The Energy Show: Real World Solar Economics with Tom Beach

The Energy Show: By Barry Cinnamon

Great solar policy is just as important as great solar technology. Obviously we need the technologies for these products — but we also need the policies so that solar products can be cost-effectively installed. And I’m not just talking about incentives…policies related to net metering, interconnection and permitting are just as important.

Getting good solar policy requires effective political lobbying. I hate to let you down, but these great energy policies did not magically spring from the brains of inspired politicians When I look back at the successes our industry has had over the years — net metering, the California Solar Initiative, Solar Tax Credits, state incentives — all of these policies were based on sound analytical research coupled with effective lobbying.

There are a few companies that specialize in the types of analysis that’s required to put together good policies. One of the best is Cross Border Energy, based in Berkeley California. They provide clients with strategic advice, economic analysis and expert testimony on market and regulatory issues in the natural gas and electric industry. It is my pleasure to have Tom Beach, Principal Consultant of Cross Border Energy as our guest on this week’s Energy Show.

Tom has been influential on many of California’s ground breaking energy policies. He has worked on the restructuring of the states gas and electric industries, the addition of new natural gas pipelines and storage capacity, renewable energy development, and a wide range of issues concerning California’s large independent power community. I also had the pleasure of working with Tom on the California Solar Initiative many years ago. To learn more about the energy industry, real world solar economics, and Tom’s perspective on energy regulatory issues, listen up to this week’s Energy Show.

New York Joins Powering Past Coal Alliance To Protest EPA Policies

By Frank Andorka, Senior Correspondent

New York Governor Andrew Cuomo, long an outspoken champion of solar and other renewable energies, took one look at the Environmental Protection Agency’s new plan to reduce greenhouse gas emissions and screamed, “Get my Press Spokesman on the phone right now!”

And just like that, Cuomo announced that New York had joined the Powering Past Coal Alliance, a group of 17 nations and Washington D.C. that are committed to eliminating coal from their electricity-generation and putting a moratorium on new coal plants that don’t have carbon-capture technology on them.

New York is the first U.S. state to join, although all the provinces of Canada (as well as the federal government of Canada) have already joined. The only other U.S. representative currently in the group is, somewhat ironically, Washington D.C., the epicenter of the pro-coal EPA policies that drove Cuomo to make his announcement.

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In announcing the decision, Cuomo said:

The future of our environment, our economy and our children is at stake, and New York will not let President Trump take us backward. Today I am proud to announce that New York will join the Powering Past Coal Alliance to share our expertise and experience and continue to lead the fight against dirty and dangerous fossil fuels. With our bold mandate to close all coal-fired power plants by 2020 and our nation-leading commitment to renewables, we are already at the forefront of the clean energy revolution and we will not go back.

It is true that New York has come a long way in its clean-energy goals and its commitment to clean energy. With 16 other governors, Cuomo helped form the U.S. Climate Alliance, a group that has been working to promote clean energy as a way of protesting the U.S. decision to pull out of the Paris Climate Accord. Under Cuomo, it has also set a renewable portfolio standard (RPS) of getting 50% of its electricity from renewable resources by 2030, one of the most aggressive RPS’s in the Northeast.

New York’s decision to join the Powering Past Coal Alliance just goes to show how wrong-headed many leaders believe the new pro-coal policies of the EPA are. Look for other states to consider joining the Alliance now that New York had set the pace.

A Tale Of Two Business Models: Could European Utilities Offer Path Forward For U.S. Counterparts?

By Frank Andorka, Senior Correspondent

Two separate pieces today by Bloomberg New Energy Finance illustrate the ever-increasing gap between how utilities in Europe and the United States view distributed generation.

In Europe, research suggests that utilities have come to the realization that distributed generation like solar and wind are becoming what electricity consumers want and, if they expect to thrive into the future, are what utilities will have to provide.

In the United States, on the other hand, utilities continue to invest in centralized distribution and can’t figure out why those investments aren’t allowing them to make the money they have in the past.

Go figure.

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Albert Cheung, head of analysis for Bloomberg NEF, tackles the European side of the issue, saying utilities in those countries are looking at distributed generation as a boon, not a competitor. After all, utilities have the built-in customer bases and expertise to continue offering electricity to their customers even if it’s in a distributed form. Their trusted brand name, after all, carries a lot of weight with consumers. After writing that utilities in Europe appear to be banking on this model, he writes:

If … the value lies in having both scale and a local presence, with a dash of technical and market complexity thrown in, then it may be that our hypotheses prove valid, and that utilities will lead the way into a brave new future of decentralized energy.

Can the same be said in the United States? In fact, at the moment, I can think of at least three situations (without breaking a sweat) where utilities are actively fighting distributed generation because they view it as competition rather than an opportunity. Most utilities in the United States are more interested in investing in technology they know rather than what technology the future will support. And the rub is this: Their customers aren’t buying it any longer.

From BNEF:

Regulated power companies make money by earning a return on capital investments. The business model is simple: the more they spend, the more they earn, all else equal. But investments and profits are ultimately paid for by customers, and sales have not kept pace. Is the utility business model broken?

The simple answer to that final question is yes, and it doesn’t take looking in Europe to find that answer. Even in this country, those utilities that have embraced distributed renewable resources like solar and wind are thriving; those fighting a rear-guard action for nuclear and fossil fuels are not.

It’s time for the utility model in the United States to change and change significantly – and perhaps European utilitiescompanies that have already embraced distributed generation could show the way forward.

More:

Cheung: Decentralized Energy and Flexibility: Reasons to Believe

U.S. Utility Investment is Booming, but Sales Are Not Keeping Up

Community Solar Spread Slowed By Outrageous Contract Terms

By Frank Andorka, Senior Correspondent

Community solar is a hot topic right now in the industry. It’s potential to expand solar’s reach to non-traditional solar customers – renters and people whose homes are not suited to individual solar arrays – is enormous, and as more states become solar friendly, community solar is one of the most frequent focuses of policymakers as they try to navigate a new solar world (see Illinois, for example).

And according to a new report from Ellen Emma Foehringer Merchant of Greentech Media, the way of doing business for community solar providers is finally changing to make it easier for consumers to join community solar projects.

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Merchant describes the current problems with many current community solar arrangements:

Common contract terms put customers on the hook for cancellation fees or signup periods stretching into two decades. The lack of flexibility is generally a turnoff for customers, limiting signups from the 50 to 75 percent of U.S. consumers who can’t access traditional rooftop solar.

According to Merchant, however, that traditional business model is changing, thanks to innovative companies like Solstice (a primary focus of the article):

Solstice, a community solar organization focused on customer management, recently introduced a “no-risk” contract tied to a new 2.73-megawatt Delaware River Solar project in the Hudson Valley. The contract includes no cancellation fee and lasts just one year. Solstice called the release a “milestone in U.S. solar accessibility” and said the terms “allow renters to participate without fear of getting stuck with a contract that they can’t take with them if they move.” The project will serve 400 households after its estimated Q4 completion.

Merchant acknowledges the Solstice arrangement is still a rarity, but posits that as companies like Solstice begin to see higher subscription numbers, other companies will quickly decide to make their terms easier for customers.

Our view is that the current business model for community solar will change as it becomes more common, and that the current struggles are nothing more than the growing pains that accompany any new market opening up. At least we hope so – as the article notes, 50% to 75% of electrical consumers don’t have access to traditional customer-sited solar arrays. It would be a shame to leave that much of the market on the table when a fix like the one Solstice is proposing is right there in front of us.

More:

Shopping for Community Solar? Contract Terms Are Getting Friendlier