Tag: Editor’s Picks

Making Sense of the ITC Extension for Wind, Solar (and Bioenergy, Too)

Tuesday December 15 was a good day for U.S. renewable energy companies. In a landmark deal that could mark the first time the Senate and House democrats and republicans were able to compromise on anything at all, the two parties released an omnibus spending bill that lifts the 40-year U.S. oil export ban and gives a five-year extension of renewable energy tax credits for wind and solar.

Solar Industry Exuberant

The bill extends the Investment Tax Credit (ITC) for solar until 2021. It was originally expected to sunset at the end of 2016, which was forcing developers to rush to finish projects. In a session last week during Renewable Energy World Conference and Expo, Julie Ungerleider of Coronal Group explained that because of the hard stop that the ITC created, solar projects that were not already “fully baked” were unlikely to be able to be built by 2016.  She said material shortages were rampant with the rush to build now.  This extension should relieve some of that pressure.

The ITC will be extended until December 31, 2019 in its current form. After that projects that start construction in 2020 and 2021 will receive 26 percent and 22 percent, respectively. All projects must be completed by 2024 to obtain these elevated ITC rates. For residential solar, a similar tax credit phase-out applies until December 31, 2021, after which the tax credit scheme ends.

Inspiring Young Women To Pursue Careers in Energy

At last night’s PennWell Awards Ceremony, Kim Greene, a 24-year veteran of the power industry, was named the POWER-GEN 2015 Woman of the Year.

Greene began her career as an engineer with Southern Company in 1991 and ascended to leadership roles at Mirant and Tennessee Valley Authority (TVA), before returning to Southern Company Services in 2013 to become President and CEO. She was a keynote speaker at POWER-GEN International in 2014.

Today, she serves as chief operating officer of Southern Company and is responsible for overseeing system operations, which include generation, transmission, engineering and construction services, system planning, and research and environmental affairs, as well as the company’s competitive wholesale generation businesses.

New Hampshire Finally Gets Serious about Solar

On a warm November morning about 200 people gathered in the small town of Peterborough, NH to officially inaugurate the state’s largest PV solar array.  The almost 1-MW project (942kW) was initiated by Borrego Solar, approved by the town by unanimous vote in July 2014, and completed by SunEdison, which purchased the project in 2015.

The energy generated by the array will meet 100 percent of the electricity needs of the town wastewater treatment plant with more to spare. The excess energy will be used to power the town house, the fire department and the library through a group net-metering arrangement recently approved by the New Hampshire public utility commission (PUC).

New Hampshire Finally Gets Serious about Solar

On a warm November morning about 200 people gathered in the small town of Peterborough, NH to officially inaugurate the state’s largest PV solar array.  The almost 1-MW project (942kW) was initiated by Borrego Solar, approved by the town by unanimous vote in July 2014, and completed by SunEdison, which purchased the project in 2015.

The energy generated by the array will meet 100 percent of the electricity needs of the town wastewater treatment plant with more to spare. The excess energy will be used to power the town house, the fire department and the library through a group net-metering arrangement recently approved by the New Hampshire public utility commission (PUC).

Digging Deeper, Why Renewables are Beating Coal and Gas in Some Parts of the World

Earlier this month Bloomberg New Energy Finance (BNEF) announced findings that the LCOE for wind and solar is now cheaper than coal and gas in Europe. Further the organization said that it is actually the renewables that are pushing up the LCOE of gas and coal. Because the BNEF analysis is so deep and complex — it uses thousands of data points the company says — the press release that it issued was hard to understand. Here we take a deeper look at the process involved in comparing energy generation technologies to determine exactly why renewables will continue to push out fossils for the foreseeable future.

First, what is LCOE? Short for levelized cost of electricity, LCOE takes all of the factors into producing a megawatt-hour (MWh) of electricity into play. This includes everything from the cost of equipment, labor, permits, etc. to build the plants; the cost of fuel to run them; the cost of operations and maintenance over the lifetime of the plant; and the cost of capital to pay for everything mentioned above. All of these costs, which BNEF derived based on actual deals and projects around the world, were tallied and then divided by the by the amount of energy the plants will produce (which depends very much on capacity factor) over their lifetime to arrive at a final cost for each and every MWh of electricity that will be produced by the power plant.

It’s a very useful metric for comparing generation technologies in an apple-to-apples format. But what will be most fascinating to energy stakeholders is that renewables are now inching out fossils in some regions of the world.

Why different regions? The cost of building, operating, maintaining and fueling a coal plant in China will not be the same as building, operating, maintaining and fueling one in, for example, Europe. Similarly, the output of an onshore wind farm in a location where the wind never stops blowing will be different that the output of a wind farm in a location where the wind picks up and then dies down frequently over the course of a year.

This is why LCOE is useful – because while in a wind farm, the fuel is free, the output is much less than a coal plant, which could theoretically run 90 percent of the time (this is called its capacity factor or utilization rate). But what happens to that coal plant’s capacity factor is greatly affected by the amount of other generation available to send power to the grid. So, as more wind energy is available because there are more wind farms built, the capacity factor of that coal plant goes down: now instead of running 90 percent of the time, it runs maybe 75 percent of the time, which then pushes up its LCOE.

While we were not able to get our hands on a publishable chart before press time, a deeper look at the BNEF analysis shows not only that the LCOE for wind and solar is beating coal and natural gas in some regions of the world, but that other renewable technologies such as geothermal, biomass incineration and small hydro also have very low LCOEs and in many regions are cost competitive or cheaper than fossil or nuclear energy.

More Numbers

To get down to the nitty-gritty, specifically, the global average LCOE for onshore wind dropped from $85 per megawatt-hour in the first half of the year, to $83 in H2, while that for crystalline silicon PV solar fell from $129 to $122.

In the same period, the LCOE for coal-fired generation increased from $66 per MWh to $75 in the Americas, from $68 to $73 in Asia-Pacific, and from $82 to $105 in Europe. The LCOE for combined-cycle gas turbine generation rose from $76 to $82 in the Americas, from $85 to $93 in Asia-Pacific and from $103 to $118 in EMEA.

Seb Henbest, head of Europe, Middle East and Africa at Bloomberg New Energy Finance, commented: “Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs. Meanwhile, coal and gas have got more expensive on the back of lower utilization rates, and in Europe, higher carbon price assumptions following passage of the Market Stability Reserve reform.”

Among other low-carbon energy technologies, offshore wind reduced its global average LCOE from $176 per MWh, to $174, but still remains significantly more expensive than wind, solar PV, coal or gas, while biomass incineration saw its levelized cost stay steady at $134 per MWh. Nuclear, like coal and gas, has very different LCOE levels from one region of the world to another, but both the Americas and the Europe, Middle East and Africa region saw increases in levelized costs, to $261 and $158 per MWh respectively.

Among the country-level findings of the BNEF study are that onshore wind is now fully cost-competitive with both gas-fired and coal-fired generation, once carbon costs are taken into account, in the UK and Germany. In the UK, onshore wind comes in on average at $85 per MWh in the second half of 2015, compared to $115 for combined-cycle gas and $115 for coal-fired power; in Germany, onshore wind is at $80, compared to $118 for gas and $106 for coal.

In China, onshore wind is cheaper than gas-fired power, at $77 per MWh versus $113, but it is much more expensive still than coal-generated electricity, at $44, while solar PV power is at $109. In the US, coal and gas are still cheaper, at $65 per MWh, against onshore wind at $80 and PV at $107.

Luke Mills, analyst, energy economics at Bloomberg New Energy Finance, said: “Generating costs continue to vary greatly from region to region, reflecting influences such as the shale gas boom in the U.S., changing utilization rates in areas of high renewables penetration, the shortage of local gas production in East Asia, carbon prices in Europe, differing regulations on nuclear power across the world, and contrasting resources for solar generation.

“But onshore wind and solar PV are both now much more competitive against the established generation technologies than would have seemed possible only five or 10 years ago.”

Lead image: The Green Evolution. Credit: Shutterstock.

Renewable Energy Gains Greater Opportunity in US Clean Power Plan

After a year of being pummeled by opponents, Obama’s final carbon reduction plan emerged this week with an even stronger push for renewable energy.

Wind and solar energy are centerpieces of the Clean Power Plan, the United States’ first ever rule to reduce carbon dioxide from power plants.

The rule not only makes renewables one of the plan’s three central building blocks, but also creates special incentives to spur communities to build renewables more quickly than required.

The revised version of the rule comes after a year of review, hundreds of meetings and 4.3 million public comments delivered to EPA.  It requires that states come up with plans to cut carbon pollution from power plants by 870 million tons, or 32 percent below 2005 levels, in 2030.

The Future of Renewable Power in Mexico

The abundance of diverse renewable energy resources, growing demand for power, macroeconomic stability, and historically high electricity prices continue to position Mexico as one of the most attractive destinations for investments in renewable power generation. 

Despite enjoying some of the highest wind and insolation levels in the world, Mexico has yet to develop most of the potential of its renewable energy sources.  As of 2013, thermal sources represented 75 percent of Mexico’s installed capacity, followed by hydropower generation, which accounted for 19 percent of total capacity, while other renewable sources, such as wind, solar and geothermal energy represented less than 6 percent of electricity generation in Mexico.

California Approves Distributed Energy Resource Providers To Aggregate Renewable Energy Generation

If you live in California, there’s a chance that a neighbor with rooftop solar panels will help keep your lights on soon.

In a first, the state’s grid operator has approved rules allowing companies to buy electricity from numerous homes and commercial power systems, and then bundle it up to meet a threshold needed to sell energy on the wholesale market.

Companies including utilities will be able to consolidate the output of rooftop solar systems, batteries and even plug-in electric vehicles, the California Independent System Operator Corp. said Thursday in a statement. The shift demonstrates that small-scale power sources are becoming a more critical part of the state’s energy mix.

Tesla CTO: Bulk Energy Storage Will Grow Much Faster Than People Expect

At the standing-room-only opening keynote at Intersolar 2015, all the talk was on the future of solar and how energy storage was helping to pave the way for greater adoption of it. Dr. Eicke R. Weber, the director of the Fraunhofer Institute for Solar Energy Systems (ISE) opened the show outlining the great progress that solar has made in the past two years by stabilizing supply and demand. “Therefore in 2016, 17, 18 you will see production capacity and the market catch up, which means we should not expect further falling prices for PV modules,” he said, adding “You can expect stable prices and maybe even some modest increases.” 

Note To PUC: Changes to Electricity Rate Design Could Dramatically Impact the Future of Solar PV

A new report from the Department of Energy’s Lawrence Berkeley National Laboratory (LBNL) finds that the future growth of distributed generation solar PV is heavily influenced by retail electricity rate design – and that proposed changes to net metering rules and retail rate structures could harm increased adoption of distributed solar.

The report, titled Net Metering and Market Feedback Loops: Exploring the Impact of Retail Rate Design on Distributed PV Deployment, is meant to inform the public and utility regulators that about the effects of changes proposed by a growing number of states to their net metering rules and retail rate structures – changes fueled by worry that increased adoption of distributed PV could result in unwelcome financial impacts on utilities and consumers.

Ryan Wiser, one of the report’s authors, said utilities are primarily concerned that solar customers don’t always pay their fair share of fixed infrastructure costs. “Utilities sometimes claim that net-metered solar customers are unfairly subsidized under existing net metering rules, with non-solar customers paying a larger share of the fixed costs of the electric grid,” Wiser said.

Testing Heats Up at Sandia’s Solar Tower

Researchers at Sandia National Laboratories are working to lower the cost of solar energy systems and improve efficiencies in a big way, thanks to a system of small particles. This month, engineers lifted Sandia’s continuously recirculating falling particle receiver to the top of the tower at theNational Solar Thermal Test Facility,marking the start of first-of-its-kind testing that will continue through 2015. The Sandia-developed falling particle receiver works by dropping sand-like ceramic particles through a beam of concentrated sunlight, capturing and storing the heated particles in an insulated tank. The technology can capture and store heat at high temperatures without breaking down, unlike conventional molten salt systems.

Testing Heats Up at Sandia’s Solar Tower

Researchers at Sandia National Laboratories are working to lower the cost of solar energy systems and improve efficiencies in a big way, thanks to a system of small particles. This month, engineers lifted Sandia’s continuously recirculating falling particle receiver to the top of the tower at theNational Solar Thermal Test Facility,marking the start of first-of-its-kind testing that will continue through 2015. The Sandia-developed falling particle receiver works by dropping sand-like ceramic particles through a beam of concentrated sunlight, capturing and storing the heated particles in an insulated tank. The technology can capture and store heat at high temperatures without breaking down, unlike conventional molten salt systems.

Behavioral Economics and the Solar PV Industry

Behavioral economic theory holds that human interactions are complex and that economic motivations include nuance beyond that of maximizing utility. This is certainly true of the global solar industry as throughout its history it has interacted within a context of here-one-day-gone-the-next incentives and subsidies, expectations of significant price drops, competition with well-subsidized conventional energy technologies as well as a continuing perception among many that solar remains a science experiment.

Solar industry participants have a preference for very big numbers and forecasts as well as for optimistic outlooks for the future.  Any deviation from the celebration of really big numbers or any notion that strays from the optimistic status quo is typically ignored. 

Cherry-picking facts — be they optimistic or pessimistic — to make a point without considering context and nuance, will almost always lead to poor decision-making. 

‘Snail’s Pace’ in Climate Talks, Weak Pledges Frustrate UN Chief

The secretary general of the United Nations is frustrated with the pace of negotiations for what’s intended to be a crucial agreement limiting global warming.

Climate change pledges submitted so far from the world’s leading economies won’t be enough to keep the planet from warming dangerously, UN Secretary General Ban Ki-moon said Monday in New York.

Proposals to reduce heat-trapping emissions need to be “a floor, not a ceiling,” he said.

The global increase in temperatures will exceed 2 degrees Celsius (3.6 degrees Fahrenheit) under the national pledges already submitted to UN, Ban said. That’s the goal scientists and the UN have set to avoid the worst effects due to global warming.

The proposals submitted to date “will not be enough to place us on a 2-degree pathway,” Ban said.

Without any changes to global emissions, the world is on track to warm by 4 degrees Celsius or more, UN Assistant Secretary-General for Climate Change Janos Pasztor said earlier this month.

World leaders have five months to go before a meeting of almost 200 nations in Paris that’s intended to seal a new global pact to cut planet-warming carbon emissions. If successful, the agreement would be the first ever to require both developed nations like the US and growing economies like China to address climate change.

“The pace of UN negotiations are far too slow,” Ban said. “It’s like a snail’s pace.”

The U.S., the world’s biggest historic source of greenhouse gases, pledged earlier this year to cut its emissions by as much as 28 percent by 2025. The European Union has promised a 40 percent cut by 2030. Several other major economies, including Australia and Japan, have yet to submit climate plans to the UN.