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.