W I L L T H E F E D S P R E S E R V E E L E C T R I C I T Y M A R K E T C O M P E T I T I O N ?

T H E P O W E R O F A P E A N U T FA R M E R ’ S “ P U R PA ”

John Farrell Director of Energy DemocracySeptember 12, 2017

H U G E C L E A N E N E R G Y P O T E N T I A L

23%

49%

All buildings Source: http://www.nrel.gov/docs/fy16osti/65298.pdf

R O O F T O P S O L A R P O T E N T I A L 2 0 1 6

POTENTIAL PERCENT OF POWER FROM LOCAL

ROOFTOP SOLAR

OVER 50%

40 TO 50%

25 TO 40%

11 TO 25%

2008 data

40-50%25-40%

Over 50%

Over 50%

25-40%

40%

POTENTIAL PERCENT OF ELECTRICITY FROM

ONSHORE WIND POWER

0 TO 10%

10 TO 25%

25 TO 50%

50 TO 100%

100% OR MORE

W I N D P O W E R P O T E N T I A L2 0 1 5 N R E L D ATA

35% c.f. or better

110m

Source: http://1.usa.gov/1CUrAWk

35 states could get 100% or more

B I G B E N E F I T S

R E N E WA B L E B E N E F I T S

0

3

6

9

12

15

Jan-2002 Jan-2004 Jan-2006 Jan-2008 Jan-2010 Jan-2012 Jan-2014

Natural Gas Price

Wind and Sun Price

D I S T R I B U T E D B E N E F I T S

Solar on Littlestown Hospital

D I S P E R S I N G 1 - M W S O L A R P L A N T S R E D U C E S I N T E G R AT I O N C O S T S

0

1

2

3

4

1 solar project 5 solar projects 25 solar projects

0.3¢

1.1¢

3.9¢

cents per kilowatt-hour

Credit: USDA

L O C A L E C O N O M I C B E N E F I T S

1 megawatt

$2.5 million

20 jobs

Source: ILSR, 2014

$5.4 million in energy savings

C O M M U N I T Y O W N E R S H I P B E N E F I T S

How Green Energy Farmers busted the barriers:

Formed several, unrelated LLCs with only Iowa owners.

State regulation Pass-through to individualsFor a limited time, the Production Tax Credit was available as a cash grant, more easily used by ordinary investors.

Sold to the utilityElectricity was sold via a power purchase agreement to the utility.

O P P O R T U N I T Y AT C O M M U N I T Y S C A L E

C O M M U N I T Y W I N D - S O L A R H Y B R I D

• Wind power for reliable, low-cost power

• Solar power for peak energy

• Big enough to capture economies of scale

(2) 2-megawatt wind turbines (1) 1-megawatt solar array

5 megawatts

C O M M U N I T Y W I N D - S O L A R H Y B R I D

• 20 local construction jobs, and 1.5 ongoing maintenance positions

• $87,000 in local tax revenue over 20 years

• $500,000 in local participation revenue over 20 years

(2) 2-megawatt wind turbines (1) 1-megawatt solar array

5 megawatts

H O W D O E S I T F I T ?

C O S T O F E L E C T R I C I T Y

G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N

3¢ 3¢ 4¢

If customer pays 10¢ per kilowatt-hour

+ +

VA L U E O F D E L I V E R Y

G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N

3¢ 3¢ 4¢3¢ 6¢ 10¢

If customer pays 10¢ per kilowatt-hour

VA L U E O F D E L I V E R Y

G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N

3¢ 6¢ 10¢

Wind-solar hybrid

P O L I C Y L I M I TAT I O N S

A U C T I O N S FAV O R L A R G E P R O J E C T S …

… 1 ) B E C A U S E A U C T I O N S TA K E O V E R H E A D

… 2 ) B E C A U S E T H E Y D O N ’ T C O U N T D E L I V E R Y C O S T S

G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N

3¢ 6¢ 10¢

T H E F E D S F I G U R E D I T O U T I N T H E 1 9 7 0 S

G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N

3¢ 3¢ 4¢+ +1 9 7 8 P U B L I C U T I L I T Y R E G U L AT O R Y P O L I C I E S A C T

A R I G H T T O S E L L …Utilities must buy electricity from “qualifying facilities,” including wind and solar, at their

“avoided cost”

F E D E R A L L AW

B U T T H E R E W A S A M I S S I N G P I E C E

G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N

3¢ 3¢ 4¢+ +

The utility claims this “Avoided cost”

A R I G H T T O S E L L … B U T A N U N FA I R P R I C E ?

1 9 7 8 P U B L I C U T I L I T Y R E G U L AT O R Y P O L I C I E S A C T

S TAT E I S S U E

G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N

3¢ 3¢ 4¢+ +

But a wind-solar hybrid has a higher “Avoided cost”

A R I G H T T O S E L L … B U T A N U N FA I R P R I C E ?

1 9 7 8 P U B L I C U T I L I T Y R E G U L AT O R Y P O L I C I E S A C T

S TAT E I S S U E

S TAT E S A L R E A D Y D O I T

• For distributed solar, Minnesota’s value of solar counts the avoided distribution and transmission costs

G O O D A N D B A D —S TAT E S C A N I M P L E M E N T

M I N N E S O TA

• Complaint filed against Otter Tail Power for fair avoided cost

• Investigation requested into avoided cost methodology for all utilities

M I C H I G A N

• Proceedings underway since May 2016 aim to establish an updated, more complete methodology for calculating avoided cost

• Goal: to adequately incorporate avoided transmission costs

M O N TA N A

• In 2016, utility won suspension of 6.6¢, 25-year PURPA contracts

• FERC found action inconsistent with law, but left it to developers to take legal action

N O R T H C A R O L I N A

• High avoided cost (5¢) led to over 2,000 MW of solar development under PURPA

• Duke Energy proposing to shorten contracts from 20 years to 5 years

• State reviews every two years

I D A H O

• Reduced PURPA contracts from 20 years to 2 years

I M P L I C AT I O N S O F D O I N G I T R I G H T

• Cheaper electricity

• Local jobs

• Local revenue

• Local tax base

T H A N K Y O U !@johnffarrell

www.ilsr.org

C H A N G I N G T H E R U L E S

P R O V I D I N G T O O L S

1 0 0 % R E N E WA B L E L O C A L E C O N O M Y

H U M A N S C A L E

L O C A L O W N E R S H I P

D E M O C R AT I C A U T H O R I T Y

I L L U S T R AT I N G T H E V I S I O N