid net metering rank image via Freeing the Grid

Sustaining Solar Energy’s Surge

Thanks to plummeting prices, solar power installations are surging across the US, especially among middle class families. But with many state incentive programs set to expire in coming years, progressive net metering and interconnection policies need to be in place in order to sustain the solar boom.

“Renewable resources are now at the scale and cost necessary to allow them to be a real and growing part of our energy landscape,” said Adam Browning, Vote Solar executive director.

Now that we’ve built this new energy economy, it’s critical we keep the way clear for Americans to keep going solar with strong net metering and interconnection policies.”

Net metering is the more controversial and thus better-known policy. At its most basic, net metering means homes or businesses who have installed their own solar systems are paid in full for the electricity they generate but don’t consume and put back onto the grid. Net metering threatens many existing utility business models and has led to high-visibility fights in states like Arizona, California, and Colorado.

By comparison, interconnection is the more boring of the two, often not even registering a blip on most people’s radar screens. However, it may be the more important policy for the future of solar energy. Interconnection procedures are the rules a solar system must follow in order to “plug” into the grid, meaning net metering may not even come into play until solar panels can interconnect.

Good Grades On Net Metering & Interconnection

But enough with the wonky background – let’s get to the good news. More than two-thirds of US states now receive an A or B grade on net metering, with zero states getting a worse grade in 2013 than in 2012. In order to get an A or B, customers must receive full retail value for electricity contributed to the grid, and the state must maintain several other pro-solar policies.

The results for interconnection are a bit less impressive – while half of US states received an A or B grade, the rest are in need of significant improvement. In order to get an A or B, states must maintain good interconnection rules that incorporate best practices, with few or no customers blocked from interconnecting their systems.

Many states should be commended for having good policies in place, but four in particular, aka the “head of the class” states, lead the nation. California, Massachusetts, Oregon, and Utah (surprisingly) received top grades in both net metering and interconnection policy. California, the epicenter of America’s clean tech market, and Massachusetts, home to one of the country’s fastest-growing green economies, aren’t a surprise, but Utah and Oregon seem primed for solar growth.

Freeing the Grid also recognized Washington as its “most improved” state, with a big jump from a D to a B in interconnection procedures by removing unnecessary requirements and procedures for smaller systems and expediting review of larger systems.

Best Practices Light The Way Forward

America is just now starting its transition to a clean economy. Renewables, and solar energy in particular, are becoming a real part of a distributed generation power system that moves toward grid freedom away from a traditional infrastructure of centralized fossil fuel generation and hundreds of miles of inefficient transmission lines. With nearly 20 best practices listed for states to emulate, the path forward is clear.

“Policy design on the frontiers of our fast-changing clean energy marketplace can be a challenge to get right,” said Jane Weissman, IREC president and CEO.

Freeing the Grid helps policymakers and other stakeholders make better sense of best practices and what needs to be done in their own state to clear the way for a 21st century approach to energy.”

Freeing the Grid net metering rank image via Freeing the Grid

This article, 4 States Lead US In Freeing The Grid For Distributed Solar Energy, is syndicated from Clean Technica and is posted here with permission.

About the Author

Silvio Marcacci is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.

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Grid Parity, Low LCOE Driving 34% Global Renewables Capacity by 2030

by Silvio Marcacci

When it comes to global electricity generation, coal is still king – but not for long

Fast-changing economics mean renewable energy worldwide will represent 34% of all installed capacity by 2030, according to the World Energy Perspective: Cost of Energy Technologies — a report from the World Energy Council (WEC) and Bloomberg New Energy Finance (BNEF).

Global levelized cost of electricity graph via World Energy Council
Global levelized cost of electricity graph via World Energy Council

The report finds many clean energy technologies are already cost competitive with fossil fuels and only getting cheaper, echoing another analysis that found US wind and solar costs fell 50% since 2008. As a result, fossil fuel’s slice of the world energy pie is projected to fall fast, from 67% in 2012 to 40%-45% in 2030.

Falling Renewable LCOE Powers Clean Energy Surge

Vast differences in the cost of building and generating power exist across the globe, but one trend is clear – the levelized cost of electricity (LCOE) continues to fall for mature renewable energy technologies, placing them close to grid parity with fossil fuels. In addition, the cost of producing power from renewables fall continue at a rate related to the level of usage, a trend known as the “experience curve.”

Our study finds that although fossil fuels continue to dominate, renewable energy and the investment appetite for them are growing.

With wider deployment the price of renewables will fall, reducing the risk for investors, and we expect to see greater uptake over the years. — Guy Turner, Chief Economist at BNEF.

The WEC report uses several cost metrics exist to evaluate power generation including capital expenditures, operating expenditures, and capacity factor, but LCOE stands as arguably the most important indicator of renewable energy’s value because it’s the only one that evaluates the total lifecycle costs of producing a megawatt hour (MWh) of power.

LCOE is best explained as the price a project must earn per MWh in order to break even on investment and considers cash flow timing, development and construction, long-term debt, and tax implications to equally evaluate all energy technologies on an equal basis in terms of their actual costs.

But most importantly, LCOE underlines the ascendance of renewable energy across the world – especially wind and solar.

Wind Power Gusts Ahead

Wind power has already become the largest non-hydro renewable electricity source and is projected to more than triple from 5% of global installed capacity in 2012 to 17% by 2030, breezing past large hydropower. From 2000-2010 global onshore and offshore wind capacity increased 30% per year, reaching 200GW installed in 2010.

Onshore wind LCOE by region
Onshore wind LCOE by region graph via World Energy Council

Onshore wind’s LCOE has fallen 18% since 2009 on the strength of cheaper construction costs and higher capacity factors.

Turbine costs have fallen nearly 30% since 2008, outpacing the traditional experience curve.

The LCOE for onshore wind is cheapest in India and China, running between $47-$113 and making well-sited wind farms in these countries among the cheapest in the world – an incredibly important factor considering their surging demand for power is currently being met by coal.

The LCOE picture isn’t as clearly defined for offshore wind, as 95% of the world’s 4GW installed offshore wind capacity is located in European waters.

By 2020 installed capacity growth in Asia will surge, offsetting Europe’s dominance with 40% of all installed annual capacity – China alone will have 30% of all new capacity. As more offshore wind comes online in different markets, LCOE will become clearer.

Solar’s Remarkable Shine

But if wind’s LCOE drop has been steady, solar energy’s has been meteoric.

The WEC reports feed-in tariffs and plummeting photovoltaic module prices make solar competitive with most forms of power generation – in some markets with expensive power, like Germany, businesses with installed solar now find using their generated power more profitable than selling it to the grid.

Solar power LCOE over time chart via World Energy Council
Solar power LCOE over time chart via World Energy Council

As a result, solar power’s worldwide capacity will absolutely boom, growing from 2% of installed capacity in 2012 to 16% by 2030. China and Japan will be biggest beneficiary of solar’s rise, with China set to exceed 50GW installed solar by 2020.

The WEC’s forecast for solar power is incredible, but even this outlook is underestimates solar’s clean energy potential, because it only includes projects above 1 megawatt in capacity – completely ignoring the spread of small-scale rooftop solar and the rise of distributed generation

Solar power LCOE by region graph via World Energy Council
Solar power LCOE by region graph via World Energy Council
Fossil Fuel’s Achilles Heel: Operational Costs

In spite of falling renewable costs, fossil fuel generation is still cheaper in most regards, except for one – the price of operation.

The WEC notes that once renewables are built and online, their costs are mainly marginal operational and maintenance expenses. Compare that to fossil fuels, whose costs are volatile and subject to change from factors like commodity price swings and external costs like carbon pricing and pollution.

This trend is most clearly seen in developed nations like Western Europe, America, and Australia, where the WEC says the potential for significant amounts of new coal generation to come online is low.

Today, developing nations buck this trend and coal is a growing generation source in Brazil, China, and India. In fact low capital costs make China the cheapest country to generate power from coal, less than half the LCOE in Europe or the US.

Coal LCOE by region chart via World Energy Council
Coal LCOE by region chart via World Energy Council

But the tide is starting to turn, evidenced by growing concerns about air pollution in China and the development of carbon markets in many of the world’s developing economies where fossil fuels have dominated generation.

Grid Parity For Renewables Fast Approaching

Put it all together, and it’s clear to see global energy economics are changing fast.

While coal still dominates global electricity production, renewables are catching up with net investment growing seven-fold from 2004-2011, outpacing fossil fuels for the second year in a row in 2012. And as more renewables come online, their costs continue to fall faster and faster from larger economies of scale.

The cost of most technologies, and most dramatically that of solar PV, is coming down with production scale-up in many areas of the world.

With such growth, grid parity will become reality in the coming years. — Dr. Christoph Frei, World Energy Council Secretary General

This article, Grid Parity, Low LCOE Driving 34% Global Renewables Capacity by 2030, is syndicated from Clean Technica and is posted here with permission.

About the Author

Silvio Marcacci is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.

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