BioCycle September 2017
Why wouldn’t you? That is my answer one month into having solar panels on our roof. We had to pay to get it but we get a tax write off. The power is free to us and the excess earns us money (net metering). As the range of green energy options grow and as they become more cost-effective, many more people, companies and utilities are coming to the same conclusion.
According to a report from Lawrence Livermore National Laboratories (LLNL), wind power has increased from just about 11,000 megawatts (MW) in 2007 to over 72,000 MW in 2015. (Mills, et al, 2016). During the same time both utility photovoltaic (PV) and distributed (roof top) PV have increased from close to zero to over 10,000 MW. Each of those MW from wind gives you a carbon dioxide (CO2) credit of over 0.65 metric tons with the equivalent credit from solar over 0.5 metric tons.
And the benefits are not just from greenhouse gas emissions reductions. Both wind and solar reduce nitrogen oxides (NOx), sulfur oxides (SOx), and particulate emissions. Those translate into public health benefits that vary by region but are typically also worth cents per kilowatt hour (kWh). Add those savings up and you are into billions of dollars annually. You also get a diverse and resilient system. Take the recent power outage in the Outer Banks in North Carolina. One wire was cut and one critical week of tourist revenue was lost as the Banks went dark. A decentralized system would mean that the potential to lose power with one wire could be limited to one household or one neighborhood.
LLNL issues an annual “Tracking the Sun” report that follows price trends for solar. The big price reductions in panels happened a few years back. More recent declines in installation prices are less dramatic and are primarily the result of declines in the stuff needed to go with the solar. How much it costs also depends on where you live, who does the installation and how big a system is. Bigger is cheaper and certain states are cheaper than others.
The reductions in costs have also led to a reduction in subsidies. At this point, larger scale wind and solar projects — the kind that utilities or private companies rather than homeowners have — are about the same price to build and operate as conventional power plants. Solar was expected to reach grid parity (same price) as conventional sources in 36 states by 2016, which it did in some states for some projects.
All told, increasing adoption of renewable energy (here with a focus on wind and solar) seems like a done deal, destined to continue to increase every year. Hopefully some day anaerobic digestion will make the big leagues and continue this trend. There is however, one small, potential sticking point, or fly in the optimistic ointment. That is the centralized grid and the utility companies that own and operate it.
Fly In The Optimistic Ointment
Just after we had our solar installed I saw a big headline in the New York Times (NYT), “Rooftop Solar Dims Under Pressure from Utility Lobbyists.” It seems that rooftop solar, which had increased by over 900 percent, has seen a dramatic slowing in growth. There are several potential reasons for this, including saturation of certain markets and production problems. The one that sent chills down my spine was the focus of the article. Utility lobbyists have been successfully arguing that decentralized or rooftop solar with net metering is just plain unfair.
As a result of this lobbying, several states have decided to phase out net metering and others are considering charging new or higher fees for people that have decided to go solar. Our power utilities have worked with one business model for a very long time and many are reluctant to let that model go. Many utilities are private companies, working under close supervision from state and regional governments. They provide the power and the lines to carry it. In some cases, they purchase the power from large-scale providers. In others, they own the source of the power as well as the distribution system. Green energy, in particular decentralized and multiple sources of energy, mean a drastically different business model. In order for renewables to really take hold, this grid and utility structure has to be reimagined and redefined. If this does not happen, we will likely end up with gridlock or at least a much longer and more circuitous road to renewables.
A study done for the Edison Electric Institute compared the current state of electric utilities to the airlines and phone companies before deregulation and innovation completely changed those industries (Kind, 2013). Some of you may remember Ma Bell and Pan Am. Many will not. Distributed solar, privately owned renewables and the range of other factors, of which bioenergy is one small piece, have the potential to result in a massive disruption of the industry as it currently exists. Alternative sources of energy in combination with declining revenues mean lower profitability for this industry — one that moves slowly and steadily and is accustomed to thinking in 30 year return cycles for capital investments. Put into the larger context, my solar roof represents a major threat to these companies. It is no wonder that many are lobbying against them.
Breaking The Mold
Fortunately not all utilities and not all states are trying to preserve the past. An article in the NYT focused on Green Mountain Power in Vermont. That one made me smile. This utility, which previously had purchased power from a third party, is now focused on creating as many decentralized power sources as possible. Mary Powell, the chief executive of the utility who has been featured in BioCycle (see “Energy Company of the Future,” September 2015), is pushing to include home and local power storage using Tesla’s batteries as part of the utility’s offerings. The ability to store power locally builds resilience during periods of high demand. The utility has also focused on conservation by providing homeowners the tools to monitor their own power usage patterns. Green Mountain has also expanded its own solar and wind generation. Green Mountain is a tiny utility and not representative of most.
ConEd is not a tiny utility, providing service to the New York Metropolitan area. ConEd is also located in New York state, which has the most progressive program to transform the power industry: Reforming the Energy Vision (REV) https://rev.ny.gov/. REV encourages traditional power companies to transform themselves — to “allow third-party businesses to develop and operate distributed resources that would alleviate the need for capital investments.” In English, that means that they would welcome my solar roof. As part of its plan, that is exactly what ConEd has done for neighborhoods in Brooklyn and Queens. As a result of demand growth (something unusual in today’s typical utility profile), ConEd was facing the need to construct new substation feeders and switching to the tune of $1.2 billion. Instead, it encouraged development of noncentralized or DER (distributed energy resources) power and has avoided this new construction and the associated expenses with its Brooklyn Queens Demand Management Project.
A trial project, in partnership with Opower, provides customers with more information on how they use power. This and another pilot to change metering that will give detailed information on usage will be employed to target customers for new products and options. Defining new Foptions to store power is also a priority. One option that has been embraced by several California utilities but to date is not a priority for ConEd is to expand electric vehicle charging infrastructure. This both provides an additional service and provides an alternative use for excess power that has been generated by renewables.
Other states, Massachusetts, California, Maryland and Minnesota to name a few, have also come up with plans of varying level and forethought to help guide utilities to this new future. Many utility companies are also expanding their portfolios of renewables and their associated business models. Pacific Gas & Electric (PG&E) is one of the leaders. Georgia Power is also looking to capture the future in its business model by offering rooftop solar installations as part of its service model.
Across the industry, there are two paths to the future — one in which the grid is reborn as a sophisticated and interactive smart system and the other where large-scale defection from the grid lets those utility poles collapse from lack of use. While the latter might sound appealing, it can lead to underutilized power and overbuilt infrastructure. What is clear is that the old business plan of providing all the power all the time as a monopoly will not persist.
How my roof and your digester will fit into the future is not clear. We were lucky to get our subsidies. Depending on where they are located new projects may be welcomed with open arms or treated like enemies of the state. Interesting times ahead.
Sally Brown is a Research Associate Professor at the University of Washington in Seattle and a member of BioCycle’s Editorial Board.