Distributed Generation News

NRG, Led by CEO David Crane, one of the biggest independent utility scale electricity providers in the country, is switching their business model to a residential and distributed model.

A quote from the Bloomberg article - The other part of the package is the growing underground network of pipes that delivers gas to about half the homes in the country. Crane wants to provide customers with fuel cells and microturbines, which produce electricity from gas.

“The individual homeowner should be able to tie a machine to their natural gas line and tie that with solar on the roof and suddenly they can say to the transmission-distribution company, ‘Disconnect that line.’ ” Crane said.

A lot of companies have been promising affordable residential natural gas turbines for a while, Looks like Mr. Crane has his eye on one.  

John Farrell discusses talk of using Master Limited Partnerships to advance renewable energy in the U.S. (spoiler alert! He doesn’t like them). Yet another tax program that local residents won’t be able to use, but absentee energy developers will.  Maybe looking at political donations is just as important as designing the right kind of renewable policy in the States.   

Ontario is reining in their Feed In Tariff program, because … “Anger over large wind farms, especially in southwestern Ontario, cost the Liberals several seats in the 2011 election, when they were reduced to a minority government.” As I’ve said before, if you want to have more support for renewable energy programs, encourage more locally owned wind… It looks like Ontario’s renewable adoption will be slowed now. The good news is their "micro fit" program stays intact, showing Ontario's commitment to locally owned renewables.

Since we’re discussing politics today, one of my energy policy buddies ( I’ll give him credit if he wants) has been saying for a while that DG advocates should reach out to Tea Party legislators for policy support. Looks like he’s right. These folks understand free markets, National Security, and self-reliance.

 Finally, everybody is writing about the utility battle against Net Metering. That’s the reason I’m an advocate for feed in tariffs (FiTs) over net metering. Under net metering, a utility customer essentially leaves the distribution system, though he still pays a facility charge to be connected to the grid. Under a FiT program, the customer adds a “sell meter” to their residence, and continues to buy electricity each month, helping to maintain the distribution system. In short, utilities are merely buying from additional sources, rather than losing customers.   So, IMO, FiTs are fairer to utilities, better for low income electric customers, easier to finance, gets the customer a fair price for the renewable energy unit sold, etc. 

My solar PV system has operated for a little over a year , I feel that I’m not compensated for the benefits  this system brings to the other members of the distribution system, Though I deliver peak electricity to the system, I’m compensated at an absurdly low wholesale rate. Avoided transmission costs are another benefit I’m not paid for.  

Also, a lot of energy efficiency advocates frequently wring their hands about lack of consumer interest in adopting efficiency measures. Maybe they should start advocating for distributed generation. The price of solar makes it competitive with a lot of efficiency upgrades… and if you want to see a homeowner excited about saving electricity, talk to him after he’s had his solar array installed for a while. I should dedicate a post about  living with solar at some point in the near future, as I seem to straying on my message here, But HEY! FiTs are the superior policy tool for advancing renewables in this country.   

More Reasons For Distributed Wind and Solar

My last post sent me looking for more information on grid security. This post by Amory Lovins turned up -  “Does a Big Economy Need Big Power Plants?” A quote – “Moreover, the 2008 Defense Science Board report “More Fight, Less Fuel” advised U.S. military bases to make their own power onsite, preferably from renewables, because the grid is vulnerable to long and vast disruptions.”

It looks like the military is serious about addressing grid security issues, and about developing micro grids- judging from this post on smartgridnews. In fact, smartgridnews has numerous articles about grid security. There are a number of articles there about enhancing grid security from low tech threats, like this. Or the problem of just seven bullets- one - on an actual recent substation attack, or another about foreign armies using cyber-attacks. 

The utilities have got our backs, and are addressing these issues…Right? 

Here’s another from that website - “Utilities to FERC: We don't need your security measures, but thanks”. Less than 25% of investor owned utilities have adopted FERC security recommendations. The coops and munis are doing better, but less than 50% have complied. Most of these links deal with malice, but let’s not forget about equipment failures and Mother Nature.    

Have you ordered your solar panels and batteries yet?

Distributed Wind and Solar

Here’s some links to Distributed Generation(DG) articles to check out. The first, by Steve Pullins for smartgridnews , clear back in 2008, was among the first I that saw that pointed out DG was on a real growth trend (just not in Iowa). Anyway, Nationally, DG (he calls it Grid Divorce) grows at a rate of 33% a year. If the trend continues, He says   “it will lead to 55 million U.S. meters (half of the nation) going off-grid by 2028.  How many utilities will survive if they lose half of their revenue?” 

A few years later, a lot of folks have identified this trend. Here’s a good one by David Roberts, “Solar panels could destroy U.S. utilities, according to U.S. utilities”.

A fun quote – “It’s worse than that, though. Solar power peaks at midday, which means it is strongest close to the point of highest electricity use — “peak load.” Problem is, providing power to meet peak load is where utilities make a huge chunk of their money. Peak power is the most expensive power. So when solar panels provide peak power, they aren’t just reducing demand, they’re reducing demand for the utilities’ most valuable product.”  Roberts, and others for that matter, spend a lot of time discussing ratepayer increases as a result of this, and initially that might be true, as utilities try to pass losses onto their customers from stranded assets. However, as the solar percentages increase ( in Germany for example) , the price of electricity plunges during the day,  supporting the quote above , but also pointing  to the fact that Germans may soon pay much less for electricity than their U.S. counterparts.  Oh, and German renewables are heavily locally owned. Dare we say WIN –WIN?  The takeaway, I think, is that legislators need need to set the right policy in place to minimize upfront consumer impacts (hint, I don't think they're doing that yet). Right now the utilities are building a bunch of generation facilities and transmission lines that we may just not need a few years down the road as DG starts to take over. Currently, our politicians are listening to utility pleas for "Business as Usual".     

Finally, we may want to root for a more distributed – diversified electrical grid, instead of the centralized model our utility friends keep telling us is only way to generate electricity. Check the video referenced in the link.  I’ll also throw in another link on this issue for you insatiable readers.       

A Couple Of Stories For Folks To Check.

“Not all renewables are created equal” - By Tom Butler. A post at grist.org, the author does an excellent job of questioning if we are developing the renewable energy industry correctly. Since I live next to one of the largest wind projects in Iowa, I could really identify with this one.  Mr. Butler was discussing the reaction to the book he coedited - ENERGY:Overdevelopment and the Delusion of Endless Growth 

A quote from the grist article - "I’ve found that some green power advocates want to keep it superficial (fossil fuels = bad, renewables = good) rather than digging into tougher questions about appropriate scale and centralized, corporate control of energy resources, including renewables. I am not unsympathetic to the arguments of well-meaning activists who say we can’t let the perfect be the enemy of the “less unsustainable,”

 

And that kind of ties in with -

The Sierra club posted this article provocatively titled   “Warren Buffett's Coal Problem -To run his coal trains, the billionaire investor needs to seize land from a bunch of Montana cowboys. That's not going over very well.” 

MidAmerican Wind Project Property Tax Update

It’s time for an update on my efforts to determine if MidAmerican Energy Company is paying the correct amount of property taxes in Pocahontas County. I sent the following request to MEC employee Dean Crist.

Dean,

Thanks for sending the property tax information that MEC submitted to the county on the Pomeroy project in Pocahontas County.  We already have this information, as it was available through the Pocahontas county assessor’s office.  

I wanted to clarify that we are looking for additional supporting documentation from MEC to compare with your property tax submissions to the Pocahontas assessor.  We were disappointed to hear that MEC was not willing to make any of the confidential utilities board filings available for review to help us determine if MEC has been assessed the correct amount of property tax for your wind project in Pocahontas county.  I did find an IUB document (attached) that helps explain why we wish to examine these IUB filings. The 2009 Nextera testimony (page21) estimated MidAmerican’s installed cost for wind as high as $2685 per kilowatt. That would give a 1.5 megawatt wind turbine a total installed cost of close to $4 million.  By contrast, the first phase of your wind project installed in Pocahontas county in 2007 is assessed at (I believe) $2.58 million, or slightly over $1700 per KW.  Though wind turbine prices do fluctuate, this seems like a pretty wide difference for a couple of years timeframe, and has several of us here wishing we had access to more information as to how MEC determines property tax in order to estimate if school districts and county are receiving the correct amounts. 

Also note that Nextera (one of the largest wind developers in the country) values its wind assets constructed in that timeframe (page18) higher than MEC, $2150 per kilowatt ( $3.2million) for a 1.5 megawatt turbine.  I have not checked what Nexteras wind assets have been assessed by the counties those properties are located in. 

I appreciate the information MEC has sent so far, and your assurances that all relevant costs in the project were taken into account for your county filings,   but we would like additional information.  We would like information that clearly details what soft costs and construction costs were capitalized and depreciated by this project, potentially adding to the assessed value. Also, a breakdown of turbine costs by foundation, tower and nacelle, transportation to site, and pad transformers.  Your submission to the county does not include an assessment for wire – cable  running between turbines back to the substation, only substation , met tower, land, and turbines.

If we can access this information, we should be better prepared for a call that you offered to set up with the MEC tax department.

Thank you,

I received the following reply from Mr. Crist. The IUB document referenced in my request can be found at the link below

“I was able to spend a little time on your request today.

As communicated before, the cost cap is not what projects were built for; the cap is the approved level we can spend under an IUB order without further prudence review. We have always completed projects at or below the cost caps. NextEra had little clue what our construction costs would be. Remember their interest in that proceeding, in my opinion, was to kill all further wind expansion in Iowa.

I did find some cost caps for the IUB proceedings we mentioned earlier:

1. The first phase of Pomeroy (123 MW in 2007) was constructed under a Board-approved cost cap of $1,811 per kW.
2. The second and third phase of the Pomeroy project (75 MW in 2007and 51 MW in 2008, respectively) was constructed under an economic test approved by the Board which resulted in cap caps ranging from $2,230 per kW to $2,480 per kW.
3. The fourth phase of the Pomeroy project (7.5 MW in 2008) was added with a Board-approved cost cap of $2,300 per kW.
4. The fifth phase was an addition of 30 MW in the last ratemaking proceeding. At this moment I cannot find what year it was added as projects were added in 2009 – 2012. Cost caps for these projects were $2,050 per kW in 2009, $2,200 per kW for 2010 and $2,300 per kW for 2011-2012.

I also include the actual costs by wind farm (not cost caps) on pages 410 and 411 of FERC Form 1.  See attached for cost as of 12/31/2012. I have highlighted the Pomeroy project.

I can find nothing more to supply at this point. “

I’m reviewing the FERC document, but really, this just raises additional issues to the ones listed in other posts on this subject.  My understanding is that the Pomeroy Project has only three different property tax rates, but Dean mentions the utilities board cost cap for this project was adjusted 5 different times.

I didn’t get any of the itemized costs I asked for yet.

As for Deans comments that Nextera was trying to kill all future wind development in Iowa, WOW!

My understanding of IUB DOCKET NO. RPU-09-0003 was that it was an argument between Nextera and MEC over who got to build a wind expansion project in Iowa, MEC won. Only these two companies know the inside details of this big wind fight.  

Two things seem certain however.

1-      MEC recently opposed further expansion of wind in Iowa when they registered against SF372, the farmer owned energy bill that did not advance at the legislature this year. Nextera only monitored it.

2-      I still haven’t gotten to the bottom of this property tax issue.