It’s easy to be for “green energy.” It’s pretty difficult, however, to decide how those electrons should be delivered and how the tax benefits and subsidies should be divided. Does renewable energy have its arsenal trained in the wrong direction?Green energy will expand, made possible by better and cheaper technologies that are facilitated by public demand and public policies. But will it be delivered over the traditional transmission wires or will it be generated onsite with solar rooftop panels? While the Clean Power Plan will be decided by the DC Court of Appeals this summer, odds are that it will be upheld there. And even if there were some glitches, utilities and industrial are already implementing green strategies. However, that power plan would not be fully implemented until 2030, or maybe later given the current delays. That means that grid upgrades will probably suffice for a while, although eventually the transmission system will need to be expanded. “If you like clean energy, you gotta like transmission as well,” Rob Gramlich, senior vice president for government affairs at the American Wind Energy Association, in a phone interview. “That’s just the way it is.” Today, the bulk power system — as it is known — is comprised of 10,000 power plants, 170,000 miles of high-voltage transmission lines and nearly 6 million miles of low-voltage distribution lines. It also has more than 15,000 substations. For every $1 invested in the nation’s network, as much as $6 is returned, says Massoud Amin, chairman of the IEEE Smart Grid and a professor of electrical engineering at the University of Minnesota. He adds that if wind energy is to swell by 40 percent during this time, high-voltage, long distance transmission will need to enlarge by 9 percent. The PJM Interconnection, which orders up power sources and schedules their delivery in a 13-state region in the eastern United States, says wind and solar energy can play a larger and more constructive role in its territory. To do so, though, investments in the electrical grid must be made: At a 20 percent penetration rate, 820 miles of wire would have to be installed for around $3.8 billion, it says.
Huge Headaches
But ever try to get a transmission project permitted? It’s more difficult than just about any other infrastructure project. And that is a key reason why onsite distributed generation potentially used in combination with energy storage devices and localized microgrids have made their way forward. Throughout the sunny Southwest, homes are dressed with rooftop solar panels. At the same time, the centralized wind and solar plants are also generating power, and they need access to the grid. “It’s about building the right stuff,” says Steve Huntoon, principal at the Energy Counsel, LLC, in Washington, DC, in an interview. “Instead of building out these 300 mile big things we should instead focus on the incremental build-outs. Those are still tens-of-billions of dollars. But they are targeted to where we need it.” The irony is that federal and state tax incentives and mandates are pushing both solutions — onsite and centralized renewable generation. Green-energy subsidies and mandates are at war with each other. With no direction at the top, state utility boards are left to sort out the mess.
Utilities Scream Foul
On the one hand, utilities can’t get large transmission built. And on the other, utilities and homeowners can’t agree on how the costs of the existing grid should be apportioned if more and more consumers self-generate. At issue here is net metering, which measures the amount of money that rooftop solar customers should get paid relative to retail electricity rates for surplus power they channel into the grid. Homeowners and businesses that generate an excess supply of electricity through their panels say that crediting them at the retail rate — the same price at which utilities sell — is fair because solar produces power at the most expensive time of day. The utilities, in comparison, want to pay solar customers the wholesale rate, which they say provides the funds needed to maintain the grid that is used by the masses. Even those who put panels on their roofs must use the grid, either to sell their excess back to the utility at whatever rate or to buy from the utility when they can’t generate enough power like when the sun is behind the clouds. Indeed, one side is saying that the process results in a wealth transfer from those who depend solely on the grid to those who can afford the panels on their homes. The other side is saying that customers who generate electricity through rooftop solar panels are preserving the grid while improving the environment. California and Nevada have taken two different roads: Nevada said in December utilities would no longer have to pay solar customers the retail rates the electricity that they sell back to utilities over their wires. California, conversely, agreed to pay the retail rates, albeit it added some hook-up fees.“Utilities are trying to slow down rooftop solar installations while they try to figure out what their futures will look like,” says Sean Gallagher, vice president of state affairs for the Solar Energy Industry Association, in a phone interview. When it comes to rooftop solar penetration, California leads the nation. It is followed by North Carolina, Massachusetts, Nevada, Arizona and New York, he adds. He goes on to say that many utilities have embraced utility-scale solar projects that are centralized and that sell solar power to them at wholesale rates, which the utilities in turn deliver to their customers at retail rates. The recent past has seen such mega-deals as the 392-megawatt concentrated solar plant called Ivanpah, which is joint venture among NRG Energy, Google and Brightsource Energy.
Community Solar?
Is there a middle ground between the centralized solar projects and the rooftop solar movement that is pitting homeowners against regulators, utilities and customers who remain fully connected to the grid? The trend now is to build smaller utility-scale projects that may total 30 megawatts. Some of the biggest names in the solar industry are headed this way, including First Solar Inc. and SunPower Corp. “They can do it on the distribution side, not on the transmission side,” says Julia Hamm, chief executive of the solar association, who adds that “community solar” is also becoming a viable option: It permits consumers to buy into a larger project that it is taking place in a jurisdiction, which can also avoid high-voltage interfaces as well as the cross-subsidization battles now occurring between rooftop solar customers and their electric utilities. The battle between utilities and new energy providers will continue, as will the civil arguments between centralized green energy providers and onsite electricity consumers. It’s especially true now that the federal government has extended the tax benefits given to wind and solar projects — the one providing them a 2.3 cent per kilowatt hour production tax credit, or the 30 percent investment tax credit that reduces their federal taxes dollar-for-dollar based on what they put into the project. For both wind and solar, the credits will get ramped down. It’s about economic survival — whether it be the traditional utility or the new player on the block, each of which wants market share. Public money and public policies figure heavily into the business strategies, making the free market battle field especially ferocious.
Original Post: Ken Silverstein
