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Tag:

Feed In Tariff

Will California Protect Customers’ Right to Self-Generate?

Will California Protect Customers’ Right to Self-Generate?

written by The Vote Solar Initiative

Should you be able to reduce the amount of energy you buy from your utility by generating your own power?  Or does a utility have the right to demand that you buy all your power from them, even if you have a solar system on your roof?

This question is at the heart of California’s new proceeding to determine the future of net metering in the state.  In comments to the California Public Utilities Commission in October, California’s three big investor-owned utilities argue that net metering should be unavailable to new customers after the current 5% program cap is reached, and that customers should have to move to a ‘buy all-sell all’ feed-in tariff (FiT) instead.  Customers who want to go solar after 2016, the utilities argue, should no longer be allowed under state law to reduce the utility-generated energy they buy by generating their own renewable energy onsite. Instead, they want their customers to have to buy all the electricity they use from the utility, and sell all their onsite renewable generation back to the utility at a pre-determined price.

What price, you ask? Well, the utilities are all over the map on that one.

  • PG&E proposes the FiT price should vary by technology and should be set at “the avoided cost of the energy minus any costs incurred accommodating the generation that are not paid by the participating customer” (this would equal approximately 4 cents/kWh, minus integration costs). PG&E proposes an adder could be included if needed to allow continued growth of rooftop solar, with that adder declining over time.
  • SDG&E proposes that the FiT price should vary by technology like PG&E, but argues the price should be set based on production cost, rather than on the value of the energy to the rest of the system.  (SDG&E follows up by proposing yet another alternative for determining the price: that it be based on the competitively-set ReMAT price already being used for systems of 1-3 MW.)
  • So Cal Edison agrees with PG&E that “the FiT rate should be based on market price benchmarks in the wholesale energy markets, such as the CAISO’s default load aggregation point (DLAP) prices” but says the price should not vary by technology and doesn’t suggest an adder to go on top of the short-run energy-only price.

We see some significant problems here. Foremost among them is that throwing out net metering and replacing it with a ‘buy all-sell all’ arrangement would be at odds with Americans’ fundamental right to self-generation. Net metering allows customers to first meet their own electricity needs with the clean energy they generate, and then receive full retail credit on their utility bill for excess electricity they send back to the grid. In California, about two thirds of the power generated from net metered systems is currently used by customers onsite.  A FiT is something else entirely – the utility credits customers for all of their solar power production at a set price. In this situation, solar customers are no longer self-generators empowered to use their solar energy to primarily reduce their own load. They instead become power producers that must send all of their power to the utility.

A FiT that accurately values the net benefits of rooftop solar generation— fully building in public health, environmental, economic and grid benefits– is a fine option for those who want to be in the business of delivering power to the utilities, but it should be the customer’s choice whether they move to a FiT or choose to primarily use their solar energy onsite as a way of reducing their electricity purchases from the utility. PURPA, a federal law approved by Congress back in 1978, affirms this common-sense customer right to self-determination. (See our earlier blog post if you’d like to read our principles for designing an expanded net metering program, highlighting the importance of the right to self-generate.)

Beyond the issue of customer rights, there are other practical concerns.  Arriving at the right FiT price to compensate customer-sited renewables is a difficult and contentious proposition. As outlined above, the utilities’ proposals for how that price should be calculated vary greatly from each other—and none inspire much confidence in reaching proper valuation.  In fact, in recent years several CPUC proceedings considered developing value-based renewable procurement programs (AB 1969 expansion, AB 920 implementation, SB 32 implementation), and in each of those proceedings, utilities fought comprehensive valuation of clean energy tooth and nail.  And the Edison Electric Institute, the trade association representing all investor-owned utilities in the US, has repeatedly stated its opposition to crediting distributed renewables with any value beyond the short term price of polluting fossil-fuel generation: see Greentech Media articles here and here.  Until the monopoly utilities are willing to properly value distributed generation, a policy that secures value for customers by offsetting retail purchases is a much more pragmatic approach.

Net metering is a simple and proven policy tool for supporting self-generation, and has been enormously successful in California. The real issue here is rate design, where solutions are available, as noted in a recent DOE Sunshot paper that proposes three-pronged approach of revenue decoupling, a minimum bill and time-of-use rates that are gradually phased in for all customers. Since the CPUC is set to approve changes to residential rate structures in 2015 that will kick in over the next several years, we simply can’t know yet how the benefits of net metering to all Californians will stack up against costs (though a proper accounting of both sides is very likely to show continued net benefits for everyone). Meanwhile, California remains far from achieving its long-term goals to protect the climate, and we need to expand solar access to more Californians who live in disadvantaged communities. We hope that in 2015, solar supporters all across the state will come together to urge the CPUC take a common sense approach: extend and expand net metering beyond 2016, enabling more Californians to help tackle our collective climate challenge, and to control their own energy future.



November 17, 2014 0 comment
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Lessons From Germany: How Can the U.S. Succeed at its Own Energiewende?

Lessons From Germany: How Can the U.S. Succeed at its Own Energiewende?

written by CleanTechies.com Contributor

Germany has put itself on the world map in the past decade as an early adopter of energy generation from renewable sources.  In 2013, 25% of the country’s energy came from renewable sources – the highest percentage in the world.  By 2050, as part of the country’s Energiewende (or “energy transition”),  Germany expects this number to be at 80%.  This is an incredibly ambitious goal, as Germans and the rest of the world will agree, but Germany is preparing now to make this happen.

As part of the Transatlantic Program hosted by the German American Chamber of Commerce, I had the incredible opportunity to meet with many of Germany’s energy influencers, and learn directly about how Germany is transitioning to carbon-free energy. It hasn’t been all smooth sailing, but there are key lessons that the U.S. and the rest of the world can learn both from Germany’s successes and plans for improvements.

Consistent Policy is Critical
The Bundesnetzagentur in Bonn is Germany’s Federal Network Agency for electricity, gas, telecommunications, post, and railway, and they had many insights to share about the reason for such high rates of renewable penetration to date.  In particular, they attribute this adoption to policy, and more specifically, three aspects of the current renewable energy policy in Germany: guaranteed grid and market access for renewables, priority dispatch of renewables over conventional generators, and guaranteed financial support for 20 years through the feed in tariff.  These three traits have provided great incentives for installers of renewable energy, paving the way in some cases for high profit as competition from solar producers caused panel prices to drop rapidly.  This is a key lesson the U.S. can learn from Germany:  consistent policy is critical for a similar large-scale transition to renewables, and it’s currently missing in our market.

Though policy incentives are often criticized, for a transition of this size predictability of expected returns throughout the expected life of renewable equipment is essential in the early years. With policies that are inconsistent or absent from state to state and year to year, individuals, businesses, and even utilities are hesitant about investment in newer technologies. Germany’s foresight on this front has resulted in solar capital costs that have reached grid parity  – a great thing that much of the world can take advantage of as we follow suit.

Negative Pricing is a Double Edged Sword

Structure Incentives for Success

The transition to renewables has not been all smooth sailing for Germany. The sudden drop in solar prices was not anticipated, as the German market and German manufacturers were flooded by low-cost Chinese suppliers.  The large influx of intermittent sources has made grid management difficult.  Only 5% of the renewable capacity on the German market is owned by the primary utilities, with the rest being owned by individuals, communities, industry, and smaller utilities.  The complexity of planning for these scattered sources (which are guaranteed access to the grid), and existing baseload plants like nuclear or coal that are difficult to shut down quickly, resulted in a “perfect storm,” with overproduction of supply and negative pricing on the spot market.  This actually incentivized demand to increase in order to balance supply and demand on the grid, and stabilize the voltage and frequency output of the system.

Germany is now adjusting their incentive structure to adapt to these unforeseen effects. The feed in tariff will soon become a feed in premium, where eligible producers of renewable energy will need to bid their production into the market just like all other providers.  They will then receive a bonus or premium price over the resulting market price.  In this way, all generators have an incentive to curtail production when the market price and demand are low (thus avoiding negative pricing), and produce when the price (and subsequent demand) is high.

Though Germany went through some growth pains to arrive at this stronger footing, they have also paved the way for greater understanding and policy structures for other markets.  As other nations look to implement a similar transition, we have a head start with Germany to thank, and can structure incentives that are implemented in a way that rewards responsible installation and management of clean technology projects.

Diverse and Rapid Innovations
Despite the challenges, Germany’s negative pricing phenomenon led to the need for very creative energy solutions. Germany has had unparalleled development and deployment of new and emerging energy technologies, many of which now have strong potential to scale.  Our delegation met with many of these new companies and it was exciting to see what’s on the horizon:

  • Researchers at EFZN in Goslar are evaluating the feasibility and economics of wind powered pumped water storage in abandoned mines in Germany.  A storage capacity of 40 GWh is likely available in 100 existing mines at a current cost of €0.05-0.10 per kwh.  When the market price of electricity drops below zero, grid electricity can be used to pump the stored water to a higher elevation.  When the grid price is high, the potential energy in the water is used to generate electricity and sell it to the grid, and the economics of this solution start to become viable.
  • A delegation tour of a hydrogen fuel production station revealed a similar economic concept, though the technology involved is significantly newer and still more expensive.  Hydrogen technology has gotten much criticism for the high cost and safety concerns associated with producing, storing, and transporting compressed hydrogen gas, however, the hydrogen production and fueling station in Hamburg’s HafenCity, provided by Vattenfall, is proving that the technology is feasible.  The plant was designed to produce hydrogen gas through electrolysis of filtered city tap water from renewable energy at low or negative cost, and sell the hydrogen to fuel the city’s fleet of hydrogen fuel cell city buses and personal cars.
  • Many battery storage technologies are also undergoing research and demonstration for expanded uses in the transition.  Lead acid batteries remain the most common technology for use with renewable energy systems due to their low cost and high availability.  However, this solution is bulky, heavy, and limited to low power applications.  The battery research center at MEET in Munster is conducting extensive testing with Lithium ion batteries, which provide many advantages in both mobile and stationary applications and performance as part of the energy transition.  Better understanding of this technology coupled with industry partnerships at the research center will allow for greater adoption and lower costs.
  • In another energy storage development, the delegation met with the Project Manager of the Smart Region Pellworm project, an island community that generates all of its energy plus some through renewable sources on the island.  As part of this project they have installed a vanadium flow battery  to help with response to grid demand for electricity and improve the economics of the renewable investment.  This type of battery is new to the market, but has the potential for tremendous benefits and applications for community scale renewable microgrid systems which are larger than what is practical for traditional batteries.  This installation was reported to have been very reliable so far, and is expected to have at least a 20 year life with only minor maintenance.

Though the technology and progress enabled by the Energiewende is incredible to behold, this still comes at a cost.   The renewable feed in tariff is funded by rate payers, and many in Germany agree that its implementation created excessive windfalls for some.  Though the rate of the FIT is declining for new installations, projects that are already operational are still reaping massive benefits.  With all of its ups and downs along the way, Germany is leading the way in the energy transition, and we all have much to learn from their experience.

Katrina Prutzman leads the system design team at UGE, and recently returned from the Transatlantic Program for Young Technology Leaders, a delegation trip to Germany focused on smart grid and energy storage. UGE (TSX: UG.V) is a leading developer of distributed renewable energy solutions for business and government, with projects in over 90 countries, including several for Fortune 1,000 companies.

Article by Katrina Prutzman.  A version of this article first appeared on GreenTech Media.



October 26, 2014 2 comments
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Local Energy Rules Episode 19 – The Leading Community Energy Aggregator

Local Energy Rules Episode 19 – The Leading Community Energy Aggregator

written by CleanTechies.com Contributor

Community choice aggregation describes a situation where a town can become the bulk buyer of electricity on behalf of its residential and small business customers. Such local aggregations serve about 5% of utility customers in Illinois, Ohio, Massachusetts, Rhode Island, and California, but it’s Marin Clean Energy in California that stands above the crowd for their commitment to renewable energy and their nearly decade-long fight to offer service.

Learn more about the struggle for local control of the energy system and its numerous advantages in this interview with Marin Clean Energy Executive Director Dawn Wiesz, recorded via Skype on Feb. 13, 2014.

Why is Local Aggregation Worthwhile?

I began by asking Dawn if the effort to form an aggregation in Marin County, almost 10 years in the making, was worthwhile.

Definitely, she said: “We’ve been able to achieve many of the goals we set out…purchasing more than double the amount of renewable energy…offering rates that are competitive and in many cases lower.”  Marin Clean Energy has prices that are competitive with incumbent Pacific Gas & Electric, and also advertises power that is 50 or 100% renewable.

When Did You Know You’d Beat the Utility?

Dawn said that it wasn’t clear they’d made it until they finally offered electricity service on May 7, 2010. “It was a down to the wire development.” The incumbent utility, Pacific Gas & Electric, had financed a ballot campaign to kill community choice aggregation by increasing the vote threshold from a majority to two-thirds, fought them at the Public Utilities Commission, and set up phone banks to dissuade potential customers from signing up.

“There’s really not a level playing field,” says Weisz.  The incumbent monopoly provider has “brand recognition, an army of lawyers” and other resources that it deployed to stop the locals.  Ultimately, Marin Clean Energy won, and about 75% of customers in their service territory now take electricity from Marin Clean Energy.

What Makes Local Aggregation Competitive?

Dawn notes that the local aggregation has several factors in their favor in offering competitive energy service to, and more renewable energy than, the incumbent utility.  As she says, “we have low operating costs – we are a small and nimble shop – we procure in a very prudent way, maximizing renewables within our portfolio, and we don’t have shareholder profits.”

More Local Energy?

Marin Clean Energy only has about 1 megawatt of local renewable energy, a solar array at a local airport, but they have big plans for more. The mechanism for more local energy is a Deep Green fund, money from customers who have opted for 100% renewable electricity.  Half the revenue from that fund will help finance pre-development for renewable energy built within the utility service area.

The utility also offers a feed-in tariff program, long-term contracts for buying solar or other renewable energy projects 1 megawatt or smaller that are built locally.

Dawn says they also have plans to support community solar or “syndicated solar,” allowing customers to buy energy from solar arrays built locally.

Advice for Other Aggregators?

Dawn has two pieces of sage advice for communities jumping into local aggregation:

  • Walk before you run
  • Don’t let the perfect be the enemy of the good

In particular, the first piece of advice refers to the desire of Marin Clean Energy organizers to offer a high renewable energy share to everyone right away, but that they phased it in slowly in order to make it work. Also, she notes that it’s really essential to get community buy-in with lots of local conversation and that taking the time to do so is what ensures all the pieces fall into place.

What’s Next?

Dawn says they’re seeing a real change with the utilities in California that may indicate a smoother road for future community choice aggregation efforts. Sonoma Clean Power is planning to launch in the next year, and many other communities in California are moving forward, offering customers “the only real choice they have” over their energy future.

You can learn more about community choice aggregation from our 2009 report or from the Local Energy Aggregation Network, a nonprofit based in California that provides information and technical assistance to states and communities considering local aggregation.

Article by John Farrell, appearing courtesy Institute for Local Self-Reliance.



April 7, 2014 2 comments
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Solar is Helping NY Tackle High Electricity Costs

written by Walter Wang

New York has some of the highest electricity rates in the nation. But now more and more New Yorkers are turning to reliable solar to help manage their electricity costs.

Governor Cuomo just announced the latest round of the NY-Sun Competitive PV program, which will support 79 new solar projects totaling 64 Megawatts

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July 11, 2013 1 comment
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Los Angeles Flips the Switch on Its First Feed-In Tariff Project

written by Walter Wang

Less than six months after LA launched its largest-in-the-country feed-in tariff (FIT) program, the city is already seeing results. Last week, Mayor Antonio Villaragosa, LADWP General Manager Ron Nichols and a group of solar supporters gathered on the roof of a multi-family apartment building in North Hollywood to to officially “flip the switch” on the first solar panel

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July 1, 2013 0 comment
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California Shared Renewables Bill Poised for Success

written by Walter Wang

California looks set to make clean energy history once again. Yesterday, the California Assembly Utilities and Commerce Committee resoundingly approved SB 43, a pioneering shared renewables program, in an 11-1 vote. This was a critical hurdle; now that we have approval from the policy committee, prospects look very good for the Assembly to approve the bill and put

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June 26, 2013 0 comment
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Denmark: The Power of Feed-in Tariffs

written by Walter Wang

Denmark is held up as one of the great success stories when it comes to wind power – and it is. Half of Denmark’s electricity consumption will be generated by wind power in just seven years time. But Denmark has other lessons for those interested in wind power. It illustrates how effective – or ineffective – government support for renewable energy can be.

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May 23, 2013 0 comment
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Who Says Solar is Too Expensive?

written by Walter Wang

Southern California Edison is asking regulators for approval of 75 new PV contracts, totaling 105.53 MW. All priced at the cost of building a new natural gas plant. Now can we stop saying that solar is too expensive?

Details in their Advice Letter, here (pdf).

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April 1, 2013 0 comment
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Solar Energy Today and Tomorrow – Shaped by History, Powered by Innovation

written by Walter Wang

Solar energy has been around for a long, long time – since approximately 3,500,000,000 BC, in fact, when cyanobacteria harnessed solar energy for life. Little did those simple organisms know that they were onto something that one day would become a viable power source that could increase the quality of human life by sustaining our environment and decreasing our

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January 31, 2013 2 comments
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Fukushima, from Nuclear Power to Wind Power

written by Walter Wang

Since the massive earthquake and tsunami that struck Japan in March 2011, and which resulted in one of the worst nuclear accidents in recent history, Japan has signaled its intentions to transition towards clean, alternative energy. Japanese officials recently announced that the country intends to build the largest wind farm in the world. The offshore wind farm will be built ten

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January 22, 2013 0 comment
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New Study Shows That Net Metering is a Financial Benefit, Not Burden to Ratepayers

written by Walter Wang

For years, we’ve been making the case that in addition to the environmental benefits, solar also adds value to the grid.

How much value? Today, we released a report that we commissioned to look at both the costs and benefits of net metering in California. The study was done by Tom Beach of Crossborder Energy, who used actual data from 10,000 solar systems

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January 18, 2013 2 comments
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Los Angeles Approves Launch of Feed-In Tariff

written by Walter Wang

We’re thrilled to see that the LA Department of Water and Power (LADWP) adopted a Feed-In Tariff (FIT) program last week.

We’d like to congratulate all the folks who, after three years of hard work testifying and developing the research and policy, made this victory possible (looking at you, LABC, Environment California, Sierra Club, Global Green, and many many more).

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January 14, 2013 0 comment
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Lessons From Germany on Solar Costs

written by Walter Wang

Solar has never been more affordable for more Americans – with residential prices dropping an impressive 14% over the last year alone. But global solar leader Germany is still beating the U.S. in the race to low-cost PV.

The Lawrence Berkeley Lab released a fascinating

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October 8, 2012 0 comment
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Top Ten Highlights of Cleantech in East Europe

written by Walter Wang

More and more countries throughout the world are starting to rely more on renewable energy and energy efficiency as a means of sustaining the current environment for future generations. While many people do not often think of Eastern European nations in this mix, the truth is that a number of them are taking great strides in the field

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September 12, 2012 0 comment
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