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Community-Based Energy Development: Macalester experiments with wind

I know there's been some interest around Minnesota's Community-Based Energy Development (C-BED) program, a state-mandated project by which utililities sponsor projects (by buying the electricity through a special front-loaded structure) that have primarily community ownership along with equity investment. This initiatives was developed to spur the development of community-owned renewable energy (primarily wind and biomass) in Minnesota. Last February, a new round of C-BED projects, Xcel Energy, the largest provider of projects, committed 300 MW of installed C-BED projects by 2007, and a total of 500 MW by 2010. This forms a large part of the target of 800 MW the state is aiming for.

More info on the C-BED program can be found at www.c-bed.org.

The Macalester Clean Energy Revolving Fund (CERF), a Macalester fund I started with a couple of friends last year and managed by a board of two students, a faculty member, and administrator, and an alumni, is in the process of entering a C-BED project for a 2 MW wind turbine. CERF is committed to investing in efficiency and renewable energy projects generated by the campus community (primarily students working with others) that are financially viable through cost-savings and revenue generation, thus sustaining and growing the fund for yet more initiatives. Started with $27,000 of student government and Environmental Studies department funding last spring, and recently augmented with a $40,000 comittment from the administration, CERF is starting its operations with a moderate degree of funding, but is obviously focused on projects that will allow it to grow considerably to provide more substantial support in the future. The C-BED system appears to be an excellent way to embark on major projects from this degree of funding, which is similar to that experienced by many farmers or other rural developers who may want to participate in the wind business. As an independent fund under Macalester College, CERF is covered under Macalester's 501c3 status, which fits the requirements of C-BED participants, that they either be Minnesota residents, or Minnesota 501c3 non-profits (there are some other categories including public schools, native American groups, etc.). While not the typical member of such a C-BED deal (most are citizens or families), CERF does face a very similar process.

The contract is not yet secured; this will require both approval by the college treasurer (the one downside of being under Macalester, since while they love the idea, they must of course deal with the liability hazards even though the funding is provided by CERF), as well as review of some basic documentation under development. However, I'll try to give a brief background of what has happened/ what we think will happen.

We learned about C-BED through our initial research into industrial scale wind turbines last fall and through the guidance of Jeff Paulson, a renewable energy lawyer who is helping us with this deal pro bono. The idea is that CERF, as the community partner in the C-BED project provides a small investment in the 2MW wind turbines being slated for production - roughly 1% of entire development/ construction costs. For the 2MW turbines widely being considered (likely Suzlon-88 models (Suzlon is Indian)) construction costs are ~$2.7-2.9 million, so 1% is $27,000-29,000. An equity investor would cover the remaining cost for a majority of the initial revenue. Jeff helped us identify a turbine project among those he was involved in and eventually identified a project in Stevens County MN with 10 turbines, one of which is potentially the CERF wind turbine. A local wind energy developer created West Stevens Wind, a blanket Limited Liability Corporation (LLC) to manage this project and negotiated the Power Purchase Agreement (PPA) with Northern States Power (Xcel Energy). The final contract for the PPA through a C-BED financing structure for the 10 turbines in this project is soon to be released.

C-BED is structured to provide high-return rates in the first 10 years (when debt service and equity return needs are the greatest). Since most debt financing structures have 10-year lengths, many turbine projects have very low profits in the first 10 years after which profits spike substantially (less useful for the owner). Most turbines sell electricity to large utilities at around 3.3 cents/kwh. C-BED introduces a front-loaded pricing system using a concept called Net Present Value - I'm not economically savy enough to understand quite what this means - set at a maximum of 2.7 cents/kwh. While this sounds low, the actual effect is that electricity rates are quite high in the first 10 years (somewhere from 5-6 cents/kwh, though we haven't seen the PPA yet) which then drops dramatically after the first 10 years (to around 3 cents/kwh) and then rises slowly after that (basically inflation). To make the first-10 years even more profitable, C-BED projects are also eligible for the federal Production Tax Credit (PTC) which I think is currently at 1.9 cents/kwh (it is 1.5 cents/kwh scaled to inflation) since the equity investors are usually large corporations with a tax load. Furthermore, depreciation benefits can accrue in initial years. Wind PPAs are generally made on 20-year periods, although the life of the turbine could be longer.

Each community owner can own only up to 2 turbines through C-BED, so a 10-turbine system like this one includes a number of different C-BED owners: our project would consist of 8 LLCs, 2 of them owning 2 turbines and the other 6 (including ours) owning 1. Initial investments in project development are fronted by the community partner for MISO studies (analyzing transmission costs), and verifying wind potential, but are counted towards the total 1% of project costs. Once the PPA is negotiated, participant owners (like CERF) form independent LLCs under the central West Stevens Wind LLC. LLCs reduce liability to basically the investment in the project and are managed by a Board of Governors - in this case since the entire West Stevens Wind would also have a Board of Governors composed of the component LLCs and the equity investor in the entire project (who wants to deal with as few members as possible, it is likely that each LLC will only have 1 Governor, who in our case will most likely be a member of the CERF Board. After the community partners are collected, the equity investor (possibly Mission Edison, a subsidiary of Edison Electric, in our case) joins to finance the majority of the project. The equity investor will recieve 99%of revenues, tax incentives, depreciation benefits etc. initially (assuming 1% community partner ownership in ech of the turbines). The equity investor sets a target return - this is estimated to take 8-12 years to pay off depending on the wind, after which point majority ownership will flip to the community partner - somewhere in the range of 80-95 % ownership, and subsequent revenues will be split along those lines - an excellent deal considering that the initial investment was only ~$30 k.

In addition to the initial 1% of revenues that the community partner recieves, they also recieve a management fee since they are responsible for the management of the turbine, though the cost of maintenance is usually already accounted for - the way management responsibilities were phrased was it would be keeping an eye on the turbine and if it stopped working calling to get it fixed. Also, since there are 10 turbines together, it is likely that one local manager would manage all of them on the ground supported by the constituent LLCs, the lead developer of the project may do this. The management fee could be anywhere from $12,000-30,000, which though a big difference, is all within the range of short-term profitability (payback within 1-3 years even if there are some costs, which should again, be minor). The expected revenues of each turbine would be somewhere in the range of $300,000 annually for the first 10 years, with possibly up to another $100,000 in tax credits and depreciation benefits, and aroun$150,000 annually thereafter. Again, the initial stream would primarily go to the equity investor.

Next steps after the PPA is finalized are forming the LLCs (hopefully including CERF) that will make up West Stevens Wind, conducting the initial development studies, and then negotiating with the equity partner before finalizing leases (each turbine will also provide several thousand dollars for the quarter-acre of land they lease to the local owners), and moving towards construction. This project is scheduled to be constructed sometime in fall 2007. Nearly all of the currentC-BED projects will be up and running by the end of 2007 because at the end of 2007, the PTC (Production Tax Credit) expires. While there is strong hope that the PTC will be renewed at the federal level, project developers are careful to get the project generating energy by the end of 2007, since if by some chance it is not renewed, the project will be much less succesful. Any project that is generating electricity by fall 2007 will recieve the PTC for the first 10 years of production whether or not the PTC is renewed. The community partner does get a share of the tax credits, which in the case of CERF may be usable by Macalester College for taxes on property rentals, but since most or all of the first 10 years is majority equity ownership, this does not make a sizeable impact on the community partner.

I think it's pretty clear that this is an excellent deal for residents and non-profits in Minnesota. The most common reaction I've gotten from people is 'where's the catch', it sounds too good to be true. The actual system seems pretty solid, C-BED keeps account of the millions C-BED is already funnelling into MN's economy. The only downside I can see is where it came from: C-BED was negotiated as part of the Xcel nuclear dry-cask storage agreements - as was Xcel's wind mandate. It is a great opportunity to jumpstart community-owned energy!

Well, that's a rather long descrip, but I hope it gives a good idea of how C-BED projects actually work - at least as I understand it. I'll send an update when we make more progress towards our C-BED turbine.

 

eGRID - FYI

The EPA has a nifty database of power plants in the US that allows you to look up emissions data, fuel type, location, etc. Go to

http://www.epa.gov/cleanenergy/egrid/index.htm

to learn more and download the files.

Deregulation Exposed

The big push for deregulation of electricity has stalled. Most of us know that generally what went wrong and generally know the players involved, but a recent NY Times story cleared up some of my confusion around the issue.

"In Deregulation, Plants Turn Into Blue Chips" by David Cay Johnston (who I think wrote a book about big business in energy), explains why those who have experienced deregulation are frustrated, and about to become livid.

Always beware the incentives

Because utilities are still allowed to pass on the cost of the power they buy, they have little incentive to choose a cheaper supplier. Electricity customers therefore end up paying more than they would have to if electricity production were truly competitive.

After Baltimore Gas & Electric transferred its 12 power plants to an unregulated affiliate and became only a distribution company, it continued to buy 70 percent of its electricity from the plants because there were not enough independent generators to supply the area’s needs. Baltimore Gas & Electric sought a 72 percent rate increase this year, causing such an outcry that Maryland regulators gave it only an immediate 15 percent, but with big additional increases virtually guaranteed over the next few years.

I saw an article about this last week which suggested that this dereg has been handled so poorly that even people at the Cato Institute say the regulated system would have been preferable to what we now see.

Update: David Cay Johnston wrote Perfectly Legal, which was on the U.S. tax system. This was the second in a series of articles, the first is available here in the NY Times archive. Thanks to David Cay Johnston for the information and correction.

Report from U of M Renewable Energy Workshop Oct. 12

I attended the Renewable Energy Workshop today sponsored by the U of MN Electrical Engineering Department. As expected, it was largely technology-focused, with some general discussions of the challenges facing renewable energy here and elsewhere. (And a good buffet style lunch). Here a few salient points of the talks I attended.

A Power Grid for the Hydrogen Economy - Thomas Overbye, U of Illinois

The speaker talked about his research into superconducting transmission lines. The idea behind the project is to supplement our existing grid with a network of underground high voltage DC transmission lines made with superconducting material. The benefit of using superconductors is that the current density can be much higher, so fewer transmission lines have to be built. Line losses would also be minimized.

Each line would consist of a superconducting core for carrying the electricity with an outer ring of liquid hydrogen, which would act both as a coolant and an energy storage mechanism. During times of low electricity demand, excess electricity from renewable sources would be used to create the hydrogen via electrolysis.

Though such a grid is technically feasible, cost is a major issue, though the speaker was quick to note that anything transmission related is expensive. He quoted a figure of roughly $2.5 million per mile to install these cables. Water scarcity may also be an issue in some places.

Lessons from Norway - an unlisted speaker, didn't get his name

(A grad student actually did this talk in place of his professor, who was scheduled to speak but couldn't make it.)

This talk mainly focused on the challenges facing Norway in meeting its future electrical demand and making use of its vast renewable energy potential (enough to supply twice that of its current annual consumption.) Currently, 99% of Norway's generation comes from low cost hydropower. However, similar to here, demand is outpacing supply. More supply will have to be brought on in coming years.

I was struck by how similar the challenges facing renewable energy are to here - public resistance (in the case of wind), cost (wind energy is still more significantly more expensive than hydropower), and political uncertainty (will subsidies continue?) Norway is also facing transmission limitations, just like here.Especially of note is that public resistance to wind energy projects has increased in recent years, for all the typical reasons - avian mishaps, other wildlife impacts, and aesthetics.

Planning for Renewable Energy at a MN Utility - Glen Skarbakka, Mgr of Resource Planning, Great River Energy

The speaker talked about the challenges of meeting GRE's rapidly growing load (about 100 MW/year) while incorporating renewables. GRE's load is mostly residential, meaning that demand goes way up in the summer, but varies a lot day to day, depending on weather. This makes it a challenge to use wind energy, which is not dispatchable in the traditional sense (though forecasting has gotten highly accurate.)

I was mostly impressed by GRE's goals to reduce its CO2 emissions to 2000 levels by 2020, as well as doubling its renewable objective of 10%. The speaker admitted that meeting the first will be extremely challenging, to say the least.

Wind Energy - Present Projects and Potential in Minnesota - John Dunlop, American Wind Energy Association

The speaker talked about how wind turbine technology has advanced over the last 20 years and how wind energy continues to grow rapidly in the US and elsewhere. He also provided a nice summary of the recent situation with the Dept of Defense blocking new wind farms due to concerns over radar. The report finally came out on Sept. 27, 143 days late. It didn't really say anything that could not have been written in one day - only that wind farms can interfere with radar. It didn't offer any mitigation measures to help current or future projects move forward. Sounded like a great use of taxpayer dollars.

Update on CapX 2020 - Terry Grove, GRE

The CapX project is an ongoing transmission planning project involving all major utiltiies in Minnesota, planning transmission needs through 2020. I already knew how long this process takes, but the uninitiatied would probably be shocked. Though, there are good reasons it takes this long. The Certificate of Need process for the first group of lines, mainly to improve reliability, alone will take through 2008. Then route permits have to be aquired, which will take through 2010. During this time, lots of meetings are held with city governments, landowners, and other agencies. The proposed Brookings -SE Minnesota line alone will require that 200,000 landowners be notified. This is just a massive undertaking.

From what I've heard, the last round of tranmission construction was an extremely drawn out and painful process. It will be even worse this time around, due to the industry restructuring that has occured since then. Now, independent power producers can bid in new projects to the MISO queue. Most of these projects fail to get off the ground, since banks won't supply the financing until a power purchase agreement is signed - a chicken and egg problem - meaning that planners don't know where new generation will actually be.

Results of Research Funded by NSF, Xcel Energy, and ONR - Ned Mohan, Electrical Engineering, U of MN

Ned gave an overview of renewable energy-related research in the EE department, then talked mainly about a matrix converter his research team developed. The converter can be used with any variable speed generator, including wind turbines and will boost power output by 1.5X of nameplate ratings. This would also eliminate the problem of bearing currents in typical motors, which eventually destroy the bearing and represent a major maintenance headache. Ned also talked about the benefits of using silicon carbide (SiC) in power electronics, which improves device performance by 10-100 times over plain silicon (Si). The cost of SiC continues to fall, making the use of this material more feasible.

Minnkota Power not happy about climate change

Minnkota Power, a generation/transmission cooperative serving electricity consumers in northwest Minnesota and North Dakota, is not happy about climate change and they want their customers to know about it. A review of their customer newsletter, the Minnkota Messenger, indicates a consistent concern that climate change is a massive environmental sham. Some of it reads like grocery store tabloids and it's quite interesting how much coverage they give to it, perhaps hoping that quantity will make it true:

  • Jul/Aug 2006, p6: "Another Perspective: Noted scientist weighs in on climate change issue"
  • Mar/Apr 2006, p10: "Myth: Global temperatures are rising at a rapid, unprecedented rate."
  • Jan/Feb 2006, p10: "An astonishing discovery: Recent fnding underscores cautionary approach"
  • Nov/Dec 2005 - took a break
  • Sep/0ct 2005, p11 - "A hurricane of misinformation global warming activists turn storms into spin"
  • Jul/Aug 2005, p6 - "Earth’s ever-changing climate state geologist offers his perspective"
  • May/Jun 2005, p12 - "Alarmist warning; Myth: Carbon dioxide levels in the Earth’s atmosphere are currently at an all-time high."

And the list goes on...

Cross Post 

New Coal Plant

More Cowbell Coal!

Hat tip to MCEA for tipping us off to this story. A TV station from South Dakota is reporting on another potential coal plant for the Dakotas. It will be the same scale as Big Stone II though it does not specify what technology the plant will use.  I have to assume pulverized coal but I hope I will be corrected by someone who knows more about it. They are looking to produce 600 MW.

Basin Electric Power Cooperative is currently searching for a place to site this new plant. Though it is based in North Dakota, 3 potential sites are in South Dakota and one in North Dakota. It will be burning powder river basin coal (low sulfur from Wyoming).

This is not solely about our need for more electrical power - it is also a patriotic act. They are motivated

to meet some of the energy needs of the country, so we see it as a regional project, a benefit to our community, but also to the country.

Without any hint of irony, they have a section of their website devoted to green bragging rights.

From the coal mine to the power plant, and from the power plant to the home, Basin Electric has invested in a system designed to meet future energy needs of our consumers while protecting the environment.

Naturally, protecting theenvironment means investing heavily into a $1.5 billion coal plant when the entire world knows carbon dioxide emissions are the leading environmental threat of our lifetime. Is that too dramatic?

The Real Cost of Xcel Energy Windsource

Xcel Energy’s Minnesota Windsource green pricing program lets you buy wind energy in blocks of 100 kilowatt-hours (kWh) for 2 cents/kWh extra. Over 23,000 Minnesotans participate in the green pricing programs at various utilities, buying almost 80 million kWh (which sounds impressive but is something around 1% of total sales). The average price of “regular” electricity is 7.27 cents/kWh from October to May and 8.27 cents/kWh from June to September. Theoretically you add 2 cents/kWh to that for the price of wind energy.

However, that’s not the whole story. As a Windsource customer you are exempt from the Fuel Cost Adjustment, which is essentially a way of “truing-up” your bill if the cost of fuel was more or less than what they predicted it would be when they actually went to buy some of the non-contracted fuel on the open wholesale markets. So what?

Well, the prices in every month since June 2005 have been higher than they guessed and so you see a little extra FCA charge on your bill each month. The theory for the exemption (the merger negotiation bargain from 5 years ago not withstanding), is that since you are buying wind energy, you aren’t using any of these fuels that have the added costs. In places that use a lot of natural gas (Texas and Colorado), this can make the wind energy the cheaper option in some months. Not Minnesota though, which gets a large percentage of its electricity from coal (41% coal and 3% natural gas for Xcel). But the FCA does add up to something.

Here is the data since June 2005, including a hypothetical average household that uses 700 kWh/month (Source: Xcel Energy electric bills):

You’ll note that in August 2005, it was no net cost to use wind energy since the FCA adjustment was right at 2 cents/kWh. But over the 16 month period, the real cost of Windsource is about 1.2 cents/kWh. The average family thinks they pay $14/month but it turns out to have been closer to $8/month.

Does it matter? Would more people sign up if they knew it was 1.5 cents/kWh or less? Maybe. One idea is for Xcel to forecast the FCA or use historical data to reduce the advertised cost of Windsource by some amount, and then adjust the actual Windsource cost similar to the FCA after the fact. To my knowledge Xcel is the only utility that offers an FCA adjustment benefit in Minnesota for buying green power. Also of note is that Xcel has indicated that future wind energy contracts are more expensive than previous ones and holding the line on 2 cents/kWh will be harder since the average cost of the Windsource portfolio may go up. Wind turbine prices have gone up over the last year due to high global demand, cost of steel, and the foreign exchange rate.

What's also interesting is comparing whether buying Windsource is the cheapest way to reduce your carbon dioxide emissions. Should you offset your carbon emissions from Xcel or from someone like Terrapass.com, who offers a 14,000 lb annual offset for $70 ($0.005/pound)? Terrapass says there are 1.84 lbs carbon/kWh (which sounds close enough), so some quick math shows that they are charging 0.92 cents/kWh to reduce your carbon. Quite coincidentally, this was the same price Xcel Windsource was in September 2006. However since June 2005, the average price of Xcel Windsource after the FCA was 1.16 cents/kWh (not weighted by use per month, since your bill usually goes up in summer when the FCA is higher). So Terrapass is marginally cheaper than Xcel.

Skepticism About Distributed Generation

When one has made a decision to kill a person, even if it will be very difficult to succeed by advancing straight ahead, it will not do to think about doing it in a long, roundabout way. One's heart may slacken, he may miss his chance, and by and large there will be no success. The Way of the Samurai is one of immediacy, and it is best to dash in headlong.

-Ghost Dog: The Way of the Samurai

 

So Al Gore’s speech at NYU on September 18 got me thinking about Distributed Generation. For those who haven’t read it yet, an archived webcast and the full text can be found here.
It was a terrific speech, by the way, and I could occupy a lot of space praising it, but that wouldn’t be very interesting. After all, you probably liked it too. But it was one issue that got me thinking, and which gave the impetus for this post. What I really want to talk about today is Distributed Generation, or DG. Gore gave voice to some ideas that are very widespread among left-leaning energy advocates, and many of those ideas deserve closer consideration.

I’m using this post to flesh out some of my critiques of the idea of Distributed Generation. Fundamentally, in reference to the quote above, I think DG advocates are setting out to solve the wrong problem. Our problem is not large-station electricity generation, our problem is climate change and energy security. Its my feeling that in dealing with climate change we are likely to deploy carbon-neutral energy technologies using the same large station (or refinery) production and distribution model that we use right now.

Wikipedia describes DG thus:

Distributed generation is a new trend in the generation of heat and electrical power. The Distributed Energy Resources (DER) concept permits "consumers" who are generating heat or electricity for their own needs (like in hydrogen stations and microgeneration) to send surplus electrical power back into the power grid - also known as net metering - or share excess heat via a distributed heating grid.

 Here’s what Gore says on the subject.

Today, our nation faces threats very different from those we countered during the Cold War. We worry today that terrorists might try to inflict great damage on America’s energy infrastructure by attacking a single vulnerable part of the oil distribution or electricity distribution network. So, taking a page from the early pioneers of ARPANET, we should develop a distributed electricity and liquid fuels distribution network that is less dependent on large coal-fired generating plants and vulnerable oil ports and refineries.

 So the main point of DG is that we rely more and more on homes and businesses producing their own electricity, and possibly selling electricity onto the grid and less and less on large station power generation (how we, by and large, do things now). Gore extends DG to include distributed (presumably somewhat larger scale) biofuels production as well. The main arguments are security (Gore’s argument), greater energy efficiency through the use of combined heat and power, and economic/self-reliance benefits (producing your own power, yeah!).

I think a lot of DG advocates miss some glaring problems.

DG and Economies of Scale

One problem with DG is that it would rely on small-scale power generation. This is actually put forward as one of the main BENEFITS of DG by many advocates. What these advocates miss is that the economics of energy production are absolutely dominated by economies of scale.

Let’s use wind as an example. A 1MW turbine produces cheaper electricity than a 200 KW turbine. And a large scale project produces cheaper electricity than a small scale project. The reasons for this are fairly intuitive. There are a lot of fixed costs that must be paid whether you’re building a large project or a small project – feasibility studies, wind measurement, planning, running around securing financing and power purchase agreements, paying to secure all of the cement manufacturing capacity in your county to pour the bases for the towers, etc. A larger project produces more kWhs, and the fixed costs can be divided over more kWhs, making the levelized cost of power cheaper.

But if you don’t believe me, you can use NREL’s online Wind Energy Finance Calculator.

To prove my point, I calculated the real levelized cost of energy for a 500 kW project (small), and for a 100 MW project (200 times bigger). I used all of the default assumptions, and only changed the size of the project.

Small (500 kW) real LCOE – 64 cents/kWh

Large (100 MW) real LCOE – 1.29 cents/kWh

So the electricity from the small-scale project is about 60 times more expensive, give or take. Its also about 6 times more expensive than retail grid electricity at about 7 cents/kWh. So in asking people to adopt small-scale distributed wind, we’re asking them to pay a LOT more for electricity than they would pay for grid electricity. Note also that, according to this calculator, a large scale project sells electricity that’s probably cheaper than even WHOLESALE electricity.

Economies of scale differ for various energy technologies, but are almost always a factor. The optimal size for pulverized coal plants, for example, is on the order of 1000 MW or larger. Gas turbines burning natural gas or fuel oil have low capital cost, and are therefore more economical at small scale. But because the levelized cost is more expensive then large station power, and they can be quickly ramped up and down, they are typically used only for peaking power.

Solar power is also cheaper at scale. Home or business scale photovoltaic panels produce electricity at around 20 cents/kWh (around 3 times higher than retail electricity). Only large-scale concentrating solar can produce electricity at anywhere near retail rates.

I could go on and on. The fact is that I can’t point to a DG technology that delivers electricity at a rate that is cheaper than, or even close to, the cost of grid power.

Economies of scale aren’t going away. If we have a limited amount of money to spend, as a society, on dealing with climate solutions, the cost of individual solutions must be a factor. Until we see the new cheap solar panels or fuel cells that we constantly hear are 6 months away (how’s that for a “Friedman”?) may not be able to afford the deployment of DG on a large scale.

Giving Up our Great Renewable Energy Resources

Another damning aspect of DG is that it may mean giving up most of our greatest renewable energy resources. Renewable energy resources like wind, solar, and biomass are not uniformly abundant around the nation. And, unfortunately, many of the best resources fall far from population centers. To stick with the wind example, taking advantage of the vast wind resource of the Great Plains likely means building large transmission lines connecting the wind resource with the potential users of that wind energy (or building large hydrogen pipelines, or building infrastructure for some other energy carrier).

This is true for biomass as well. In urban areas, where most energy is used and most people live, there are serious limits on the potential biomass supply. Take the Twin Cities as an example. There is a famous district heat project in St. Paul (District Energy) that has recently switched from coal to biomass as an energy source. Other projects are being planning, including Rock Ten and the south Minneapolis project formerly run by the Green Institute. Those projects are reportedly having great challenges in finding a sufficient supply of biomass because District Energy has secured much of the available supply of urban wood trimmings and the like. So we’re reaching the limited of the DG biomass potential in the Twin Cities, and supplying only a small fraction of the metro area’s biomass needs.

Utilizing the country’s biomass supply on a large scale probably means having projects in rural areas – with cheap land, fertile soil, and lots of biomass, and transporting products like cellulosic ethanol to demand centers. This will likely be wonderful for rural areas, but its not DG.

Solar energy may one day be an exception to this, but right now economics and the efficiency of panels stand in the way.

Conclusion

My point is not to argue that DG shouldn't be done. I think there are many niche applications for DG. In rural areas and small rural communities, for example, there will be applications for Distributed Generation from renewables, possible in combination with combined heat and power. I know some people who are very excited about their rooftop solar panels, and they don't really care that they're paying a lot for the electricity. I also think that there are credible scenarios under which DG could play a larger role in our energy system, provided there are some really fundamental technological innovations. I think that the vision of mass-produced, highly efficient, renewable DG technology, similar to Personal Computers, is pretty exciting to contemplate. But lets not fool ourselves. This kind of thing is a ways off, whereas there are a variety of large-scale carbon-neutral technologies that are commercial or near commercial and could be deployed over a relatively short time frame.

There are many energy advocates who feel that large station electricity generation is bad by its very nature. There are some who offer DG as an alternative, and even use the DG alternative as a rationale for fighting new transmission and new large energy projects. In the MN legislature last year there was infighting between those who wanted only community, small-scale wind development and those who wanted 20% renewable energy standard which would require a lot of large-scale projects.

All that said, I think that macro-scale analysis of power generation technologies, resources, and demands, will reveal that DG is likely to play a small role in the near term. DG can't be used as an excuse to fight large carbon neutral energy projects.

I welcome comments, and hope this starts some discussion.

 

Iris Ovshinsky, 79, dies

Those who have seen 'Who Killed the Electric Car?' and loved the cute couple who invented the NiMH battery and continue to work on alternative energy technology will be saddened at the death of Iris Ovshinsky. She died August 16th due to drowning after apparently suffering a heart attack while swimming.

Student Fee for Renewable Energy and Conservation

Students at several colleges in Tennessee are working for a new fee to be used for conservation and efficiency efforts on campus and for purchase of renewable energy. This would be an interesting policy to look into at the University of Minnesota. It’s not that it is inherently necessary as administrators can increase tuition and use the money for those purposes already. The beauty of it, though, is that it is visible, marketable, and targeted.

Perhaps this would allow for a successful end to Dean Abrahamson’s long crusade to put occupancy sensors in all the classrooms.

Solar Lighting

Oak Ridge National Laboratory recently announced more news about a new technology. Using fiber-optics and 48 inch roof collectors, they are lighting buildings with sunlight.

The hybrid solar lighting technology uses a rooftop-mounted 48-inch diameter collector and secondary mirror that track the sun throughout the day. The collector system focuses the sunlight into 127 optical fibers connected to hybrid light fixtures equipped with diffusion rods visually similar to fluorescent light bulbs. These rods spread light in all directions. One collector powers eight to 12 hybrid light fixtures, which can illuminate about 1,000 square feet. During times of little or no sunlight, a sensor controls the intensity of the artificial lamps to maintain a constant level of illumination.

They are still in beta testing and are trying to cut the costs by one third. It will also qualify for tax credits - good policy. Nonetheless, they see massive potential for it as it reduces not only lighting cost, but air cooling cost as well. That is especially good because it makes the most sense to put these in hot, southern areas that get the most sun.

The system can save about 6,000 kilowatt hours per year in lighting and another 2,000 in reduced cooling needs for a total of 8,000 kilowatt hours annually, according to Sunlight Direct estimates. Over 10 years, for parts of the country where the utility rates are 10 cents per kilowatt hour, that can result in savings up to $8,000 per hybrid solar lighting unit. For large floor spaces - 100,000 to 200,000 square feet - this translates into energy cost savings of between $1 million and $2 million over 10 years, according to Sunlight Direct. Operation and maintenance savings could account for another $300,000 in savings over the same period.

CA Solar Initiative: Policy ruling from PUC

The New Rules Project (based at David Morris' Institute for Local Self-Reliance in Minneapolis) blog Democratic Energy posted an article today on the latest decision by the California PUC regarding their Solar Initiative.

A part of the ruling establishes performance-based incentives that decrease as the program becomes more successful. The payments start out at $0.39/kWh and drop down in steps to $0.03/kWh when the state has an installed capacity of 650MW of solar generation.

This addresses one of the common breakdowns, or failures, of technology policy where subsidies stick around past the point where they are needed. This creates situations of "corporate welfare" that can become politically dangerous and a waste of scarce public money. One approach is to have the subsidies end after some period of time. At that point they are then re-evaluated and renewed if deemed necessary. This approach, however, is highly susceptible to politicization where the decisions are based on reasons other than whether it is needed. It also makes long- or mid-term investment in those technologies difficult.

The approach taken by the CA PUC is predictable and indexed to a performance measure. It is also, indirectly, indexed to the profitability of the solar systems. As more solar is installed and the subsidy drops it will eventually get to the point at which it is no longer profitable to install systems and the growth will stop. If technology allows for higher profitability at that subsidy level installation will jump again. This should apply continuous pressure for technology innovation that will keep dropping the cost of installation. It also creates a feedback between the cost of installation and the subsidy that should keep them roughly synchronized.

There is more to the program that I haven't looked into but I think there are promising aspects that can be used as models for other state or federal programs. I would be interested in what they are also doing with regards to the technology innovation process in order to ensure that promissing new technologies can quickly make it from the laboratory to use. R&D funding is nice but the problem with adoption can so often occur later between the laboratory and the point where venture capitalists are willing to step in.

Compact Fluorescents

Slashdot has a huge discussion about CFL bulbs. I enjoyed scrolling through the many comments to see what people have to say. Some insightful comments, such as a response to concerns about the mercury in CFL. It is quoted from wikipedia.

Note that coal power plants are the single largest source of mercury emissions into the environment. According to the Environmental Protection Agency (EPA), (when coal power is used) the mercury released from powering an incandescent bulb for five years exceeds the sum of the mercury released by powering a comparably luminous CFL for the same period and the mercury contained in the lamp.

A way to model the pollution impacts of distributed energy sources

Ok, the last post for the day. Researchers in California have developed means to model the air quality impacts of small scale, distributed power sources.   “Using a supercomputer, scientists analyzed thousands of variables including land-use information, emissions data and atmospheric chemistry to determine the potential effect of distributed generation on Southern California air by 2010. Distributed generation – the operation of many small stationary power generators located throughout an urban air basin – includes fuel cells, photovoltaics, gas turbines, micro-turbine generators and natural gas internal combustion engines. The use of clean distributed generation in place of traditional power-plant generation cuts down on electricity transmission losses, reduces the need for unsightly overhead power lines and facilitates the use of generator waste heat, which further reduces electricity needs and emissions.”

Scientific American looks at Energy and Climate Change

The Scientific American recently had a series of articles related to energy and climate change. Unfortunately, most of these require a subscription to access online. You can purchase them or buy the hardcopy.   A Climate Repair Manual [ INTRODUCTION ]
Global warming is a reality. Innovation in energy technology and policy are sorely needed if we are to cope   An Efficient Solution [ ENERGY EFFICIENCY ]
Wasting less energy is the quickest, least expensive way to stem carbon emissions   High Hopes for Hydrogen [ FUEL CELLS AND MORE ]
Using hydrogen to fuel cars may eventually slash oil consumption and carbon emissions, but it will take some time   The Rise of Renewable Energy [ CLEAN POWER ]
Solar cells, wind turbines and biofuels are poised to become major energy sources. New policies could dramatically accelerate that evolution   What to Do about Coal [ CARBON CAPTURE AND STORAGE ]
Cheap, plentiful coal is expected to fuel power plants for the foreseeable future, but can we keep it from devastating the environment?   A Plan to Keep Carbon in Check [ STRATEGY ]
Getting a grip on greenhouse gases is daunting but doable. The technologies already exist. But there is no time to lose.   Plan B for Energy [ SPECULATIVE TECHNOLOGY ]
If efficiency improvements and incremental advances in today's technologies fail to halt global warming, could revolutionary new carbon-free energy sources save the day? Don't count on it--but don't count it out, either   Fueling Our Transportation Future [ AUTOMOTIVE ANSWERS ]
New technologies, lighter vehicles and alternative fuels can lower greenhouse gas releases from cars and trucks   The Nuclear Option [ ROLE FOR FISSION ]
A threefold expansion of nuclear power could contribute significantly to staving off climate change by avoiding one billion to two billion tons of carbon emissions annually     

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