Will the Feds Preserve Electricity Market Competition?
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Transcript of Will the Feds Preserve Electricity Market Competition?
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