Archive for May 30, 2013

Utilities weigh getting into solar installation business

Some U.S. utilities are looking at getting into the solar rooftop business as the installations are creating an increasing threat to their business model.
The Wall Street Journal reported companies such as American Electric Power co. and Southern Co. are looking at making the move.
Arizona Public Service Co. has only a rooftop program for government and schools. Salt River Project has built a large solar system and allowed people to buy into it instead of getting rooftop solar.

original article

update: An appropriate quote from an article in the Forbes article: “The electric utility business model is broken. Rather than burn the Earth in political battles over net metering, we should be reimagining the regulatory compact between utilities and ratepayers and regulators.” to which I say Amen.

Tennessee Senators – Level the Playing Field of the Master Limited Partnership Legislation

Senator Alexander is quoted in a National Journal article as acknowledging climate change and the need to reduce carbon pollution. Two of his “four grand principles” includes ending the obsession with taxpayer subsidies and strategies for expensive energy and allowing marketplace solutions to create an abundance of clean,cheap, reliable energy. Right now taxpayers are subsidizing energy sources including all fossil-fuels and one wonders if our two senators are willing to eliminate all subsidies for all energy sources. The United States taxpayer is fossil fuels’ largest benefactor at $502 billion in 2011. That $502 billion is just over 3% of the US economy, currently being given away to big fossil fuels companies. Now let’s talk about leveling the playing field for energy choices based on Senator Alexander’s desire for clean, cheap, reliable energy. Depends on how you choose to compare these choices. For example, the industry uses “Grid Parity.” “Grid Parity” is defined as the point when PV-generated electricity becomes competitive with the retail rate of grid power. TVA has stated that it expects grid parity for solar in the valley by 2016. With the cost of solar energy decreasing and the cost of traditional power increasing, the abundance of clean, cheap, reliable energy will favor renewables after 2016 which is less than 3 years away.

Then there is the “Levelized cost of energy” (LCOE). LCOE is the minimum price at which energy must be sold for an energy project to break even. Typically LCOEs are calculated over 20 to 40 year lifetimes, and are given in the units of currency per kilowatt-hour, for example USD/kWh. Solar’s LOE uses a life of 20 years. We know that is an understatement for the useful life of solar based on monocrystalline silicon based panels. First, the panels are warranted to have a 80% output at the end of 25 years. Second, studies of 30+ year old panels showed no degradation. A more rational life of the premium solar panels should be either 30 or 40 years in life. This drastically reduces the LOE for solar.

We can further decrease cost of solar by giving it the same tax benefits as all the other energy fuels. This can be done by including renewables in the recent legislation offered in the house and senate. In the senate the legislation is called “The Master Limited Partnerships Parity Act.” The Master Limited Partnership includes all fossil-fuels but not renewables. Both houses have bi-partisan support for the addition of renewables. In a Duke study, a baseline LCOE for all energies included in the MLP showed a decrease in LCOE of 5 cents per kilowatt-hour without federal tax credits. In addition the inclusion of renewables in the MLP legislation would reduce the cost of financing of renewable energy projects by that same 5 cents per kilowatt-hour. Today,the cost of financing makes up an ever-greater fraction of the total cost of renewable projects by as much as 50% according to Brookings.

Should the federal government continue research into solar photovoltaics? The answer is yes. The aim should be to increase the efficiency of future solar systems while keeping close control of the cost of manufacturing.

Senators Alexander and Corker, support the Master Limited Partnership Parity Act and hold to Senator Alexander’s principal of to create an abundance of clean,cheap, reliable energy.

Master Limited Partnership Parity Act – What It’s All About

In the race to capture the economic benefits of the growing clean energy sector, the Master Limited Partnership Parity Act would provide an opportunity for U.S. businesses to mobilize private capital and better compete. It would provide the same tax treatment for investments in clean energy and fossil fuels . Sen. Chris Coons (D-DE) introduced the bipartisan bill today with original co-sponsors Jerry Moran (R-KS), Lisa Murkowski (R-AK), and Debbie Stabenow (D-MI). Congressmen Ted Poe (R-TX), Mike Thompson (D-CA), Peter Welch (D-VT), Chris Gibson (R-NY), and Cory Gardner (R-CO) co-sponsored companion legislation in the House.

“We applaud this bipartisan group of co-sponsors on the introduction of the Master Limited Partnership Parity Act,” says Phyllis Cuttino, director of Pew’s clean energy program. “Our research indicates that nations with consistent, transparent clean energy policies do better in attracting private investment.”

If approved by Congress, this tool could lower financing costs for clean energy projects, some by as much as 50 percent, according to Recycled Energy Development, a waste energy power producer. The market value of the master limited partnerships has grown to about $370 billion The bill is supported by clean energy businesses (PDF), labor and environmental groups, and policy organizations.
A master limited partnership is a business structure that has the tax advantages of a partnership but whose ownership equity can be traded as easily as public stock. Energy projects qualifying as a master limited partnership have access to low-cost capital and liquid investment opportunities as well as a relatively high rate of return for investors. Master limited partnerships have existed since 1981 and are available to investors in fossil-fuel extraction and pipeline projects.

By expanding the list of qualifying projects to include solar, wind, geothermal, and other clean energy and transmission technologies, renewable-power projects could access new financing markets, thereby increasing investment and deployment of these clean technologies.

original article

Returns on investing in solar has banks and investors funding distributed solar

SLevy: Distributed solar is disruptive to electric distributors, especially in regions with high power rates. Solar will accelerate installations, a fact that must be factored into the future business plans of our distributors here in the valley. To support this statement Edison Electric Institute recently published a report entitled “Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business.” TSEA offers distributors its services in understanding the impact and has suggestions towards solutions to avoid faced with unpleasant alternatives.

There were a record number of solar panels installed in the U.S. on rooftops and on ground-mounted systems in 2012. Now both traditional financing companies and new types of investors are starting to get in on the trend of providing the funds for the high upfront costs of installing solar panels, in exchange for making some money back several years down the road. But the potential to make money in this way has only just started.

Solar leases are a contract between the building owner and SolarCity, whereby SolarCity pays the upfront cost of installing the system, owns and maintains the panels, and the building owner pays for the monthly electricity for the power from the panels over around 20 years. As Ucilia noted on GigaOM Pro today, the residential solar leasing market alone is expected to grow from $1.3 billion in 2012 to $5.7 billion in 2016, according to GTM Research.

SunPower said earlier this month that demand for its residential solar leases is far greater than the money available to finance them.

It’s not just banks and corporate do-gooders that want the opportunity to make a decent return — some 10 to 12 percent in some cases. Crowd-funding is starting to appear as an interesting blip on the radar. Startup Solar Mosaic says that it’s now raised $1 million from its crowd-funders for its solar panel systems, which offer around a 4.5 percent annual yield.

original article

A Second California City Establishes a Solar Mandate

SLevy: The price of electric power in parts of California is as high as 35 cents per kilowatt-hour. A strong motivation for solar whereas Tennessee has a lower price of electricity at the present. The motivation here in Tennessee is improved air quality and a buffer against future costs with other forms of electric power generation.

The town of Sebastopol, in the apple- and grape-growing rolling hills of western Sonoma County, is following suit with a much more aggressive ordinance, suggesting that solar-by-fiat might be more viable as policy. In Sebastopol, a system would also qualify if its output meets three-quarters of the building’s electrical load on an annual basis. The ordinance also includes a provision that allows officials to exempt buildings from the requirement if a site isn’t conducive to solar, but a fee or other energy-saving measures could be required.

Mayor Michael Kyes told the Press-Democrat in nearby Santa Rosa that Sebastopol, with a population of around 7,500, already had some 1.2 megawatts of installed solar capacity. “This ordinance will add to it,” the mayor said. According to the Press-Democrat, there was a citizen objection to the solar requirement registered at the Sebastopol Council meeting; someone said “mandatory sort of implies coercion” (a sentiment it’s hard to argue with). But of course all manner of building requirements are essentially coercive, and Councilman Robert Jacob seemed to capture the sentiment of the town leaders when he said that “this ordinance is not only cost-saving…it’s the responsible thing to do.”

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