Alliance for Renewable Energy

Opportunities in Challenging Times: Renewable Energy Payments in New York State

        Changes in the U.S. federal government in January of 2009 have been accompanied by important shifts in policy priorities with regard to energy security and concerns over climate change and greenhouse gas emissions. On February 17, 2009, the $787 billion American Recovery and Reinvestment Act went into effect to address the country’s deepening global economic crisis. However, in spite of the loss of more than 2.6 million jobs between November 2008 and February 2009, there is hope for the growth of the renewable energy sector.

        Americans have become increasingly aware of the interrelated nature of economic and energy security, coupled with environmental sustainability. As such, numerous states and municipalities are currently reviewing past, present and potential policies to promote renewable energy technologies in their jurisdictions. New York State provides an interesting case study of the key issues surrounding policy mechanisms to promote renewable energy technologies, particularly Renewable Energy Payments (rep).

        In his “State of the State Address” in January 2009, the Governor of New York, David Paterson, presented the goal that New York State would meet 45% of its electricity demand through energy efficiency and renewable energy by 2015. The “45 by 15” goal, as termed by Governor Paterson, would create an estimated 50,000 new jobs in the state. On March 26, 2009, however, the New York State Department of Labor announced that the “recession” in the state had “deepened” for the month of February, citing 145,800 job losses in the private sector alone since August 2008. Nevertheless, recent developments are encouraging.

        On February 27 2009, The Consolidated Edison Company of New York (ConEdison) presented the Public Service Authority (psa) a petition for a $25 million “Solar Energy Pilot Program” in order to generate 12MW from solar by 2011. On the same day, the Long Island Power Authority (lipa) announced that the procurement process for the state’s largest solar project to date (50MW) had been completed. This will in effect triple the state’s capacity to generate electricity from solar technology. The New York State Energy Research and Development Authority (nyserda) will provide lipa with $15 million for the project. Furthermore, a renewable energy payment bill was recently introduced in both houses of the New York State Legislature: The New York Renewable Energy Sources Act (Download Discussion of the Bill New York RE Sources Act).

Power to the People: Saving the Solar Sector

Recent articles from CNET News report (LaMonica) report that two California solar companies are close to crashing-and-burning in a heap of shattered photovoltaic dreams. Daystar reported a net loss of $26 million in 2008, and without a major boost of capital the company will likely go under in 2009. Daystar is unique in that they are among the first companies to invest in silicon-free technologies. Another California-based company, OptiSolar, has closed their production plant and will lay off 200 employees. This is unfortunate as OptiSolar specializes in thin-film cells from amorphous silicon. This technology uses less than 1% of the silicon used in tradition crystalline systems (OptiSolar.com), thus reducing demands for a limited resource. 

LaMonica discusses the difficulties that start-up companies face during the first crucial years of research-and-development (R&D). Major funds are necessary to keep these companies thriving and allow them to retain creative engineers and marketing strategists alike. Although American capitalism breeds survival of the fittest, we need to allow companies with creative and feasible ideas the opportunity to get rolling (think of cars covered in solar cells, charging your battery while you shop for groceries…).

Gainesville, Florida, which recently passed feed-in tariff legislation that is stimulating their solar industry, remains an example of how quickly, with the right policy in place, a technology can catch on. Yet without the production capacity, even the best laid plans will go to waste. We need to focus both on pushing for the right incentive legislation and on supporting and promoting companies that will give us the production capacity for all forms of green power—solar, wind, water, biomass, and biogas.

The Obama Administration has committed $1.2 billion in energy research-and-development (LaMonica). Recently the Department of Energy has begun to divvy out funds, including a $535 million dollar loan to Solyndra to expand solar production capacity at their California plant (Solyndra.com). The company estimates that this will create 1,000 permanent jobs at the plant; this figure does not include potential jobs created for installers or other related fields.

Feed-in Tariffs and Renewable Energy Payments hold promise to help push the ‘green agenda’, create jobs, and increase our energy security, but we still need to take this one-step at a time. The Green Revolution started in the ‘70s, picked back up in the early ‘90s and subsequently languished for the last 20 years. We have a renewed optimism and, more importantly, have convinced the American public that the ‘same-old, same-old just ain’t cuttin’ it any longer’. There is a sense that ‘time is of the essence’ that was not present in the American psyche that was not present even 10 years ago. Now we are faced with a paradigm shift that will hopefully lead to a future powered by solar, wind and cow manure.

Please refer to the following links for more information:

http://news.cnet.com/8301-11128_3-10201932-54.html?tag=mncol

http://news.cnet.com/8301-11128_3-10202041-54.html

http://www.solyndra.com/News/Press-Release-032009

Florida Debates Renewable Energy Support Mechanisms

The general opinion of Florida utilities is that RECs are a more appropriate mechanism to catalyze growth in the renewable energy sector.  However, Gainesville's recent adoption of a feed-in law, and numerous local and international studies that support the cost-effectiveness of feed-in laws, have added momentum to the campaign for feed-in tariffs in Florida.
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ARE Hosts Panel on Feed-in Tariffs at ACORE RETECH Conference, March 26th in Las Vegas

It was standing room only as over 100 people crowded into ARE’s session on feed-in tariffs at the Renewable Energy Technology--RETECH conference organized by the American Council on Renewable Energy--ACORE.

Lois Barber, Co-chair of the Alliance for Renewable Energy—ARE, organized and chaired the panel.
Speakers included:

    Michael, Eckhart, President, ACORE

    Dr. Murray Cameron, founding member and Chief Operating Officer of Phoenix Solar, and Vice President of the European Photovoltaic Industry Association (EPIA), the largest solar trade association in the world representing 80% of global production.

    Wilson Rickerson, Senior Vice President at Meister Consultants Group, where he is responsible for the firm's international energy and climate change practice.

    R. James Woolsey, Former Director of Central Intelligence.

    John Burges, Managing Director at Knight Capital Markets, the largest market maker in North America, where he is responsible for energy, alternative energy and clean technology.

    John Geesman, Former California Energy Commissioner, current Co-chair of the ACORE Board of Directors and member of the ARE Board of Advisors.

    Steve Lapp, Renewable Energy consultant and professor of Renewable Energy Technology at St. Lawrence College, Kingston, Ontario.

    Cheri Olf, Director of Education & International Workforce Development at ACORE where she manages its educational and workforce outreach programs, including the Higher Education Committee on Renewable Energy.

Does cap-and-trade make REPs redundant?

A leader in this week’s Economist argues that cap-and-trade alone will reduce greenhouse gas emissions at the lowest cost, while renewable energy support policies will dramatically increase these costs.  As evidence, it claims that the marginal cost of switching to renewables is about five times greater than the anticipated price of carbon under a cap. I would argue that this finding only strengthens the case for policies like REPs for the following reasons:

·         Cap-and-trade will encourage least-cost presently-available abatement measures, meaning energy efficiency and, in some cases, substitution of natural gas for coal. Case in point, the SO₂ cap promoted switches to low-sulfur coal, but not long-term technological advancement. Yet no one is arguing that efficiency alone will achieve necessary reductions, and natural gas is an ultimately limited fossil fuel, much of which we import.

·         Through deployment and appropriate incentives, renewable energy will become less costly. Yet this process takes decades. As Tom Friedman explains in Hot, Flat, and Crowded, technologies like the cell phone or PC overcame their early high cost only because there were no cheaper (and dirtier) substitutes. But if we cut off support for renewables and just wait for the carbon price to go high enough to make them competitive at today’s prices, we will lose valuable time and end up with higher costs in the long run.

·         But keep in mind that carbon is not a real market commodity. Caps are set based on political feasibility not science. If carbon prices skyrocket with few tangible benefits to show for the scheme, will politicians really keep driving the cap down?

·         Whether or not they do, there will be regulatory risk. The high upfront cost of renewables precludes their development in the climate of market and regulatory risk the Economist proposes. Note that no other energy technology has ever developed without subsidies – even before the credit crunch.

·         On the other hand, if the Chinese, Japanese, and Europeans continue to develop clean energy technology, it may yet mature and become widespread, but American industry and workers will miss out on the benefits.

·         And again, as the SO₂ cap demonstrated, cap-and-trade is efficient only in a very limited sense. Theoretically it ensures that an administratively-determined level of short-term emissions reductions is achieved at least cost, but the solutions it fosters will not necessarily cohere with other policy goals. Renewable energy promotes climate stability, a safe and healthy environment, energy (and national) security, and job creation. Rather than rely on a single indirect incentive mechanism, or even a plethora of them, we should choose the one direct policy that will achieve all of these aims: REPs.

Rather than increasing the cost of carbon reduction policy, I would say that REPs will lower the cost of cap-and-trade by ensuring that in the long run there is a sustainable, cost-effective alternative to the purchase of carbon permits. Not to mention the avoided political costs associated with displaying immediate benefits in the fight against climate change.

The New York Times Weighs in on REPs in the US

This photo (http://search.creativecommons.org) is courtesy of Flickr user b2tse, shared under a Creative Commons license.

Last Thursday, the Times published an article on the Gainesville feed-in tariff, its European predecessors, and news of other US states that are considering similar policies.  The article and subsequent GreenInc blog entry addressed important concerns both for and against FIT's. Most importantly, it's apparent that a national dialogue is beginning to take shape around the idea of using fixed rates to stimulate renewable energy investment. This open conversation is going to help educate Americans on the need for renewable energy and help lawmakers find the right way to implement this type of policy. So please, America, discuss!

Audubon has clean solar electricity that’s going to waste. Does anyone want it?

 The Audubon Society building in Los Angeles is powered entirely off the grid by solar energy. It is producing too much energy but no laws in place encourage utilities to buy it. A REP would be ideal for them!

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This photo (http://search.creativecommons.org) is courtesy of Flickr user Powerhouse Museum, shared under a Creative Commons license.

Japanese Government Planning REP System

The Japanese government is planning a Renewable Energy Payment system as early as spring 2010. Critics say the plan will cost too much, notably to consumers. However, this plan has not been submitted to public debate. When surveyed and explained the significance of the system, a clear majority of surveyed consumers expressed their support.  

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(This photo is courtesy of Flickr user Abe Massayuki, shared under a Creative Commons license.)

Columbia Consultants present their project to graduates and faculty

 On March 4th, Columbia Consultant member Ryan Black gave a midterm presentation to other members of the Masters program and faculty. This was an important milestone for the project as well as an opportunity for the team to begin introducing academia to REP. The team created a memo explaining the importance of of REP and why academia has an important part to play in this campaign.

Academia Memo

Gainesville Solar REPs Program Meets Target Before Launch

On March 1, Gainesville, FL officially became the first city in the U.S. with a solar REPs law.  Utilities in the city are required to purchase solar energy from registered producers for $0.32 per kilowatt hour through 2010.  This 2009 tariff rate will be adjusted over time but program profits are guaranteed for 20 years.  At the commencement of the program, Gainesville now sees an influx of completed applications to request connection to the electricity grid that would sum up to a total of 4MW of generated solar energy, which is the first-year target of the program. 

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